As is often the case, Cramer started “Mad Mail” with a little homework. He returned to TriMas, a diversified industrial company that Steve In Washington had asked about during Thursday’s “Lightning Round.”
What’s the verdict? Well, TriMas’ biggest problem, as Cramer sees it, is that the company is so diversified that it can’t excel at any one of its businesses, and that cuts into the profit potential. Two of TriMas’ largest divisions, which account for half of sales, are still being realigned and their growth opportunities are limited.
Plus, the stock trades at a valuation equal to that of Honeywell International and Eaton , two similar companies that Cramer likes a whole lot more. And these two give their shareholders a 2-percent dividend yield to boot. So if investors want to play this space, they’re better off with other HON or ETN.
Now for some e-mail…
Gary in Michigan wanted to know how long is should tolerate the short-selling action in Agnico-Eagle Mines . But Cramer urged him to hold on.
“If you think that gold is going to $2,000 in the next four or five years like I do,” Cramer said, “you don’t sell the best-run large gold company, you buy more of it.”
Mike asked if he should hold on to his shares of First Niagara because they only began to move recently after the company bought NewAlliance Bancshares . Again, Cramer said to hold on. A lot of the regional names have started to “percolate,” and FNFG has made some “major changes” that should result in a higher share price.
“They are going to become a powerhouse,” Cramer said. “You want to own that.”
Harold in Minnesota said he was considering a utility for his grandkids’ portfolio, but he worried that the Environmental Protection Agency could hurt the industry in 2011 with its regulations. Cramer said those fears were, at least in part, sound, as any coal-based utility would be under pressure. But he’s “much more comfortable” with any business that produces energy using natural gas.
Is Wendy’s/Arby’s Group cheap compared to McDonald’s? That’s what John in New York wanted to know. It is cheaper relative to Mickey D’s , Cramer admitted, but “we pay up for best of breed on this show.” So go with MCD.
Shawn has decided to buy Lazard as a play on what looks to be a good coming year for M&A, but did Cramer agree? No, he thinks Goldman Sachs is the cheapest in the group, saying that while some expect GS to earn $18 a share in 2011 Cramer’s predicting the number will be $20. They also try to put an eight multiple on the stock when he thinks it deserves a 12. His choice, then, would be Goldman.
“I think Goldman Sachs is back and bigger than ever,” Cramer said.
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