The media may portray BP’s exploded oil rig and the resultant oil leak as something that can “wipe out” the company, Cramer said Monday, but he doubted that would happen.
BP has taken full responsibility for the spill and its cleanup costs, The New York Times reported, and some seem to wonder if the company will buckle under that outlay of cash. But Cramer pointed to a number of factors that will help BP weather the storm. Not the least of which is the company’s “incredible” debt-to-capital ratio and its strong management team.
Also, though, as The New York Times reported on Monday, BP has made progress with its containment domes. According to the Times, these 4-story, 70-ton structures will be lowered into place over the three leaks to catch the escaping oil and allow it to be pumped to the surface. One had been completely built, the company said, and the other two were expected to be done on Tuesday.
“The game changed,” Cramer said, when that report hit the wires today, at about 2 PM ET. That caused BP to turn, as well as Transocean and the Oil Services HOLDRs exchange-traded fund.
“If the Times article is true,” Cramer said, “the worst is over.”
Still, Cramer recognized that BP will foot the bill for the cleanup, though he remains “optimistic” that damage done won’t be on par with Union Carbide’s gas leak in Bhopal, India, or even the Exxon Valdez off the coast of Alaska.
Elsewhere in the market, Cramer recommended California homebuilder Standard Pacific , saying he thinks the near $7 stock could go to $8. He sees the company’s ability to raise prices on its properties as bullish, and he predicted SPF will sell out its inventory.
“It’s my best name in the group,” Cramer said.
Cramer's charitable trust owns BP.
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