Cramer's Mad Money Daily Recap 8/26/05 - Hurricane Plays

[Thierry Martin]

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Cramer's Mad Money Daily Recap 8/26/05

Hurricane season plays

You have to own Montpelier Re Holdings (MRH) because people sell good insurance companies during bad weather. It's the kind of knee-jerk reaction that happens every August and September, right around now, said Cramer.

Insurance companies always have to pay out during hurricane season, and they account for that. Expected hurricanes shouldn't have any effect on their earnings.

Cramer prefers Montpelier to American International Group (AIG), which used to be the insurance play, because of AIG's tarnished image at the moment.

Lowe's (LOW) and Home Depot (HD) are not good hurricane plays. Cramer said, because both companies are "pretty good corporate soldiers," when bad weather strikes. "They don't gouge," he said. "If anything, they give back to their communities."

Airlines

Airline stocks have been going down for as long as Cramer has been in the market.

Although not an airline, Aviall (AVL), an outsourcer for the airlines, is one airline-related stock Cramer recommends. Aviall is benefiting from the airlines' problems because it helps them save money.

Cramer said that although the helicopter business is healthy, there are no good pure plays because helicopter companies are all part of larger conglomerates.

A caller asked about World Air Holdings (WLDA). Cramer said Aviall was the better play.

Martha Stewart short squeeze

Cramer is bullish on Martha Stewart Living Omnimedia (MSO) because a short squeeze is occurring. The usual reasons to short a stock, such as accounting fraud or bad management, aren't there with MSO.

"This is why I'm floored when I think about the short story with MSO," said Cramer. "What's the short strategy here? There are so many things that can go right now with this company."

With Martha's new TV show and new CEO Susan Lyne, MSO's future "looks unbelievably bright."

Grey Wolf is a winner

Grey Wolf (GW) CEO Tom Richards was on the show via telephone.

Cramer is bullish on Grey Wolf and believes the stock can go to $10. The stock closed Friday at $7.20.

"As long as there's no excess capacity and they can raise rates, you know you've got a winner," said Cramer.

Syntroleum's - wait and see

Cramer spoke to Syntroleum (SYNM) CEO Jack Holmes. Cramer asked if his gas-to-liquids company was about to turn profitable.

Holmes said "we expect to have profits within the next two years."

Cramer said "I want to see profits. I will reserve judgment until I see the profits."

Lightning Round

Bullish - Harley-Davidson (HDI), McDermott International (MDR), Johnson Controls (JCI), Fluor (FLR), Lufkin (LUFK), PPL (PPL), Stolt Offshore (SOSA), Activision (ATVI), MicroStrategy (MSTR), Precision Castparts (PCP), Sirva (SIR), Sears Holdings (SHLD), AMLI Residential Properties Trust (AML), Headwaters (HW) and Amgen (AMGN).

Bearish - Safeway (SWY), Citigroup (C), OSI Pharmaceuticals (OSIP), AMR (AMR), Hi-Tech Pharmacal (HITK), Scana (SCG), Equifax (EFX), Cheesecake Factory (CAKE), Medtronic (MDT), Eastman Kodak (EK), Alpha Natural Resources (ANR), Veeco Instruments (VECO), Entrust (ENTU) and PLX Technology (PLXT).