Cramer's Third Pick For Five Years Out: Transocean (RIG)

On tonight’s MAD MONEY on CNBC, Jim Cramer said he wanted to reviewsome picks that you might want to own with a 5-year time horizon forthe future.  He wants to look beyond the current markets and thevolatility, so he wants to look at earnings visibility for a multi-yearperiod.  So that way he can look past a major market swing or againstan analyst panicking over a stock drop.  He has three picks that have5-years worth of visibility and his THIRD PICK is as follows:

• Cramer’s third pick with 5-years visibility is Transocean (NYSE: RIG) that just bought GlobalSantaFe in an $18 Billion merger.  This one gets great prices for deep water oil rigs that are in short supply and its deepest water rigs are under contract on great rates out to 2010 and 2012.  Despite this on getting hit every time oil drops, he thinks that shouldn’t happen because its 38 rigs of that sort are under long-term pacts.  Even the deeper water over 10,000 feet have far longer contracts with huge rates locked in.  Now that Transocean bought its largest competitor it has pure pricing power.  Since it takes so long to build a giant rig they won’t have any serious competition for a ways out.  High oil prices will continue to benefit it.  These have been hit with the pullback and can be bought now.

His first pick was First Solar and you can see that here.

His second pick MedcoHealth Solutions and you can see that here.

Cramer’s TOP PICKS FOR 2007.

Here is our own open email distribution list where we highlight some other Cramer picks, buyouts, break-ups, spin-offs, value stocks, merger-arb, and more.

Jon C. Ogg
December 17, 2007

Jon Ogg can be reached at [email protected]; he produces the SPECIAL SITUATION newsletter and he does not own securities in the companies he covers.