Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday November 16.
7 Earnings Reports To Watch In the Week Ahead: Lowe's (NYSE:LOW), Jack in the Box (NASDAQ:JACK), Best Buy (NYSE:BBY), Sears (NASDAQ:SHLD), Heinz (NYSE:HNZ), Salesforce.com (NYSE:CRM), Deere (NYSE:DE). Other stocks mentioned: Home Depot (NYSE:HD), Lions Gate Entertainment (NYSE:LGF)
Lowe's (LOW): will it report the same kind of solid number as competitor, Home Depot (HD) did? Cramer predicts only 1.5% comp sales for Lowe's, and recommends that, if HD is knocked down along with Lowe's, HD is a buy on weakness.
Jack in the Box (JACK) reports, and should discuss its large-scale renovation scheme. Cramer would look for pin action in other restaurant stocks if Jack in the Box reports something positive.
Best Buy (BBY
) reports. Cramer is not optimistic about its earnings.
) faces cut-throat competition in its consumer hard goods business. Cramer expects a downbeat quarter
Heinz (HNZ) may be bottoming, and is well-run. Heinz will benefit from lower commodity prices. Cramer thinks the quarter may be dynamite.
Salesforce.com (CRM) is “the heart of the cloud” and is likely to report a good number. Cramer would consider buying it on any macro weakness.
) tends to get hit after every report, because the company tends to be cautious. The stock has run ten points.
Cramer took a call:
Lions Gate Entertainment (LGF
) may sell off after its recent film the way it sold off after Hunger Games.
Del Frisco's (NASDAQ:DFRG), Chuy's (NASDAQ:CHUY), Bloomin' Brands (NASDAQ:BLMN), Ignite (NASDAQ:IRG)
Of the recent restaurant IPOs, Cramer thinks the one to buy is Del Frisco's (DFRG), and even then, on a pullback. After Ignite (IRG) came public on May 10th, it rose 22% on the first day of trading, but since has fallen 29% on accounting issues. Cramer’s rule is never buy stocks with accounting irregularities, and it is not too late to sell Ignite.
Chuy's (CHUY) is in the Mexican casual dining space which has the advantage of serving alcohol. The stock has pulled back six points, but is growing at a 20% clip. However, the growth might not be sustainable, as the company reported a small 1.5% increase in same store sales. Since Chuy's is up 64% from its IPO and 39% from its first day of trading, Cramer would take gains; “I’m not paying 33 times earnings for a stock with comps that low.”
Bloomin' Brands (BLMN), which owns Outback Steakhouse and other restaurants, has met expectations with same store sales up 3%. However, the stock ran 13% the first day of the IPO and has gained 17%. Cramer would take gains, especially given fiscal cliff concerns.
Del Frisco’s is the steakhouse chain to buy, with 32 restaurants in 3 different categories. While investors are cautious about steak places, the stock is barely above its IPO price of $14.44. Del Frisco’s has virtually no debt, and with a modest number of locations, there is room to expand. The company raised guidance and has a sturdy 16% growth rate. While the stock is “pretty darn cheap,” Cramer would wait for a pullback and use limit orders.
CarMax (NYSE:KMX) versus AutoNation (NYSE:AN)
. Other stocks mentioned: General Motors (NYSE:GM), Ford (NYSE:F)
, AutoZone (NYSE:AZO)
Autos are roaring back, especially after Hurricane Sandy; it is estimated that 200,000 cars in the U.S. will need to be replaced. While this seems like good news for Ford (F) and General Motors (GM), the two companies have too much European exposure to make buying the stocks worth the risk.
Cramer compared CarMax (KMX), seller of used cars, to AutoNation (AN), a dealer in new cars. Both stocks are up 10% year to date, are trading at 15 times earnings and have each gained nearly 300% during the last decade. However, in the past 5 years AutoNation has dramatically outperformed CarMax, which reported a miss last September. Cramer likes both companies, but prefers CarMax, because now the used car market is looking better than the market for new cars. As many dealerships are recovering, the competition for selling new cars is likely to be vicious. Few new cars were built during the recession, and with production of autos ramping up, there is likely to be excess supply. However, the number of used cars is holding steady.
CarMax is expanding its store count from 110 locations to 330, and is a regional to national growth story. AutoNation, however, since it franchises stores, can’t put up new ones whenever it wants to. CarMax has announced a share repurchase program. Cramer would buy the stock on weakness as it declines.
Cramer took some calls:
) is a stock Cramer wishes he had recommended earlier. Cramer thinks the stock is still “terrific.”
Mad Mail: Omega Healthcare Investors (NYSE:OHI), Greenway Medical (NYSE:GWAY), Dynavax (NASDAQ:DVAX). Other stock mentioned: Walgreen (NYSE:WAG)
Omega Healthcare Investors (OHI) has an 8% yield that Cramer thinks is “too good to be true.” Cramer would avoid this REIT until there is some indication that the dividend is not going to be cut.
Greenway Medical (GWAY) is a healthcare technology company that signed a deal with Walgreen (WAG). However, the company sells at a multiple of 37, and is too expensive.
Dynavax's (DVAX) stock fell 47% on news from the FDA that it needs more safety information before approving its Hepatitis C drug. Cramer believes this is only a setback for Dynavax, and not a rejection, since 13-1 on the panel attested to the drug's effectiveness, and no safety issues were raised; the FDA simply wants more information. Cramer still likes Dynavax, because he thinks the selling is overdone.
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