Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday January 4.
7 Things To Watch In The Week Ahead: Celgene (NASDAQ:CELG), Biogen IDEC (NASDAQ:BIIB), Monsanto (NYSE:MON), Alcoa (NYSE:AA), Walgreen (WAG), Herbalife (NYSE:HLF), Chevron (NYSE:CVX), Wells Fargo (NYSE:WFC). Other stocks mentioned: Ulta Salon (NASDAQ:ULTA), Exon (NYSE:XOM)
Cramer discussed 7 things to watch in the week ahead:
JPMorgan Pharma Conference: This is perhaps the most important biotech conference of the year. Cramer wants to hear what Celgene (CELG) management says about approvals, and predicts CELG will be a great stock for 2013. Biogen IDEC (BIIB) had to withdraw a drug, but the stock barely moved. Cramer thinks there is a lot to like about BIIB.
Monsanto (MON) reports, and while its seeds have been selling successfully, the stock has had such a run that Cramer fears a pullback, no matter what management says.
Alcoa (AA) has been hit so hard that it is difficult to see how it could decline further. While Alcoa has so much going for it, with autos, construction and aerospace, its main headwind is the aluminum glut. Cramer wants to hear management discuss how Alcoa is going to cope with this problem and if it will be alleviated in the near future.
Walgreen (WAG) Analyst Meeting: WAG is unveiling its international initiative, and the drugstore cohort in general has been performing well. WAG has relatively easy comps to beat, and it may be a great story for 2013.
Herbalife (HLF) Analyst Meeting: Management will state its case defending HLF's business against accusations by shorts that HLF is a dubious scheme. Cramer says he doesn't remember another time the shorts were more determined to destroy a company, and while he doesn't recommend anyone buy this battleground stock, he would listen from the sidelines.
Chevron (CVX) Interim Update: Chevron is one of the Dow's worst performers, but it has a large amount of cash and a generous yield. CVX has been growing production. Cramer thinks CVX could be a buy after Thursday, because these updates often sound more bearish than the fundamentals are.
Wells Fargo (WFC) reports. Cramer thinks WFC is one of the most misunderstood companies. WFC used the great recession as an opportunity to triple its market share for mortgages; it now has 30% market share. The Street has been hard on WFC, because there is widespread belief it is overvalued. However, Cramer thinks WFC is going to have upside, particularly if the Fed raises interest rates. WFC is a buy if it gets hammered after its earnings.
Concerning investing in the current environment, Cramer said, "This is a treacherous time to act, but a terrific time to listen."
Cramer took some calls:
Ulta Salon (ULTA) was a great stock for 2012, but expectations are a bit high for Ulta. Cramer would let the stock come down in price before buying.
Exxon (XOM) has been performing poorly. Cramer prefers Chevron to Exxon.
Breaking up is often good to do if a company's parts are worth more than the whole. Cramer thinks Johnson Controls (JCI) might be a great break-up story, because it has three segments: Heating and air conditioning, auto supply and batteries, that don't seem to fit under the same roof. The company has been making acquisitions to make up for its exposure to the slow-growth auto parts industry, where there is substantial competition. Even though JCI's management has said nothing about splitting up the company, Cramer thinks that JCI could trade at a 27% premium if it does break up. One good reason for JCI spinning off businesses is that many of the segments are cyclical, which means they are more fairly valued according to projections in the out-years; as long as JCI is one company, it will continue to be unfairly valued according to near-term projections.
Cramer took a call:
Newscorp (NWSA) is splitting up into entertainment and publishing segments. Cramer owns NWSA for his charitable trust, and says he will hold onto the entertainment business and sell the publishing side of NWSA.
Cramer has been bearish on the optical equipment sector, but it may be time to buy these stocks, especially with the ramp-up in telco spending. A major player in this area is JDS Uniphase (JDSU). When it rose 7,000% between 1997 and 2000 in the dot.com era, Cramer said JDSU stood for "Just Don't Sell Us." After the dot.com bubble popped, JDSU stood for "Just Don't Sue Us." After a few a long lackluster period and the lowest inventory in 3 years, JDSU might be ready to be a major supplier in the "telco arms race," with Verizon (VZ), Sprint (S) and other carriers increasing their budgets. Around 46% of JDSU sales are optical and 40% deal with testing and measurement, a business that is 90% levered to increase in sales. JDSU sells at an average of 22% lower than its competitors. Cramer would buy JDSU ahead of an investor conference in 2 weeks, but would use limit orders.
Natus (BABY) does screening for newborns and is also a good diagnostics play. The company has a mere $355 million market cap and is relying on acquisitions, while its legacy products lag. BABY might be hurt by uncertainty over medical device tax increases and decreased orders from hospitals. Cramer thinks Johnson & Johnson (JNJ) is safer.
W.R. Grace (GRA) rose 46% last year on rising hopes that its decade long asbestos lawsuit will be resolved. Cramer is concerned that estimates are too high for GRA, and it could get hit if it guides lower.
Taser (TASR) the stock has run up 55% in the last 3 months on an upgrade cycle, and has reported better than expected sales. Cramer would wait for a pullback to $8 before buying. Since this stock trades on contracts, it can be particularly hard to game.
Burger King (BKW) is doing better than expected and McDonald's (MCD) is doing worse than expected. Cramer would stay away from the burger wars.
What To Do With Google? (NASDAQ:GOOG). Other stocks mentioned: Microsoft (NASDAQ:MSFT), Facebook (NASDAQ:FB)
After Google's (GOOG) spectacular earnings miss last quarter, with a drop of 100 points, Google seemed headed to the penalty box. However, the stock is creeping back almost to where it was before the bad quarter, and Cramer thinks there may be a few reasons to hold onto Google, or buy it on a pullback.
1) The FDC let Google off the hook, even though it owns 70% of the search market. This wasn't the same scandal that Microsoft (MSFT) faced more than a decade ago over accusations that it is a monopoly. Google was able to prove that it delivers a superior service and that it does not use coercive strategies to force the hands of customers.
2). Advertising could be getting stronger for Google, and its European business seems to be turning around.
3) Google has barely begun to monetize smartphones, and this could happen in 2013.
With Facebook (FB) showing that it can make the transition to mobile, Cramer doesn't think Google will be far behind.
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