Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday January 11.
12 Earnings To Watch In The Coming Week: PPG Industries (NYSE:PPG), Lennar (NYSE:LEN), JPMorgan (NYSE:JPM), Ebay (NASDAQ:EBAY), Kinder Morgan Partners (NYSE:KMP), Bank of America (NYSE:BAC), Citigroup (NYSE:C), Capital One Financial (NYSE:COF), Intel (NASDAQ:INTC), General Electric (NYSE:GE), Johnson Controls (NYSE:JCI), Schlumberger (NYSE:SLB). Other stocks mentioned: Broadcom (BRCM), Ascena (NASDAQ:ASNA), Peabody (BTU), Joy Global (NYSE:JOY).
PPG (PPG) is a stock that Cramer hopes will come down, because it is a solid investment. PPG sold off its commodity chemicals business. “It remains one of the best-run chemical companies on Earth.” Cramer would buy on any weakness.
Lennar (LEN) is levered to a strong, long-term trend, but tends to sell off when it reports. Cramer would buy on a decline.
JPMorgan (JPM) is a read on the global economy, and management is usually straightforward on its conference call. Cramer would not trade the banks this week, but would listen to earnings.
eBay (EBAY) was a stock Cramer’s charitable fund held. The fund took profits in eBay, but it kept going higher. eBay got hammered last time it reported, because The Street failed to appreciate the full value of Paypal. If the same thing happens again, Cramer would buy eBay.
Kinder Morgan Energy (KMP) finished 2012 terribly because of worries about taxes and the fiscal cliff. Even though worries abide, with concerns over the debt ceiling and oil prices, look for an entry point with a yield above 6%.
Bank of America (BAC) is a good story long-term, but when expectations are high, it tends to disappoint. BAC got 2 downgrades last week. Short-term, BAC might see a decline, but long-term, it is good.
Citigroup (C) is giving its first conference call with its new CEO. Cramer wants to hear what he has to say about the state of the business.
Capital One (COF) should report “one of the best quarters of any financial.” The company has a strong credit card business and has made a successful acquisition.
Intel (INTC) should be hurt by computer sales down 6% last year. “There is more to life than a slow-yielding slow-growing company.” Cramer prefers Broadcom (BRCM).
General Electric (GE) could beat expectations after the bar was set low by management. “GE could be a standout next week.” Cramer’s charitable trust has a substantial position in GE.
Johnson Controls (JCI) reported better-than-expected numbers last time. Cramer thinks JCI should break itself up to bring out value. He predicts the stock could go up 10 points on such an announcement
Schlumberger (SLB) is not expected to report a strong quarter, with worries over oil prices and scarce resources. However, the stock is above where it was when it pre-announced weak earnings. Cramer doesn’t expect a big pop, but it does have solid fundamentals and is a good company.
Ascena (ASNA) didn’t have the “right stuff” in its stores. Cramer thinks $16 is too low to sell, since it was at $23. “This was very disappointing. I share your anxiety.”
Peabody (BTU) is the coal company most levered to China, but Cramer prefers Joy Global (JOY), which has run, but is a buy if it pulls back.
The analysts are divided about Quicksilver (ZQK), the apparel play that caught an upgrade from Goldman Sachs from Neutral to Buy, but Piper Jaffrey downgraded it from Buy to Neutral. ZQK is an outdoor sports/lifestyle company that makes clothing for surfers and skaters, or for those who just want to look fashionable. ZQK has been stagnant for a long time, but the Goldman Sachs analyst thinks the new CEO, Andrew Mooney, who turned around Disney’s (DIS) consumer products division and was a former head of marketing at Nike (NKE) will be able to create value for ZQK. The company has been cutting costs and inventory, but its gross margins are still lackluster. Piper Jaffrey pointed out the retailers that sell Quicksilver’s products are not reporting strong same store sales from the holidays. ZQK’s record has been inconsistent; the stock fell 13% after its disappointing earnings, but has recently risen 33% in a month. Although Cramer thinks the new CEO might turn the company around, Cramer would not buy Quicksilver until it pulls back and until there is evidence of a comeback.
Cramer pitted two top performers of 2012, Bank of America (BAC), up 109% and Pulte Group (PHM), which has risen 188%, to see which stock is worth investing in for 2013. Bank of America got the majority of votes from viewers who Twittered Cramer, but Cramer prefers Pulte for 2013. Both stocks are in sectors that have been beaten down and are ready for upside. Although rates are low for loans and loan growth hasn’t been aggressive, there has been improvement in most banks, especially with resolutions to mortgage putbacks and the settlement of many legal issues. BAC management says it will be able to “turn on the loan growth jets” and might be in a position to return capital to shareholders.
The housing sector is still in the early innings of a multi-year turnaround; many homebuilders have risen dramatically. With high rents and low mortgage rates, more people are going to start buying homes again. Pulte is seeing upside in revenue growth. Bank of America is also looking stronger, but with two downgrades in a week, BAC seems less steady than Pulte. While neither stock is best-of-breed in its sector (Cramer’s favorite picks for the sectors are KeyCorp (KEY) and Toll Brothers), he narrowly prefers Pulte for 2013 to BAC.
3-D Systems (DDD) is in a hot sector, 3-D printers; “DDD is a heck of a lot better than 85% of the companies I follow.”
Cynosure (CYNO) makes treatments for cellulite, hair and tattoo removal. Its tattoo removal product was approved from the FDA last year. The stock doubled in 2012, and expectations are high. Wait for a pullback before buying.
Accretive health (AH) is a play on hospital revenue collection and regulation compliance. This stock had a tough year last year, and is trading at a premium. Although many people think it is a buy on Obamacare, Cramer prefers Athenahealth (ATHN).
Just Energy (JE) sells natural gas and electricity, and there are concerns about commodity prices and weak cash flow. Its 12.5% dividend is a red flag. “Just say ’no’ to Just Energy.”
Darden (DRI) needs stronger growth and has not been putting up good numbers.
Sanofi-Aventis (SNY): SNY “makes great vaccines and is a great company.”
Apple (AAPL) should not be traded on upcoming announcements until it reports its quarter. The stock has been “jumping up and down,” and the company missed the last two quarters.
Amazon (AMZN) is a buy on any decline, and should reach $300.
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