Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday January 14.
The IPO That Made a Ruckus (NYSE:RKUS)
The IPO scenario often plays out the same way. The stock rises dramatically on its opening day, only to fall back down in the aftermarket. It may be worth getting in to such deals, if shares are available, and selling immediately after the pop. However, Ruckus (RKUS) has had the opposite story. The stock came public at $15 on November 15th only to drop to $12.25 the same day. Part of this disappointing performance could have been the post-election obsession with the fiscal cliff bogeyman. However, since then, the stock has run 44%, and is trading at $21. RKUS is revolutionizing wifi, and is making interference-resistant systems and antennae to ensure there is no interruption in wifi service. The company has strong exposure to the enterprise space, and allows companies to install fewer wifi points, because the signal is so effective. RKUS is growing at an annual rate of 20%, and while this might be a reason to buy, Cramer would wait for a pullback before buying RKUS, since the stock has run so much.
iShares FTSE China 25 Index ETF (NYSEARCA:FXI), Coach (NYSE:COH), Cummins (NYSE:CMI), Starbucks (NASDAQ:SBUX), Starwood (NYSE:HOT), Nike (NYSE:NKE), Wynn Resorts (NASDAQ:WYNN), Celgene (NASDAQ:CELG), Allergan (NYSE:AGN), Ford (NYSE:F), General Motors (NYSE:GM), Banco Santander (NYSE:SAN), Royal Bank of Scotland (NYSE:RBS). Pepsi (NYSE:PEP), UPS (NYSE:UPS), FedEx (NYSE:FDX), Walgreen (WAG), CVS Pharmacy (NYSE:CVS)
While the name of the game in 2012 was to buy stocks with mainly domestic exposure, the situation has reversed, with good news from Europe and China. On increasing growth in China, iShares FTSE China 25 Index ETF (FXI), Coach (COH), Cummins (CMI), Nike (NKE) and Starbucks (SBUX) should see upside. Starwood Hotels (HOT) is adding 100 new locations in China, and Wynn Resorts (WYNN) is still a great play on Macau.
Celgene (CELG) and Allergan (AGN), which had been ailing in Europe, are on the road to recovery, along with Ford (F) and General Motors (GM). Domestic banks were the financials to buy in 2012, but now Banco Santander (SAN) and the Royal Bank of Scotland (RBS), which received an upgrade from JPMorgan, are better choices.
Cramer took some calls:
Pepsi (PEP) has great management, and Cramer is confident PEP will report a good quarter. He would own some shares going into earnings.
Walgreen (WAG) is "terrific," but a better bet is CVS Pharmacy (CVS), because it reported strong numbers.
Why Masco (NYSE:MAS) Should Merge With Fortune Brands Home & Security (NYSE:FBHS). Other stocks mentioned: Home Depot (NYSE:HD), Lowe's (NYSE:LOW). Weyerhaeuser (NYSE:WY), Plum Creek Timber (NYSE:PCL)
2013 may be the year for mergers. M&A activity is at the highest level in four years, and this trend should continue for 2013. Cramer thinks Masco (MAS) should buy Fortune Brands Home & Security (FBHS) to take advantage of the housing rebound. 2012 was the best year for housing starts in 4 years, and when new households are established, there is a greater demand for sinks, cabinets, locks and security systems. Both stocks will likely do well even if there is no merger, but if the companies combine by the end of the year, the resulting company can streamline costs by cutting duplicate divisions and be in a better position to compete against Home Depot (HD) and Lowe's (LOW). Fortune Brands can give Masco much-needed exposure to China, and the two can create a house of winning brands under one roof. Both stocks rallied in 2012, but have more room to run on the housing boom and a potential merger.
Cramer took some calls:
Are you backing away from Apple (AAPL), or is Apple backing away from being Apple? After the passing of famed CEO, Steve Jobs, Cramer declared that Apple was "Just another stock," but reiterated his bullish recommendation as the stock rose 200 additional points. However, there may be reason to believe that Apple may indeed become "just another stock." Questions have been raised about demand for its new products, and its new iPhone is losing market share.
Cramer sold half of his position in Apple for his charitable trust on the release of its iPhone 5. The phone had an additional plug that many customers thought was unnecessary, and Apple made the mistake of getting rid of the popular Google (GOOG) maps for the phone and replacing it with its own less successful App. Walter Isaacson, author of Steve Jobs' biography, has intimated that Apple's pipeline is no longer remarkable and there may not be anything huge on the drawing board. While Apple is cheap, trading at 10 times earnings, an inexpensive stock that has disappointed on earnings twice in a row is not an eye raiser. It might be worth holding on to some shares of Apple for the long term, but for now, the company seems to have run out of steam.
While late in 2012, many gave up on Hewlett-Packard (HPQ), Research in Motion (RIMM), Avon Products (AVP) and Best Buy (BBY), the stocks are up significantly so far in 2013. RIM might be seeing gains because it could be taking market share from Apple. Hewlett-Packard had declined so much in 2012 (44%) that it just may not be able to go any lower, especially if the company breaks itself up. Avon Products, with a new CEO, might see an upside or a takeover bid. Best Buy (BBY) reported improved same store sales. Cramer thinks that, since there is no hard data to explain these moves upward, the stocks are vulnerable to dropping back down, and he would stay on the sidelines. Dell (DELL), which attracted bearish sentiment in 2012, is buying back stock and might be a takeover target. While Cramer doesn't usually recommend a stock based on a potential takeover, he believes in Dell's management, and it might be cheap enough to buy here.
Jim Cramer's Action Alerts PLUS: Trade right alongside a Wall Street pro! Start your 14-day FREE trial today.
Get Cramer's Picks by email - it's free and takes only a few seconds to sign up.