Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday January 23.
Apple (AAPL) Is Not A Momentum Stock. Other stocks mentioned: Amazon (AMZN), Netflix (NFLX), Johnson & Johnson (JNJ), LinkedIn (LNKD)
The market is not always consistent or rational; Johnson & Johnson (JNJ) rose even after news about failed hip implants. There is a similar inconsistency with the way the bulls love high multiple stocks, such as Amazon (AMZN), Netflix (NFLX), and LinkedIn (LNKD) and forgive their high valuations, while Apple (AAPL), which beat earnings by 33 cents, reported what The Street considered a disappointing quarter because revenues were light. It is clear that Apple now has more competition for its products, it lacks the "OMG" factor and perhaps Apple now, is "just another stock." Cramer thinks that Apple has lost its momentum, and might be more appropriate in the category of a JNJ rather than an Amazon. "I'm not pounding the table to sell Apple," Cramer clarified, it is still a long-term investment, but Apple has no momentum.
CSX (CSX), Norfolk Southern (NSC), Kansas City Southern (KSU), Trinity (TRN), American Railcar (ARII)
There is a roaring bull market in railroads; CSX (CSX) and Norfolk Southern (NSC) rose after they reported upside surprises. Kansas City Southern (KSU) delivered an "unbelievable number," and the stock has rallied. KSU is up 20% from where Cramer recommended it 2 months ago. What is driving this bull market in rails is the increase in orders for new rail cars, especially tank cars that transport oil and gas. While there is a pipeline buildout going on, there are still many gaps that need to be filled by rails, and the rails allay some safety and environmental concerns about pipelines.
The companies that have the most exposure to tank cars are American Railcar (ARII), and Trinity (TRN). Trinity is a best-of-breed company, but ARII is a pure-play, with 20% of its sales from tank cars. Investors should decide whether they want a broad exposure that Trinity provides (also to construction and housing) or pure-play ARII; both stocks are ready to run.
Pfizer (PFE), Zoetis (ZOET)
Cramer likes good breakup stories, and the latest is Pfizer (PFE) spinning off its animal health business into a company called Zoetis (ZOET). The IPO is expected to price by next Thursday, January 31, and Cramer wants viewers to get in on the IPO, but would not recommend selling Pfizer on the news of the IPO. While Pfizer will still own 80% of Zoetis, the deal should be lucrative, because biotech spinoffs tend to be successful. Pfizer has 19% market share in the animal health industry, and makes medicines and vaccines. Cramer would jump into the Zoetis deal, as long as it isn't priced higher than $26.
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