Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday February 26.
The Single Best Earnings Call of 2013 So Far: Home Depot (HD). Other stocks mentioned: Weyerhaeuser (WY), Eaton (ETN), Scotts Miracle-Gro (SMG), Masco (MAS), Fortune Brands (FBHS), Lumber Liquidators (LL), Whirlpool (WHR), Five Below (FIVE), Stanley Black & Decker (SWK)
Cramer urged viewers to pay more attention to domestic themes and not to be distracted by woes in Italy. Home Depot (HD) has reported "the single best earnings of 2013," and its strong performance is a testament to the housing rebound. Management reported a 7% rise in same store sales, a 34% dividend increase and a substantial buyback. Since the stock, which Cramer owns for his charitable trust, has run up $3, it is now a bit too pricey, but Cramer would look at other housing plays that have pulled back. Stanley Black and Decker (SWK) is down a bit, and while it has European exposure, Cramer thinks it can be bought. Charitable trust holding, Weyerhaeuser (WY) is the largest timber company in the U.S. and has a strong homebuilding segment. The stock has dropped 10% since its last quarter, although the fundamentals are good. Eaton (ETN) is a great way to play the electrical theme. While HD management said gardening was strong, Cramer thinks Scotts Miracle-Gro (SMG) is still in the penalty box after reporting a few disappointing quarters. Masco (MAS) has pulled back and may be worth buying. Cramer also likes Fortune Brands (FBHS), Lumber Liquidators (LL) and Whirlpool (WHR).
Cramer took some calls:
Five Below (FIVE) is a stock Cramer has been "pushing hard," but at $39, it might now be too high. He would wait for a pullback.
CEO Interview: Chip Johnson, Carrizo Oil & Gas (CRZO)
Carrizo Oil & Gas (CRZO) has made aggressive strides into increasing its exposure to oil and away from natural gas. Around 80% of its revenues now come from oil. The company has been downgraded, but it is performing well, reporting a 19 cent earnings beat recently, a dramatic rise in revenues, a 58% increase in proven reserves and a major ramp-up in production. Cramer asked CEO Chip Johnson how the company was able to make the transition to oil so quickly, and he responded that since the company had already done significant research into the best areas to find oil, "we were able to tie up acreage quickly and start drilling." CRZO transports its oil to places where it can fetch the higher Brent crude rate, and keeps production costs low enough that its margins are at $72 per barrel. While the balance sheet has been an issue for CRZO, Johnson said CRZO is cutting down on its capital expenditures and is growing production. Its wells have an 80% rate of return, and 95% of its oil is hedged for 2013.
Cramer once again consulted Carolyn Boroden of FibonacciQueen.com about where the S&P 500 and some crucial stocks may be headed. Boroden predicted successfully the moves in the index last year, and says that the S&P 500 can go higher as long as it stays above 1353, although short-term pullbacks are likely. Cramer discussed Boroden's predictions for 3 stocks: Amazon (AMZN), Michael Kors (KORS) and Schlumberger (SLB).
Amazon hit a ceiling and has been declining, but Boroden sees a buyable pullback at $253 or $255. If Amazon declines further, it could be worth buying at $236 or $239. She suggests waiting to see if the stocks hold these levels before buying.
Michael Kors is pulling back to $66, and Boroden sees three zones of support: $57.87-57.58, $53 or $49. Cramer thinks it is safe to buy KORS at the first level, given the strong fundamentals.
Schlumberger is at $76. A key level is $72-74.80 and at $70. Cramer sold SLB for his charitable trust, but he would buy it again at one of these key lower levels.
Cramer took some calls:
Gap (GPS) is providing investors with a good entry point.
Yahoo (YHOO) may be turning around under the leadership of CEO Marissa Mayer. Cramer believes in Yahoo.
CEO Interview: Dan Junius, ImmunoGen (IMGN)
Immunogen (IMGN) creates technology that targets cancer cells while leaving the healthy cells in the body unharmed. IMGN has seen some success recently, as 5-10 oncology companies license its products and the FDA approved Kadcyla, its treatment for late stage breast cancer. The stock sold off on the news because its partner, Roche, is going to be making the lion's share of the royalties. In spite of this dip, the stock has rallied 20% since Cramer got behind it the last time CEO Dan Junius appeared on Mad Money. Junius said that even though the company will not make a large amount from royalties for Kadcyla, he sees this drug as a first step, since the company has an early stage breast cancer drug in the pipeline. IMGN expects clinical data for its ovarian cancer drug later on in the year. It is also working on a small cell lung cancer drug, the first of its kind in 25 years. "IMGN has been a winning stock and has been producing life-saving medicine," said Cramer.
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