Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday February 27.
J.B. Hunt Transportation Services (NASDAQ:JBHT), Kansas City Southern (NYSE:KSU), Boeing (NYSE:BA), Cummins (NYSE:CMI), Eaton (NYSE:ETN), U.S Airways (LCC), Delta Air Lines (NYSE:DAL), JPMorgan (NYSE:JPM), Joy Global (NYSE:JOY), Home Depot (NYSE:HD), Macy's (NYSE:M), Eaton (ETN), Wal-Mart (NYSE:WMT), Brinker (NYSE:EAT), Darden Foods (NYSE:DRI), Panera Bread (NASDAQ:PNRA), Chipotle Mexican Grill (NYSE:CMG), Radian (NYSE:RDN), Huntington Ingalls (NYSE:HII), Lockheed Martin (NYSE:LMT), Netflix (NASDAQ:NFLX), Apple (NASDAQ:AAPL), Coach (NYSE:COH), Google (NASDAQ:GOOG), 3D Systems (NYSE:DDD), ADT Corp (NYSE:ADT), UPS (NYSE:UPS), FedEx (NYSE:FDX)
The Dow soared 175 points on Wednesday, and Cramer thinks the index is rebutting arguments that the economy is faltering. Durable goods numbers were strong, demand for machinery is rising by the greatest amount in 2 years, and prices for container board (a significant gauge of consumer demand) are rising, as the price tag is also going higher on sheet metal. Cramer commented that price hikes for container board and sheet steel do not usually happen in a weak economy.
Trucking is strong, as shown by the 4 point jump for J.B. Hunt (JBHT). Cramer bought more UPS (UPS) for the charitable trust, and FedEx (FDX) is going strong. Kansas City Southern (KSU) rose $6 on management's plans to expand its rail system to transport more oil. Industrial stocks, Cummins (CMI) and Eaton (ETN) rose, and surprisingly, Boeing (BA) is close to its 52-week high in spite of problems identified with the Dreamliner; Cramer thinks these issues will be corrected in the near future, and when they are, BA may go even higher. Although Cramer was famously bearish on airlines for many years, consolidation in the industry has made him bullish, and he is recommending U.S. Airways (LCC) and Delta (DAL). Italy can't be affecting the financial sector in America too dramatically, given JPMorgan's (JPM) bullish projections for growth at its analyst meeting.
Doubts about China were countered by Joy Global (JOY) management's comments on strong performance in China. Both high-end and low-end retail names were rallying, with Macy's (M), Home Depot (HD), WalMart (WMT), Darden (DRI), Brinker (EAT), Panera (PNRA), Chipotle Mexican Grill (CMG) higher on Wednesday. Radian's (RDN) secondary offering brought the stock higher, and this is good news for housing, as well as Fed Chairman Ben Bernanke's commitment to continue buying bonds.
Cramer took some calls:
Ariad Pharmaceuticals (ARIA) produces orphan drugs for bone marrow diseases and rare forms of leukemia. Because these are rare conditions, ARIA can charge more for these treatments. Dr. Harvey Berger discussed the recent approval of Iclusig, which took only 5 years to develop from the time the first trials began to FDA approval (the process can often take twice as long). The drug could be worth $1 billion in 5 years. Although Pfizer (PFE) also has a treatment for rare leukemia, Dr. Berger is confident ARIA can compete, because its entire sales department is devoted to promoting Iclusig. Dr. Berger thinks the drug will be successful globally.
Linn Energy (LINE) is a high yielding MLP with a 7.7% distribution [for 401k or IRAs, Cramer recommends Linn Co (LNCO), because of the difference in the tax structure.] LINE is purchasing Berry Petroleum, which should add significant assets to the company. LINE has been criticized for hedging 100% for 4 to 6 years. Ellis defends the practice as necessary to operating the business, as it gives the company little if any commodity price risk. Ellis also defended the company's non-GAAP accounting methods. LINE has also acquired assets from BP, which are likely to create value for the long term.
CEO Interview: Richard Pops, Alkermes (NASDAQ:ALKS)
Alkermes (ALKS) develops injectable treatments for diabetes, Multiple Sclerosis, substance abuse and mental illness. Its diabetes treatment requires only a weekly injection and its substance abuse treatment, which cuts off cravings as they arise in the brain, needs to be injected once a month. ALKS is developing an injectable monthly anti-psychotic medication, which should be a vast improvement over medicines that need to be taken orally every day, since many patients who suffer from mental illness often forget to take their pills or think they do not need them. The new treatment will eliminate the cravings that cause schizophrenics on the traditional treatment to gain weight dramatically.
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