Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday, March 18.
What Does Cyprus Have To Do With The Price of Bristol Myers (NYSE:BMY)? Stocks discussed: Banco Santander (NYSE:SAN), Vodafone (NASDAQ:VOD), Verizon (NYSE:VZ)
With the disaster concerning banks and ATMs in Cyprus, many bears are discussing apocalyptic scenarios for the banking system internationally. However, the Dow dropped only 62 points on Monday, much less than expected. Cramer thinks this is a clear indication that we are no longer in a scenario which has European news dominating U.S. stocks. Cramer pointed out that "end of the world" scenarios were also discussed over the downfall of Banco Santander (SAN), but the dramatic decline in the Spanish bank was an excellent buying opportunity. The news about Cyprus shouldn't be a shock, because the country has a history of poor bank regulation. As Cramer is wont to say in similar situations: "What does this have to do with the price of Bristol Myers (BMY)?" In fact, he thinks the defensive stock could be a buy.
Cramer took a call:
Are The Charts Signaling A Hike In Interest Rates?
Cramer didn't like what he saw while perusing stock charts this weekend. There were an excessive amount of "parabolic" charts, which showed stocks rising in a steep slope. The most parabolic movers were insurers and banks, both in industries that benefit from higher interest rates. Cramer thinks this could signal an interest rate hike, and is especially concerned, because there is a Federal Reserve Meeting on Wednesday. Defensive stocks look like they are finishing the parabola pattern, so Cramer would sell these stocks.
The Flying Oligopoly: US Airways (LCC), Delta (NYSE:DAL), United Continental (NYSE:UAL), Alaska Air (NYSE:ALK), Spirit Airlines (NASDAQ:SAVE), Hawaiian Holdings (NASDAQ:HA), FedEx (NYSE:FDX), Eaton (NYSE:ETN)
Cramer changed his 30 year bearish tune on the airline industry a couple of weeks ago, because everything he disliked about the sector finally seemed to change. With the announcement of the impending merger between US Airways (LCC) and American Airlines, the trend toward consolidation in the industry has reached its high point. Now there are only three major airlines competing for business, and they have the power to raise ticket prices and dramatically streamline operations. Delta (DAL) reported a profitable March quarter for the first time since 2000. U.S.Airways' stock has risen 17% in the weeks since the potential merger was announced. Cramer thinks LCC is best-of-breed and perhaps the best investment in the industry, but he also approves of buying other airlines on a price dip: Delta (DAL), United Continental (UAL), Alaska Air (ALK), Spirit Airlines (SAVE), Hawaiian Holdings (HA).
Cramer took some calls:
Cramer feels uncomfortable about owning FedEx (FDX) ahead of its earnings after it has run so much. He recommended finding a lower level to buy.
Eaton (ETN) is a great stock that has seen substantial gains. He would sell half and let the rest run.
While the natural eating trend isn't going away, stocks of Hain Celestial (HAIN) and Annie's (BNNY) have been punished lately. Annie's selloff resulted from recalls of frozen pizzas in January, because there was suspicion that there might be wire mesh in the pizzas from a broken device in a factory. No metal pieces were found, but the stock was punished, and is still 9 points off its high.
Hain Celestial (HAIN) suffered from a scathing article that alleged pesticides were found in its herbal teas, the company lacked organic growth and that CEO Irwin Simon's selling of his company's stock was questionable. Recently, JPMorgan refuted the bearish report. Hain Celestial factories and products were inspected and were found to be free of toxic chemicals, organic growth is robust, at 11%, and Irwin Simon was making understandable sales of stock options prior to expiration. Cramer prefers buying Hain to Annie's because the latter is more expensive. Annie's trades a multiple of 39 compared to a 22% growth rate, while Hain's multiple is 20 and its growth rate is 27%. In addition, Hain is a larger, more diversified player and its products are appearing in many supermarkets and big box retailers. Hain is expanding internationally, and 28% of its revenues are from overseas. Cramer is bullish on Hain.
Kimberly Clark (NYSE:KMB) Is Too Expensive
Cramer got out his Kleenex and bid farewell to KMB as a "Buy." KMB has long been respected for the strength of its brands, including Kleenex, and its reputation as a shareholder-friendly company with substantial buybacks and dividend raises. However, Cramer agrees with a Goldman Sachs analyst that KMB is just too expensive; it is trading at 17 times earnings with only a 7% growth rate. While its 3.5% dividend seems generous, it would be higher now if the stock hadn't risen so much. Cramer might consider buying KMB again, but at a much lower level.
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