Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday March 22.
8 Things To Watch In The Week Ahead: Dollar General (DG), Five Below (FIVE), Paychex (PAYX), Phillips Van Heusen (PVH), Accenture (ACN), Blackberry (BBRY). Cramer took some calls: Tibco Software (TIBX)
Dollar General (DG) management said the company was going to make less money per sale during its last report, and the stock was "obliterated." Since then, shares have recovered, and the group has regained its luster. Cramer would not buy the stock at its current level; a decline following earnings may be a buying opportunity.
Durable Goods and New Homes Data: Many people think the durable goods number might not be so hot, but Cramer is optimistic.
Case Shiller: Should corroborate the good news from the homebuilders' earnings reports; housing prices have been strong.
Five Below (FIVE) is up 30% this year and it might see a selloff because it has gained so much, especially if there is news of another secondary. Cramer would pick up some shares on a decline; "It has the best growth trajectory of any retailer."
Paychex (PAYX) has a 3.8% yield and has been creeping up each time it reports, because analysts tend not to like it, given the company's exposure to small business. However, Cramer has observed that PAYX has provided a buying opportunity on every major decline.
Phillips Van Heusen (PVH) is a stock the street has turned against, because analysts are wary of the Warnaco acquisition. Cramer thinks the worries are groundless, since the acquisition brings the entire Calvin Klein product line under one roof. Cramer would buy PVH on weakness.
Accenture (ACN) has been a "battleground" given the intensity of competition in the consulting sector. The last time ACN reported, its numbers weren't fantastic, but the stock rallied anyway. Cramer would buy some ahead of the quarter and more on a decline.
BlackBerry (BBRY): With the BlackBerry 10 just going on sale a few days ago, this report will not give a reading on the latest big news for the company. The stock fell because some believed the launch was weak, but this assessment came out before the release had begun in earnest. Cramer would buy any dip in BlackBerry.
Cramer took some calls:
TIBCO Software (TIBX) gave a very bad conference call last time around; "I hated this call," Cramer said. The stock was already in the penalty box when it reported, and now it has to report two good quarters before Cramer would even touch it.
Compuware Corporation (CPWR)
For Speculation Friday, Cramer discussed Compuware (CPWR), a $12 stock that is a likely takeover target and might find itself in the middle of a bidding war. The company rejected an offer when it was trading at $9 because the proposed takeover bid was too low, but said it intended to "carefully review any credible offer." CPWR has a clean balance sheet and has $133 million free cash flow. It raised its dividend, and it now yields 4%; a higher level than is seen in most tech stocks. While the stock has recovered since the recession, it is still down 60% from its 1999 level and is transforming itself into a growth tech company, thanks to its mainframe programs, application management and app development and cloud-based platform. The company will likely spin off its cloud segment; all of these divisions are growing at double digit rates. Cramer would be careful speculating in CPWR, and would wait for a pullback.
Cramer continued his week-long series on oligopolies by discussing the refining industry. While there seem to be too many players to consider refining an oligopoly, the barriers to entry are so staggering, that new competition for present players is unlikely. U.S. regulations make it virtually impossible to get a permit for a refinery, and even extending present refineries involves huge obstacles. There hasn't been a brand new refinery built in the U.S. since 1976, and at the same time, there is a domestic drilling boom. In addition, since refiners find it difficult to get approval to expand their operations, there is very limited competition between the current refiners, and virtually no chance of a price war. Refiners are benefiting from the price variation between West Texas Intermediate at $93 and Brent Crude at $108. Once the refiners buy the cheaper oil, they are able to refine it and sell it at much higher prices overseas. Cramer's favorite plays on refining are those companies that are right in the "bottleneck" and can benefit the most from these price differentials. HollyFrontier (HFC) has a great long-term record and has the strongest returns on capital. The company missed its February earnings, but the stock went higher. It has now pulled back and is buyable. Cramer also likes Chicago Rivet & Machine (CVR), which is run like an MLP and yields 10%.
Cramer took some calls:
Heckmann (HEK) requires patience, but it is worth hanging onto for the long run.
Petrologistics (PDH): Cramer doesn't usually like propane plays, but he thinks PDH might be alright.
Sandridge Permain Trust (PER): The yield is too high and is a red flag.
Mad Mail: BlackRock Kelso Capital (BKCC), Blackstone (BX), Emeritus (ESC), Nordic American Tankers (NAT), Stratasys (SSYS), Linn Energy (LINE)
BlackRock Kelso Capital (BKCC) invests in middle-market businesses and yields 10.4%. The dividend, while high, is not a red flag, because business development companies tend to have higher yields. However, Cramer prefers Blackstone (BX), because it has more upside and is more predictable.
Emeritus (ESC) is in the "sweet spot." It has pulled back more than 13%, and has a good entry point.
Nordic American Tankers (NAT) seems to be bottoming, along with the other shipping stocks. While Cramer thinks it will be awhile before NAT regains its former glory, "the turn is coming."
Stratasys (SSYS) is the best of the 3-D stocks, but its valuation is a bit rich.
Linn Energy (LINE): Cramer isn't worried about the number of shares sold short; he likes Linn.
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