Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday April 4.
Economists Don't Know Jack About Stocks: Panera (NASDAQ:PNRA), VF Corp. (NYSE:VFC), Macy's (NYSE:M), Time Warner (TWC), Pfizer (NYSE:PFE), Dominion (NYSE:D), Kimco (NYSE:KIM), Tanger (NYSE:SKT), Eastgroup (NYSE:EGP)
"Economists don't know jack about stocks," said Cramer, who criticized economists for looking only at macro data to make conclusions about how individual stocks are going to behave. "They can't invest their way out of a paper bag." Cramer pointed out that for every dire prediction made by a financial sage, there are positives to outweigh the negatives. The pessimists talk as if the average American is no better off than four years ago, but housing prices are going up, food prices are steady, thanks to the lack of commodity inflation, and natural gas, while it has increased in price, is still helping average people save on their heating bills. The payroll tax merely returned to a former level, and was not a fierce increase, and dividend tax increases weren't as terrible as feared. Could the economic situation be dire when Macy's (M) and Panera (PNRA) are reaching the all-time high list, along with VF Corp. (VFC) and Time Warner (TWC)? While bears point out gains in Pfizer (PFE) and Dominion (D), defensive stocks, might be an indication of worry about the economy, the most economically sensitive sector, housing, is seeing dramatic increases among homebuilders and Real Estate REITs. These REITs offer high yields and steady revenue streams. Cramer likes Kimco (KIM), Tanger Factory Outlets (SKT) and Eastgroup (EGP).
Apple (AAPL) is the deposed captain of the Nasdaq 100, and other tech stocks have mutinied. However, it seems that the Nasdaq 100 might well be a sinking ship, and it might be time to get off of it. Apple, thanks to its massive market cap, makes up 13% of the Nasdaq 100, but lately Apple has been declining, down 19% so far this year, and the Nasdaq 100 is up 5%. The correlation between Apple and the Nasdaq 100, represented by Powershares QQQ ETF (QQQ), has shifted, and now Apple "no longer matters to the Nasdaq" as other tech stocks are gaining more importance and gaining share from Apple.
However, this does not mean that the QQQ will see further upside. Technical analyst Mike Collins of RealMoney.com predicts a 3-5% pullback for the QQQ. The daily chart is showing a topping out process as it makes a double dip pattern, a reliably bearish sign. The momentum indicator shows that the QQQ is consistently approaching the overbought territory. The QQQ has shown this pattern before, and each time, it has fallen a few percentage points. This time, the drop might be more dramatic, because it is showing a wedge pattern that indicates either a breakout or a breakdown, and the latter is more likely than the former scenario, given the other bearish patterns. The weekly chart shows the ETF making lower lows and lower highs. Collins not only wants out of the QQQ, he wants to short it. While Cramer tends to focus more on fundamentals, he says he doesn't like a chart that looks this bad.
ImmunoGen (IMGN) is a small speculative biotech with a $1.3 billion market cap. The stock has doubled since Cramer recommended it in November 2009, and may have more room to run. The company makes treatments that target cancer cells and leave healthy cells alone. The company has 9 partnerships in its drug development. Its breast cancer drug, developed with its partner Roche, was approved by the FDA. The drug is expected to generate $6.5 billion peak sales by 2020, but since IMGN has a royalty agreement with Roche that gives the latter company the lion's share of the profits, IMGN will see limited upside from the drug. However, the FDA approval validated the company's technology, and IMGN has 5 drugs in the pipeline, and it owns 100% of each drug. The stock has run 21% since the beginning of the year, and Cramer would wait for a pullback before buying. If it declines before its Analyst Meeting on April 12, it might be worth playing off this catalyst.
Seattle Genetics (SGEN) has seen a 50% gain since Cramer recommended it last June. The company makes treatments with targeted antibodies to attack cancer cells. It gained FDA approval for a lymphoma drug, but it is only approved as a second-line treatment. SGEN has late stage trials so the treatment can be approved as a first-line treatment. The company also has other cancer drugs in the pipeline, but presently, it has only one drug and no major approvals expected for a year. Those who want to buy it should wait for a pullback.
Onyx (ONXX) has treatments on the market for liver, kidney, thyroid, breast and colorectal cancers. While it shares royalties with other companies, the drugs should produce significant revenue for Onyx. This stock is 6 points off its high, and is a buy at its current level.
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