Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday April 5.
13 Things To Watch In The Week Ahead: CarMax (KMX), Bed Bath and Beyond (BBBY), Pier One Imports (PIR), Alcoa (AA), Wells Fargo (WFC), JPMorgan (JPM), ImmunoGen (IMGN). Other stocks mentioned: Best Buy (BBY), Toll Brothers (TOL), Radian (RDN), Global Payments (GPN), Mastercard (MA), Visa (V)
Disappointing employment numbers on Friday caused the Dow to drop 177 points in the morning. Thanks to overseas buyers and their downward effect on interest rates, REITs and pharma became more attractive, and industrials had already fallen; the Dow reversed upward and finished the day only 41 points down. Cramer thinks the blame for the bad employment number lies squarely at the feet of Washington and sequester fears that prevented hiring. Cramer thinks not all is lost, even on a negative number, but if there is another sluggish employment number combined with sequester and the "Sell in May" crowd, it may be a rocky time for stocks. If earnings season isn't strong, good dividends won't come to the rescue.
Chinese Inflation Numbers: "China is part of the problem," given that its housing bubble has been bursting. Bulls needs to see low inflation numbers and signs of a stimulus. "The rally in minerals and materials tells me that someone believes something is up in China. They could be wrong, but that is what the rally was all about."
German Industrial Production: With terrible European retail sales numbers, this data point, if positive, could provide some hope.
Japanese Federal Reserve Minutes: The Japanese have been fighting deflation by any means necessary, perhaps too aggressively. This number warrants attention.
Ben Bernanke Speaks At The Federal Reserve Market Conference: Cramer has faith in the Fed Chairman, and believes he might unveil new ideas to counter the bad employment numbers. A commitment to low interest rates is good for housing. Cramer would buy Radian (RDN) and Toll Brothers (TOL) on this speech.
Alcoa (AA) does not tend to have a strong first quarter earnings report. While some of its end markets are doing well, the numbers may be terrible. The company is well-run, but sadly, that hardly matters, because Alcoa makes aluminum, and right now, aluminum is cursed. "I wish they made plastics."
Chinese Merchandise Trade Balance Data: China is stymied, because the country has not been able to export much to Europe because of the laggard economy there, and the Japanese have been flooding China with merchandise. Don't expect great news.
CarMax (KMX) is a classic "tell" of the underlying strength of the economy. It might help repudiate the bad employment numbers. Cramer predicts management will say that sales were strong in March.
Bed, Bath & Beyond (BBBY) has given 3 weak earnings reports, but the stock rebounded after the last one. Many had given up on Best Buy (BBY), but it made a comeback. Cramer thinks BBBY might be as resilient as BBY.
Unemployment Claims: Cramer recommends caution, because this number may be "horrendous."
Pier One Imports (PIR) reports. It might not be able to counteract poor employment numbers, but strength in this company could brighten the picture a bit.
JPMorgan (JPM) and Wells Fargo (WFC) report earnings. If these banks say they see a drop in private lending, but if they are compensating through a growth in commercial lending, these stocks can stabilize and go higher. Cramer doesn't like either stock, particularly JPM, which has risen significantly.
Immunogen (IMGN) Analyst Meeting: Cramer likes IMGN, not least because it is somewhat resistant to a slow economy.
Cramer took a call:
CEO Interview: Nick Schorsch, American Realty Capital (ARCP)
American Realty Capital (ARCP), a REIT, has risen 13% since Cramer last spoke the the CEO Nich Schorsch last month. It yields 6.1%, and management recently raised the dividend. The company made an offer to take over Cole Credit Property for $9 billion in shares. After Cole rejected the first offer, ARCP raised it to $9.7 billion with a 60% cash payout. Following a second rejection and a statement from Cole that the deal is not in the best interests of its shareholders, Cramer spoke to ARCP's CEO.
Schorsch discussed the fact that the acquisition, if it does happen, will be 10% accretive to ARCP. He pointed out that while Cole is a larger company, it has $3.6 billion in debt, compared to ARCP's $750 million debt. The company already has sufficient financing for the merger. ARCP's earnings growth is strong and is projected to grow by 16% next year. With earnings growth may come dividend growth, regardless of whether the Cole deal pans out. Cramer likes ARCP, "even up here."
Opko is a revolutionary diagnostic company that has risen 62% since Cramer recommended it in November of 2012, when 20% of its shares were sold sort. It is up 10% since January. The company has a prostrate cancer diagnostic test which can reduce the number of false positives that occur in current tests. False positives, in addition to unmeasurable cost of emotional anguish, lead many people to undergo invasive and expensive tests that waste $2.5 billion per year. Opko's tests can reduce the number of false positives by 50%, and the test could bring $1.8 billion in peak revenues. Other indications may be possible for this test. It has been launched in Europe, and is expected to be available in the U.S. during this quarter. The company also has tests for lung and pancreatic cancer. It has a treatment for nausea for chemotherapy patients and 2 fully owned drugs in late-stage testing. Opko has an early-stage treatment for Parkinson's. CEO Dr. Philip Frost has the "Midas touch"; in the last 30 years, he has founded and sold 2 biotech companies. Frost owns 44% of Opko. The stock has been hot, so Cramer would wait for a pullback.
Exact Sciences (EXAS) is a very speculative biotech company that is developing a non-invasive stool test for colorectal cancer. This test might do away with the need for a colonoscopy. The test could generate a billion in peak sales. Cramer emphasized that this is not a stock for the risk-averse. The stock is down 6% and is 2 points off its high, so it can be bought at its current level. Data should be released on the test this year, and approval is expected in 2014.
Cramer took some calls:
AMN Healthcare (AHS) is an opportunity, since it has dropped; "You've got a winner."
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