Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday April 12.
16 Things To Watch In The Week Ahead: Citigroup (NYSE:C), Google (NASDAQ:GOOG), General Electric (NYSE:GE), Intel (NASDAQ:INTC), Microsoft (NASDAQ:MSFT), Coca-Cola (NYSE:KO), Johnson & Johnson (NYSE:JNJ), Core Labs (NYSE:CLB), Kinder Morgan Partners (NYSE:KMP), The Gap (NYSE:GPS), Union Pacific (NYSE:UNP), Chipotle Mexican Grill (NYSE:CMG), Honeywell (NYSE:HON), Under Armour (NYSE:UA), Kimberly Clark (NYSE:KMB), McDonald's (NYSE:MCD). Other stocks mentioned: Pepsi (NYSE:PEP), Barrick (NYSE:ABX), BlackBerry (NASDAQ:BBRY)
Earnings season revs up in the week ahead, and companies will indicate whether this miraculous rally is on borrowed time or is the real thing. Cramer would avoid trading around earnings, except for Google (GOOG) or General Electric (GE), a holding in Cramer's charitable trust. If Intel's (INTC) report is disappointing, and Microsoft (MSFT) declines to $27, those who are bullish on MSFT could buy some ahead of the earnings on Thursday.
Citigroup (C) management should talk about streamlining the company and how independent the bank is now from government regulations.
Coca-Cola (KO) is the "test case" earnings for safety stocks. Cramer thinks KO is "just okay." It should report a good number, which management may or may not be able to justify. If KO declines, it might be a good time to buy other safety stocks.
Johnson & Johnson (JNJ) is galloping to $100, and should see a turnaround with its new CEO Alex Gorsky. Cramer says he is waiting for a pullback so his charitable trust can load up on the stock, but he doubts we will see a decline in the stock soon.
Intel (INTC) is a "tell" on how PCs are doing. There are conflicting reports on how well or poorly Intel is performing. Bulls could buy INTC if it pulls back.
Core Labs (CLB) is the best long-term performer of the oil services group, and lucky for bulls, its stock often reacts poorly after it reports and usually offers a buying opportunity.
Kinder Morgan (KMP) will discuss the El Paso acquisition and the Copano merger. Management should talk about oil versus gas, energy independence and a higher dividend.
The Gap (GPS) analyst meeting: Cramer likes The Gap, and wants to hear what management says about the health of the consumer.
Union Pacific (UNP): Are higher gas prices leading to a greater use of coal? UNP management should answer this question. UNP is benefiting from a strong auto industry and the fact that rail plays an important role in oil shipping, given the dearth of pipelines; "UNP is triumphing with the help of oil."
Microsoft (MSFT) should give more information about the state of the PC industry.
Google (GOOG) is a wild trader and a battleground stock. It has been battered, and might be a Buy ahead of the quarter, but only with deep in the money calls.
Chipotle Mexican Grill (CMG) has also been a volatile stock and a battleground. CMG has easier comparisons than usual. Management needs to address the issue of raw costs.
General Electric (GE) should discuss its acquisition of Lufkin and its oil and gas business.
Honeywell (HON) should focus on strong areas, such as aerospace and climate controls.
Under Amrour (UA) is likely to raise its forecast.
Kimberly Clark (KMB) is expanding into emerging markets, and should mention a dividend raise. "KMB is the most shareholder friendly of the consumer products segment."
McDonald's (MCD) is introducing healthy menu choices, such as an egg white McMuffin, which should appeal to health-conscious consumers.
Cramer took some calls:
Coca-Cola and Pepsi (PEP) have been downgraded because some are concerned that their valuations are too high. While both companies have good dividends and stable balance sheets, Cramer wants to hear KO's conference call before opining.
Barrick (ABX) has a construction problem in Chile, and such unexpected disappointments are characteristic of gold miners. Cramer would avoid the sector, especially since gold is also going down.
BlackBerry (BBRY): "If it declines to $12, buy it, if it rises to $15 sell it. That is my game plan with Blackberry, and I'm sticking to it. "
CEO Interview: Don Wood, Federal Realty (NYSE:FRT)
Federal Realty (FRT) a retail REIT, reached a new high. On its previous earnings call, management discussed a strong occupancy rate of 94.9%, up 70 basis points from just 3 months earlier. The stock yields 2.6%, which would be higher if it weren't for the acceleration in the stock price. FRT has been a consistent dividend raiser.
CEO Don Wood is not discouraged that the recent retail sales number was the worst in 9 months. He explained that retail real estate can't be gauged by monthly numbers, but from long-term data. Leasing has never been stronger, "In fact, we said that 2012 was the year of the leasing agent." Currently, demand exceeds supply. If a contract is broken, the tenant has to pay a considerable fee, and there is always another tenant waiting in the wings because of the premium location of FRT's properties. "If you buy our stock," said Don Wood, "buy it for the long-term." Cramer added, "I've been recommending this stock since the day we started the show."
Pfizer (NYSE:PFE) Is Still Healthy. Other stocks mentioned: Zoetis (NYSE:ZTS), Bristol Myers (NYSE:BMY), Perrigo (NYSE:PRGO), Actavis (ACT), Forest Labs (NYSE:FRX)
Pfizer (PFE) is the world's largest pharmaceutical company with a deep pipeline and a 3.35% yield. It has run up 22% since the beginning of the year, but trades at a multiple of only 13, a 10% discount to other pharmas. There was concern over the patent expiration of the company's most successful drug to treat high cholesterol, Lipitor, which generated $9.6 billion in annual revenues. The stock, nevertheless, has climbed 66% since Lipitor lost patent protection, thanks the the strength of PFE's other drugs and its pipeline. Management has been cutting expenses and spinning off non-core divisions. One major success was the IPO of Zoetis (ZTS), which was Pfizer's animal health division. ZTS has risen 19% since its IPO, and Pfizer still owns 80% of the company.
Management has said that it plans to keep PFE's consumer business, but may divide the drug business into off-patent and patented drugs. Recently, Eliquis, an anti-clotting drug developed along with Bristol Myers (BMY), has been a top drug and may generate $5.5 billion in sales by 2020. PFE has 17 Phase 3 drugs, the most robust late-stage pipeline in the company's history. Included among these are drugs for lung cancer, a meningitis vaccine and a treatment for breast cancer that might be worth $5 billion by 2020. Since the FDA has been fast tracking approvals lately, Pfizer may rise even higher.
Cramer took some calls:
Actavis (ACT) has been a winner, but Cramer doesn't like most generic plays, aside from Perrigo (PRGO).
Teleflex (NYSE:TFX) is an "amazing medical device company. It is a winner not a loser. Hold onto it."
Forest Labs (FRX) has Carl Icahn as a shareholder and does produce good drugs, but Cramer said, "Don't put FRX in the same sentence as Pfizer. FRX is not in the same league."
Mad Mail: Diana Shipping (NYSE:DSX), Radian (NYSE:RDN), USAirways (LCC), Gilead (NASDAQ:GILD), Kellogg (NYSE:K), General Mills (NYSE:GIS), Valero (NYSE:VLO)
Diana Shipping (DSX) is one of Cramer's three speculative stocks for 2013. "Don't be a slave to the way a stock is trading," Cramer told a viewer. His other two top speculative picks are USAirways (LCC) and Radian (RDN).
Kinder Morgan Partners has gained 25%. "That is not enough, I want you to wait for a double. I think it is going to be a terrific quarter because they have the El Paso deal and the Copano deal." KMP yields 5%.
Gilead (GILD) seems to have a high valuation, but Cramer said, "I am not perturbed by it." The company bought Pharmasset, which may have a potential cure for Hepatitis C.
Refiners are in free-fall mode, as margins are closing in, since transporting oil is easier. For those who feel they must own a refiner, Cramer would buy Valero (VLO), because of a potential spin-off.
Too Much Chatter About the March Retail Number. Stock mentioned: Phillips VanHeusen (NYSE:PVH)
The huge decline in oil will be good for the consumer, who will have to pay less at the pump. Rising real estate prices might also trump the weak March retail numbers, at the lowest level since last June. Some believe that payroll taxes were responsible for the dramatic decline, but Cramer agrees with Emmanuel Chirico, CEO of Phillips Van Heusen (PVH), that the unseasonably cold weather was to blame. Consumers were not interested in buying clothing for spring while they were wearing winter coats. Cramer thinks there is too much chatter about this short-term number, and not enough emphasis on the strong performance of individual retail stocks.
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