Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday April 26.
16 Things To Watch In The Week Ahead: Buffalo Wild Wings (BWLD), Masco (MAS), Cummins (CMI), Pfizer (PFE), Zoetis (ZTS), Tanger Factory Outlet (SKT), Allergan (AGN), Clorox (CLX), Radian (RDN), AIG (AIG), GM (GM), Alliant Techsystems (ATK), LinkedIn (LNKD). Other stocks mentioned: Amazon (AMZN), Starbucks (SBUX), D.R. Horton (DHI), Ford (F), Weyerhaeuser (WY), ADT (ADT), Zynga (ZNGA)
Earnings are dominating the movement of stocks, but Cramer encourages viewers to dismiss facile generalizations about earnings season. However, there are two points to keep in mind: 1) companies with mainly domestic exposure are tending to report better results than those dependent on overseas sales 2) execution matters at least as much as sector strength. Results from Amazon (AMZN) and Starbucks (SBUX) were disappointing, but D.R. Horton (DHI), whose revenues come mainly from the U.S. with its booming housing market, were positive. Procter & Gamble (PG) did not manage to shine, but Colgate Palmolive (CL), in the same sector as PG, performed well because of its superior execution.
Cramer discussed things to watch in the week ahead.
Buffalo Wild Wings (BWLD) had strong March Madness sales and is benefiting from the decline in chicken wing prices. The stock has run, but it might not be finished.
Masco (MAS) is levered to housing, but has 25% European exposure. Cramer likes other housing plays better.
Cummins (CMI) is a major exporter to China, so some softness is expected, "but not enough to run away from CMI."
Pfizer (PFE) received bad news from Europe after its rheumatoid arthritis drug was denied approval on the Continent. However, PFE has plenty in its pipeline and has been handling Lipitor's fall from the patent cliff. All things considered, PFE has been a strong performer.
Zoetis (ZTS) was a spin-off from Pfizer, and the animal health business is red hot. Cramer expects good results.
Tanger Factory Outlet (SKT) is a slow and steady grower, and consistently delivers on earnings and boosts its dividend.
Allergan (AGN): Its Botox product has been approved for many medical indications and is a "pipeline within a product." Allergan usually sells off after earnings, so Cramer would buy AGN after the conference call.
Clorox (CLX) has rallied 18% so far this year. The stock has performed well, management is buying back stock and increasing the dividend. Cramer would wait until after the report to buy it.
Radian (RDN) is in the mortgage insurance sector, which has been a good place to be as bad loans are being replaced by good loans. Cramer thinks the stock could double from $11.
The Fed's Open Market: There is likely to be plenty of chatter ahead of this meeting, but with slow GDP numbers, it is unlikely Ben Bernanke will tighten interest rates.
European Central Bank should announce a rate cut. If there is no rate cut, stocks may get hit.
AIG (AIG) is a strong company; "If you can get it under $40, go for it."
General Motors (GM), like Ford (F) is likely to be hurt because of its European exposure. Ford's stock recovered well after its lackluster quarter. GM is an inexpensive stock and might surprise to the upside.
Alliance TechSystems (ATK) may perform well, since the defense sector in general has been giving better than expected results.
LinkedIn (LNKD) is a real standout among social media stocks. It has a great business model, with some free and some paid services. Cramer would buy with deep in the money call options.
Labor Department non-Farm Payroll Report: The number was terrible last time, and few are expecting outstanding numbers this time around.
Cramer took some calls:
Weyerhaeuser (WY) has behaved badly lately, but Cramer still likes the company.
ADT (ADT) also hasn't been performing well, but Cramer thinks it will give a strong earnings report next week. ADT is a holding in Cramer's charitable trust.
Zynga (ZNGA) has a new product iteration, has a strong balance sheet and may see some upside. However, Cramer is not bullish on ZNGA and prefers other stocks in the sector.
CEO Interview: Nick Akins, American Electric Power (AEP)
American Electric Power (AEP) is one of the largest power transmission companies in the U.S. The EPA has been targeting AEP because of the amount of energy it generates from coal --65%. Management has said it plans to cut this percentage down to 50%. AEP reported a one cent earnings miss and in-line revenues but re-affirmed its guidance. The stock has gained 12% since Cramer spoke to the CEO, Nick Akins, last February. The stock trades at a multiple of 15 and yields 3.9%.
Akins explained that while the company is engaged in a transition to cleaner fuels, the process cannot be done in haste, given the possible cost impact on consumers and the effect on local industries. Akins has seen a significant reduction of greehouse gases, thanks to the transition from coal to natural gas, but since natural gas has risen in price, the transition from coal to natural gas is going to be gradual. He noted that in 2007, the company used 80 million tons of coal and has reduced the amount to 54 million tons. Cramer thinks AEP is returning value to shareholders and is relatively cheap.
CEO Interview: David Steiner Waste Management (WM)
Waste Management (WM) is the largest garbage disposal company and landfill operator in the U.S. It offers a 3.8% yield and is employing initiatives that are good for the environment and for its bottom line. The company is producing energy from waste and is seeing dramatic successes; WM is able to produce enough fuel from waste to power 1.2 million homes, eight times the amount produced by the entire solar industry in the U.S. Methane gas from landfills is used for electricity; 90% of the power needs of the University of New Hampshire and at a U.S. BMW plant are provided by WM's methane electricity. WM is working on building the infrastructure to transport energy. Currently 90% of its new truck purchases have engines that run on natural gas. Cramer is bullish on Waste Management.
TravelCenters of America (TA) is one of the largest owners of rest stops and has seen a dramatic recovery post-recession. The stock surged from $4 to $12. Cramer likes TA, but would wait for a pullback.
Jazz Pharmaceuticals (JAZZ) specializes in sleep disorders. After a huge run, the stock pulled back on worries about generic competition, since a drug that produces 69% of Jazz's revenues will lose patent protection next year. One ray of hope is that Jazz may win a court case with the company producing the generic alternative. Jazz might be a decent spec play, but Cramer would stick with companies that have less problematic stories, like Celgene (CELG).
AVEO Pharmaceuticals (AVEO) is a small biotech that focuses on cancer drugs. Cramer would prefer not to play "FDA approval Russian roulette" with this one, since the kidney cancer drug space is crowded, and there have been questions about the data and survival rates on AVEO's drug.
PhotoMedex (PHMD) is an aesthetic dermatology company with strong sales, a multiple of only 11 and no debt. PHMD is expanding into new markets. Cramer wants to see more data on orders and evidence of a sustainable business model before he recommends the stock.
Performant (PFMT) is a business analytics services company that has, as its clients, student loan programs, Medicare and Medicaid. The company may be vulnerable to government cutbacks, so Cramer would beware.
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