Cramer's Mad Money - Two Crucial Earnings Reports (5/15/09)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday May 15.

Home Depot (NYSE:HD), Lowes (NYSE:LOW)

Two earnings reports next week could signal a recovery or might give the Dow a 1,000 point haircut. Lowes will announce Monday and Home Depot's report is Tuesday. These chains have many locations in California and Florida, the two states that have been the hardest hit by the housing crisis. Increased home improvement spending at Home Depot and Lowes could be a sign that the country is emerging from the downturn, and has implications also for housing and restaurants. Bad numbers from these two companies may mean a prolonged recession. Cramer says he tends to look at individual companies as a sign of what is really happening on the larger scale.

Munro Muffler Brake (NASDAQ:MNRO), GM (NYSE:GM) O'Reilly Automotive (NASDAQ:ORLY), Autozone (NYSE:AZO), Advance Auto Parts (NYSE:AAP)

With mass closings of Chrysler and GM dealerships, customers are going to be searching for places to repair their cars. Munro Muffler and Brake has increased 31% since August and its advertising campaign has improved sales. Even before the worst news was out about the automakers, the company increased guidance and predicted same-store sales would increase 10%. Munro has also cut costs. O'Reilly Automotive is an auto parts company that can also profit from Detroit's decline, and while Cramer also likes Autozone and Advance Auto Parts, he thinks ORLY is the best of the three auto parts companies. O'Reilly has a higher multiple but also has more growth potential.

CEO Interview: Timothy Sullivan, Bucyrus (NASDAQ:BUCY)

Bucyrus is a stock that has seen tremendous gains recently, and is up 84% from Cramer's March 4 recommendation. While it has doubled from its 52-week low, it is still down 71% from its 52-week high. Sullivan says the fact that commodity producers have reduced their output may be a sign of price increases in the near future. Bucyrus' clients are now finding it easier to obtain credit to buy the company's equipment, which on average costs $5 to $180 million. While international growth can be hampered in countries like India with complex government bureaucracies, Bucyrus insists on deposits, so cancellations are rare. Cramer likes Bucyrus but cautioned to wait for a pullback before buying.

Ciena (NASDAQ:CIEN), Verizon (NYSE:VZ), AT&T (NYSE:T)

As more people watch internet video on their television, Internet Protocol providers, Verizon and AT&T and companies like Ciena producing networking technology, will profit from this trend. The use of Internet Protocol is expected to grow by 652% by 2013. Verizon has so far spent relatively little on new networking equipment, and Cramer expects Verizon to start buying soon. One incentive will be a Ciena's new version of CoreDirector switch which is used by 50 telecom carriers and is expected to be released sometime in 2009. Ciena has reduced its operating costs by 12% and has cut 9% of its workforce. While Ciena is not making money right now, its losses have stabilized, orders are steady, there are no cancellations and the company has plenty of cash. Cramer would buy half a position before the Ciena's June 6 earnings report.


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