Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday May 3.
10 Things To Watch In The Week Ahead: Berkshire Hathaway (NYSE:BRK.A), (NYSE:BRK.B), Anadarko Petroleum (NYSE:APC), EOG Resources (NYSE:EOG), Whole Foods (NASDAQ:WFM), Disney (NYSE:DIS), Continental Resources (NYSE:CLR), Heckmann (HEK), Priceline (NASDAQ:PCLN), DISH Network (NASDAQ:DISH), Weyerhaeuser (NYSE:WY), other stocks mentioned: Hain Celestial (NASDAQ:HAIN), Sprint (NYSE:S), Public Storage (NYSE:PSA), Diebold (NYSE:DBD), Tempur-Pedic (NYSE:TPX)
The monthly jobs report was better than expected, and the Dow roared 142 points. Industrials were strong. Cramer thinks that the earnings reports coming up in the week ahead may help the bullish run continue, since most of the companies reporting are strong.
Berkshire Hathaway's (BRK.B), (BRK.A) Annual Meeting: What may be a major driver for the week ahead begins this weekend, with the Berkshire Hathaway Annual Meeting. The "Woodstock of Capitalism" should bring good news with the housing rebound, strength in the insurance sector and bullish trends in oil and gas drilling and rails. Cramer re-iterated his recommendation of BRK.B shares.
Anadarko Petroleum (APC) has prime assets in the Gulf of Mexico, and management should boost its forecasts on oil drilling during its earnings report.
EOG Resources (EOG) has significant assets in the Bakken and the Eagle Ford. While CEO Mark Papa is not bullish on natural gas, he should indicate whether the move in the price of the commodity is sustainable or not.
Whole Foods (WFM) was hit after Hain Celestial (HAIN), a main supplier, gave a cautious outlook. WFM disappointed last quarter, and is seeing more competition. However, Cramer believes that long-term growth is intact.
Disney (DIS) has hit films coming out, including Iron Man 3 and a new Star Wars. Theme parks are humming, and ESPN is coining money. Cramer thinks it is unlikely DIS will get hit, but if it does, he would buy some shares.
Continental Resources (CLR) reports and should give a read on the state of domestic oil and gas drilling.
Heckman (HEK) has a great long-term story, but may not report a strong quarter. Even though natural gas prices are high, drilling has been cut back, because many are skeptical about the move in natural gas prices.
Priceline (PCLN) tends to be a wild trader after earnings. The first move is not always the true move. Those who want to get into PCLN should keep this in mind.
Weyerhaeuser (WY) has a Shareholder Meeting. It is the nation's largest timber supplier, and gave a better than expected report last time. However, management tends to be conservative, and the stock often drops after earnings. Cramer would buy WY for is multi-year story.
Cramer took some calls:
Public Storage (PSA) is a good company, but has risen so dramatically, that Cramer would take profits on half and let the rest run.
Diebold (DBD) is not that well-run, but has a good yield. Cramer would not recommend it.
Tempur-Pedic (TPX) is a stock Herb Greenberg has red-flagged. Cramer agrees with Greenberg and would stay away from TPX.
What Can Still Be Bought? Citigroup (NYSE:C), JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), KeyCorp (NYSE:KEY), First Horizon (NYSE:FHN), Hartford Financial Services (NYSE:HIG), Microsoft (NASDAQ:MSFT), EMC (NYSE:EMC), Ford (NYSE:F), GM (NYSE:GM), ConocoPhillips (NYSE:COP), Caterpillar (NYSE:CAT), Dupont (NYSE:DD), General Electric (NYSE:GE), U.S. Airways (LCC), Schlumberger (NYSE:SLB), Eaton (NYSE:ETN), Radian (NYSE:RDN), Genworth (NYSE:GNW)
What can still be bought now that stocks have gone higher? Cramer made a shopping list of undervalued stocks to buy on a down day.
Citigroup (C) is up 20% for the year, but can still go higher, since it is down substantially from its pre-recession highs and no longer has a portfolio filled with bad loans. Citi has strong exposure to emerging markets. JPMorgan (JPM) is off 10% from its highs because of bad headlines, but the negative news will not affect earnings. Wells Fargo (WFC) has 30% of the mortgage market. Key Corp (KEY) and First Horizon (FHN) are strong regional banks. Mortgage insurance is coming back, and Radian (RDN) and Genworth (GNW) will lead the trend. Hartford Financial Services (HIG) is recovering, as shown by its strong quarter.
Microsoft (MSFT) is an invigorated tech which trades at an "absurd" 12 times earnings (Cramer thinks it should trade at 15). MSFT yields 2.75%, which is a strong dividend for a tech company. EMC (EMC) is down 5% and is unfairly disliked. As Europe is turning, General Motors (GM) and Ford (F) are likely to see some upside, since both companies have been hurt by sluggish sales on the Continent.
Oils have done very little of late. When the sector starts to move, ConocoPhillips (COP) and Schlumberger (SLB) are likely to be beneficiaries. USAirways' (LCC) merger with American Airlines is likely to create a major move for the company. Eaton (ETN) will have a strong 2014, and trades at just 13 times earnings, compared to its historic multiple at 18. General Electric (GE) is trading at half price from 6 years ago. Although business is weak for GE, an improvement in the global economy should be a mover for GE, as well as Caterpillar (CAT) and Dupont (DD).
The Strongest Story of Earnings Season: Facebook (NASDAQ:FB). Other stocks mentioned: LinkedIn (NYSE:LNKD), Yahoo (NASDAQ:YHOO), Bottomline Technologies (NASDAQ:EPAY)
Cramer identified the strongest earnings call of the season: Facebook (FB). Even though many investors are hunting for dividends and buybacks, FB is doing the right thing by investing the bulk of its cash back into its business, given FB's strong growth prospects. The company missed earnings by a penny, but this was expected, since FB said it was going to invest a large amount into its business. FB beat on every other metric: revenues were up 38%, and is accelerating. Concerns over mobile ads are a thing of the past; now mobile accounts for 30% of FB's advertising budget, and its plethora of ads has not reduced user engagement. The stock has only risen 6% since the beginning of the year. Bears still point out its large multiple of 36, but compared it its 29% growth rate, FB is not overvalued. Cramer also likes LinkedIn (LNKD), which was hammered following earnings.
Cramer took some calls:
Yahoo (YHOO) is at its best as a stand alone company. Cramer is not hoping for a takeover, given that CEO Marissa Mayer is at the helm of Yahoo and is reinventing the company.
Bottomline Technologies (EPAY) has too much competition. Cramer does not recommend it.
Trius Therapeutics (TSRX) is a small cap speculative biotech with a drug that treats skin infections. Cramer thinks it has solid chances of approval in the second half of the year, and if approved, the drug could generate $800 million. Cramer would use limit orders when buying.
Standard Pacific (SPF) is a great homebuilder with solid prospects in California. Even though the stock declined slightly following Cramer's recommendation, he warned, "It might not go up in a straight line."
Tesla Motors (TSLA) is a "cult stock. I will not opine a long or a short call on a cult stock. It is too hard."
Big Pharma Should Spend More on Research: Charles River Labs (NYSE:CRL), Celgene (NASDAQ:CELG), Gilead (NASDAQ:GILD), Biogen (NASDAQ:BIIB), Regeneron (NASDAQ:REGN), Merck (NYSE:MRK)
Charles River Labs (CRL) is the leader in facilitating research for pharma and biotech companies. Management at CRL says that big pharma is not spending aggressively on early stage testing. Big Pharma companies are making the mistake of harvesting what is already there and known and are concerned with capital preservation and meeting Wall Street's numbers. While these companies are generous with dividends and buybacks, Cramer thinks they could serve investors better by spending the money on research.
Biotechs like Celgene (CELG), Gilead (GILD), Biogen (BIIB) and Regeneron (REGN) are focused more on taking risks than on meeting Wall Street's numbers. They are spending more on research and are reaping rewards; Celgene is up 50%, Gilead has risen 50%, Celgene has seen a 55% gain and Regeneron (REGN) has delivered a 56% uptick since 2013 began. Merck (MRK), a holding in Cramer's charitable trust, has been the most adventurous of the big pharma companies in research, and is developing the 28 drugs in its pipeline. However, Cramer still thinks its huge buyback would have been better spent on the development of those drugs.
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