Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday May 20.
The Kids Love Tesla (NASDAQ:TSLA)
Cramer commented that he hears parents say, "I wish I had listened to my kids and bought Tesla (TSLA)," after the stock's meteoric rise from $50 to $90. The popularity of the electric cars is growing, particularly in California, even as the stock is hated by analysts in New York. Currently, the share count is kept so small that it is hard for bears to short it. Without stock to buy or sell in sufficient amounts, it is hard to opine on this "cult stock." Cramer added, "I refuse to say whether I like the stock or not," but the product is certainly gaining a following.
An Austerity Moment For the Wealthy: Kinder Morgan Partners (NYSE:KMP), Enterprise Products Partners (NYSE:EPD), Williams Partners (NYSE:WPZ), Healthcare Trust of America (NYSE:HTA), Johnson & Johnson (NYSE:JNJ), General Mills (NYSE:GIS), Newmont Mining (NYSE:NEM), Barrick Gold (NYSE:ABX), Agnico Eagle Mines (NYSE:AEM), Cognizant Technology Solutions (NASDAQ:CTSH), SAP (NYSE:SAP), Accenture (NYSE:ACN)
Cramer recalled his days as a money manager when he often had very wealthy clients. His strategy for the super rich was to divide the money into U.S. treasuries, municipal bonds and corporate bonds. Wealthy people had already made their money, so the logic went, so why did they need to risk losing it on stocks? The current low interest rate policy of the Federal Reserve has created an "austerity moment" for the wealthy. With rates low enough to risk not keeping up with inflation, fixed income investments are not the right choice, even for the wealthy. Cramer said if he had such clients nowadays, he would suggest high-yielding MLPs like Kinder Morgan Partners (KMP), which yields 5.9%, Enterprise Products Partners (EPD), with a 4.9% dividend and Williams Partners (WPZ), with a 6.5% yield. He would also choose REITs like Healthcare Trust of America (HTA). Other good choices include quality companies with a history of raising dividends: Johnson & Johnson (JNJ) and General Mills (GIS), for example.
Cramer took some calls
Newmont Mining (NEM), Barrick Gold (ABX) and Agnico Eagle Mines (AEM) have some "terrible looking charts." They are too low to sell right now; Cramer would wait for an uptick before getting rid of them.
CEO Interview: Ben Baldanza, Spirit Airlines (NASDAQ:SAVE)
Cramer has recently gotten behind airlines after disliking the sector for decades. However, investors who are still worried about airlines' history of bankruptcy and bad balance sheets might want to consider an alternative airline stock. Spirit Airlines (SAVE) is a small operator of only 45 planes that make 200 flights a day at ultra low cost fares. It has a clean balance sheet and is able to charge the lowest prices in the industry while still performing. The company reported a 3 cent earnings beat with a 22% gain in revenues. The stock has risen 22% since Cramer spoke to the CEO in March.
Responding to some published reviews that put the company in a negative light, CEO Ben Baldanza responded, "I don't care about a review that surveys a different customer base," Spirit customers, "don't want to pay for what they don't care about." The typical Spirit customer is willing to sacrifice "extras" for the lowest cost. He added that consolidation in the industry gives Spirit an advantage; the higher ticket prices of competitors make Spirit the budget travel alternative.
Catalysts For Healthcare Stocks: Gilead (NASDAQ:GILD), Bristol Myers (NYSE:BMY), Merck (NYSE:MRK), Tesaro (NASDAQ:TSRO), Exact Sciences (NASDAQ:EXAS), BioMarin (NASDAQ:BMRN), Mylan (NASDAQ:MYL)
Cramer discussed companies with presentations at the upcoming Society of Clinical Oncology Conference from May 31 to June 4. He thinks the conference could be a powerful catalyst for the following stocks:
Gilead (GILD) has winning HIV and Hepatitis C franchises, and has risen 87% since September. Cramer thinks GILD could go even higher on data about its phase III drug for leukemia. The treatment blocks the protein that causes the growth of tumor cells. Because of incredibly positive data, Gilead is pushing for accelerated FDA approval. Since GILD has a total of 7 presentations at the conference, the odds of success are good.
Bristol Myers (BMY) has run up 34% so far this year, but it might see further upside on data for its phase III drug to treat lung and renal cell cancers. The drug could be worth $1.8 billion, but with multiple applications, the value could rise to $5-6 billion.
Merck (MRK) is a stock Cramer bought for his charitable trust after selling BMY. MRK hasn't run as much as BMY, and is presenting data on its melanoma drug, which is still in the early phases.
Cramer recommended Tesaro (TSRO) at $15 and it has run to $35. The company is working on a treatment that inhibits the growth of breast and ovarian cancer cells. The drug is in phase III trials. Cramer warned that TSRO has run quite a bit and is speculative. He would wait for a pullback before buying.
BioMarin (BMRN) is a company Cramer likes and is also presenting at the conference. It has already seen success with its MS treatment and its orphan drugs.
Cramer took some calls:
Mylan (MYL) is not proprietary enough. Although some commodity plays have been winners, Cramer thinks Mylan has run too much.
Exact Sciences (EXAS) dipped but has rebounded. The shorts have been rough on the stock. "Let's take it off the table and start over."
CEO Interview: Scott Peters, Healthcare Trust of America (HTA)
Healthcare Trust of America is a REIT that rents buildings to the healthcare industry and yields 4.4%. Because of the passage of the Affordable Care Act, HTA expects to see more upside and increasing demand as employment ramps up in the healthcare industry and more loans are available to developers. CEO Scott Peters expects to see occupancy rates, which disappointed in the last quarter, rise from 90% to 94%, and thinks that rents will rise. Cramer says HTA has been the best performer in the group.
Jim Cramer's Action Alerts PLUS: Trade right alongside a Wall Street pro! Start your 14-day FREE trial today.
Get Cramer's Picks by email - it's free and takes only a few seconds to sign up.