Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday June 11.
Lululemon's (NASDAQ:LULU) Worst Moment
Lululemon (LULU) is a company that grew from a yoga apparel specialty company to a leading provider of sportswear. It was rising in almost a straight upward line, even though analysts worried it was overvalued or could face competition. LULU even recovered from its pants recall with a strong quarter, and it was the leadership of CEO Christine Day that helped the company rebound from the crisis. Given her unexplained departure from LULU, which caused the stock to fall $14, Cramer doesn't think the stock will bounce back very quickly. "This is the worst moment for Lululemon."
With the Dow sinking 117 points on Tuesday, one thing is clear, according to Cramer, "You can't ignore what is happening in the world ... but you can't fear it." It was apparent there would be a down day from the very beginning, when the averages were "soggy" on weakness in Asia, particularly Japan, and increasing worries in Europe over the escalating conflict in Turkey. However, down days are just an opportunity to pick up quality stocks at lower prices; Bristol Myers (BMY), General Mills (GIS) and Jack In The Box (JACK) attracted buyers. BMY's oncology drugs will not be affected by global conflicts and weak news from Asia. However, the bad macro news cannot be dismissed, either.
Cramer took some calls:
iPath S&P 500 VIX Short-Term Futures ETN (VXX) is not something Cramer would buy. He prefers investing in "great American companies that pay good dividends."
Teva Pharma (TEVA) is heading off the patent cliff with its MS drug. It used to be a rapid grower, but not anymore.
CEO Interview: Greg Ebel, Spectra Energy (NYSE:SE). Other stock mentioned: Spectra Energy Partners (NYSE:SEP)
Spectra Energy (SE) is a major pipeline play in North America and yields 4%. In March, it gained exposure to oil pipeline through an acquisition. The company owns 61% of Spectra Energy Partners (SEP), and CEO Greg Ebel says that the MLP has been a "great success." By the end of the year, the company can put more pipeline and storage into the MLP to increase its size substantially. SEP and SE will both see dividend raises, and Ebel says both SE and SEP are good for shareholders. The company is completing its pipeline into New Jersey, the first in 40 years, and residents of New York and New Jersey will save a significant amount in their fuel bills as a result. While rail seems to be competing with pipelines, Ebel said, "Rail is a great stop-gap, but over time, you will want to see pipeline." When asked if he thinks the Keystone Pipeline will be approved, Ebel replied it is likely, but the politics over the issue are becoming increasingly difficult. Cramer is bullish on SE and SEP.
What The VIX Is Saying About the Market. Stocks mentioned: iShares Silver Trust ETF (NYSEARCA:SLV), Vale (NYSE:VALE), Cliffs Natural Resources (NYSE:CLF)
Mark Sebastian, Chief Operations Officer at Optionpit.com, is an expert on interpreting the "Fear Index" or the VIX. The index can often indicate whether stocks are going lower or higher; a rise in the VIX is often followed by a fall in stocks and vice versa. Cramer discussed Sebastian's analysis, which points out that the current behavior of stocks compared to the VIX is similar to the way stocks and the index were moving ahead of corrections in 2010 and 2011. In each case, paying attention to the VIX helped investors to find the bottom in the market. Since this April, the S&P 500 has been hovering in the 1640 to 1650 range, and can't seem to break above it. Meanwhile, there is a rising volume in the VIX and Treasurys. While this might seem like bad news, Sebastian pointed out that the sell-offs in 2010 and 2011 were relatively brief and gave investors buying opportunities. The same might be true this time around.
Cramer took some calls:
iShares Silver Trust ETF (SLV) has taken a beating, but Cramer doesn't think it is proving a buying opportunity. He would stay away from silver.
CEO Interview: Tarek Sherif, Medidata Solutions (NASDAQ:MDSO). Other stock mentioned: Oracle (NYSE:ORCL)
Cloud computing and biotech are two great investment themes, and both are combined with Medidata (MDSO) which is the "clinical cloud" play. More pharma and biotech companies are using cloud computing for clinical trials. The company has dramatic revenue and gross margin growth, and jumped 25% after a strong quarter. The stock has retreated 9%, so the pullback may be buyable. The company has 150 customers among the top 25 pharma and biotech names, and it is taking share from Oracle (ORCL). "There is a big runway ahead of us," said CEO Tarek Sherif. While the stock trades at a high multiple, Cramer thinks the current pullback might make it worth buying for its accelerated revenue growth.
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