Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday June 13.
The Kids' Portfolio: Disney (DIS), Nike (NKE), Gap (GPS), Hasbro (HAS), Whole Foods (WFM), Apple (AAPL), Google (GOOG). Other stocks mentioned: Lockheed Martin (LMT), Northrop Grumman (NOC), Entergy Corporation (ETR)
In 2009, on Cramer's first "Family Affair" edition of Mad Money (which is now an annual event), Cramer formed a portfolio the entire family could understand and would help educate kids about investing. The portfolio comprised Disney (DIS), Nike (NKE), Hasbro (HAS), Apple (AAPL) and McDonald's (MCD). Since 2009, the Kids' Portfolio returned 140% compared to the S&P's gain of 83%. Cramer updated the kids' portfolio, replacing Hasbro (HAS), which has underperformed, with Whole Foods (WFM), a stock that has the advantage of teaching kids about nutrition and strong investment themes. Apple (AAPL) is no longer the growth stock it used to be; Cramer replaced it with Google (GOOG). Nike (NKE) has been okay, but it has too much exposure to China, which is in decline. Cramer would replace Nike with Gap (GPS).
Cramer took a call:
The preferred method of investing in gold is through gold coins.
Entergy Corporation (ETR) is a solid Midwestern utility.
Rite Aid (RAD) was the laggard in the pharmacy space, but has risen an astounding 132% since the beginning of the year. While competitors Walgreen (WAG) and CVS Caremark (CVS) have also rallied significantly, RAD has roared ahead. It wasn't long ago that RAD was doing so poorly that there was talk of possible bankruptcy. Since then, RAD has made a dramatic turnaround with profitable partnerships, private label products and more generics that are good for the company's gross margins. RAD beat earnings estimates by 12 cents and is refinancing its debt. Cramer thinks it is time to ring the register on part of a position in RAD and let the rest run. While he believes Walgreen (WAG) is actually best-of-breed in the space, he would consider buying CVS Caremark (CVS), because it isn't just a pharmacy, but the Caremark segment is a pharmacy benefit manager. With Obamacare, this theme should be a strong one. CVS took substantial market share from Walgreen during its conflict with Express Scripts (ESRX). While an agreement has been made between the companies, many of the customers who switched to CVS Caremark are going to CVS rather than back to Walgreen.
In honor of the NBA playoffs, Cramer has been featuring companies from San Antonio and Miami. He looked at the least valuable players from these cities to see which one might be worth buying on a decline and which should be benched.
Carnival Corporation (CCL), based in Miami, has seen several disasters. This year, one of its ships caught fire, leaving passengers without electricity and sufficient food. Last year, a ship capsized off the coast of Italy, a tragic incident that sent the stock tumbling. CCL management said it would spend more to improve its ships and lowered its earnings forecast.
Rackspace (RAX) is in the cloud computing space, a hot sector, but is in the commodity portion with no original software. The stock has been a serial disappointer. It reported a dismal quarter in February and fell from $75 to $60 overnight. It repeated its poor performance again and dropped from $52 to $39 in its recent earnings report. Worse, it competes against major players Amazon (AMZN) and IBM (IBM), larger and much stronger companies.
Cramer thinks RAX is even worse than CCL, because RAX could go even lower, while it is hard to see how, barring another disaster, CCL can get hit more than it has. One saving grace for CCL is that it yields 3%, which provides some protection against downside.
Cramer answered questions from guests of his "Family Affair" edition of Mad Money:
"I think Google is coming in and killing Apple."
"You have to think about what will be good in 2015. I think Celgene (CELG) will be good two years from now."
General Motors (GM) is going to have a huge year. Cramer thinks China will come back. GM is a better company than it was a few years ago. While Cramer's charitable trust owns Ford (F), and he prefers Ford for its European performance, GM is a good stock.
"I like Alaska Air (ALK). That is the way to play Alaska."
General Mills (GIS), is a strong, conservative food stock.
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