Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday June 14.
9 Things To Watch In The Week Ahead: FedEx (FDX), Kroger (KR), Micron (MU), Pier One Imports (PIR), Darden (DRI), CarMax (KMX). Other stocks mentioned: Pfizer (PFE), Zoetis (ZTS), Groupon (GRPN), WhiteWave (WWAV), Restoration Hardware (RH), Dean Foods (DF)
The most crucial event in the week ahead is the Federal Reserve's Open Market Committee meeting on Tuesday and Wednesday. The meeting should provide clarity amid controversy and worry over whether the Fed will start tightening rates soon. Cramer thinks other economic news and earnings are likely to be drowned out by any Fed announcement, positive or negative.
Empire State Fed Survey is likely to show weakness and may indicate that interest rates should not be raised too soon.
Japanese Industrial Production Reports: If these reports are positive, the Japanese stock market will rocket. If not, expect more declines. Cramer noted that Japanese stocks were indicating a decline in its market on Monday.
FedEx (FDX): The highs and lows of this stock's movement before, during and after its earnings have created a "nauseating rollercoaster." Watch out.
Micron (MU) is one of Cramer's favorite speculative stocks, because the company has transformed itself, especially through acquisitions. It now has strong exposure to DRAMs and flash memory. However, MU has run "endlessly" going into its quarter, and Cramer would not buy it unless there is a pullback.
FOMC Announcement is expected to be the most dramatic mover of the markets this week.
Kroger (KR) has improved its image and performance with private label items and other effective strategies. Cramer likes KR and expects a good quarter.
Pier One Imports (PIR) is expected to report a strong number, especially after Restoration Hardware's (RH) successful earnings. While RH is more "high end" than PIR, it seems clear that homeowners are spending more on their houses.
Darden (DRI) has to refute press reports that consumers are cutting back on dining.
CarMax (KMX) should say that auto sales are robust and used car sales are strong. There has been news that car companies have to boost incentives to move inventory. CarMax management has to refute this if it wants to convince analysts to be bullish.
Cramer took some calls:
Pfizer (PFE) and its spinoff, Zoetix (ZTS) are both good stocks. Zoetis is levered to the powerful, multi-year growth story that is the animal health industry. Pfizer is a strong performer with a solid yield.
Groupon (GRPN) is not a stock Cramer is crazy about, and is particularly disappointed with its management change. He wouldn't buy it or short it.
Eighteen months ago, Cramer predicted Covidien (COV) would spin off its pharma division, Mallinckrodt (expected to trade under the symbol MNK). The deal has been announced, and COV has risen 57% since Cramer got behind it as a break up story. Shareholders will get one share of MNK for every 8 shares of COV. The question is, what should COV shareholders do with both companies? The desire to simply take gains is understandable, but Cramer thinks more money can be made from both stocks. The post breakup COV will be a pure play medical device company with 4-6% revenue growth, double digit earnings growth and a generous buyback. After Abbot Labs (ABT) spun off its pharma business, AbbVie (ABBV), Cramer sold ABBV for the charitable trust and kept ABT. He regretted this move, because ABT rose 12% but ABBV gained 27%. To avoid making the same mistake again, Cramer would hold onto MNK, but would sell before next year, when it loses patent protection. While only 8% of its business is vulnerable to the patent cliff, it isn't a standout player in the pharma space, but it could see more upside. However, he would exit out of MNK if it rallies significantly. Cramer thinks the stocks together could gain 12% from the breakup.
A great "under the radar" play is W.R. Grace & Co. (GRA), a specialty chemical company that has risen 23% for the year. Cramer thinks the stock could go higher as it emerges from bankruptcy late in 2013. The company filed Chapter 11, not because of problems with the company itself, but because it was besieged by asbestos settlements. Even though the bankruptcy status didn't have much to do with the day-to-day business, many institutional investors didn't want to touch GRA, even if they liked the fundamentals. Once GRA emerges from bankruptcy, it should attract many new buyers.
GRA makes catalysts that transform oil to gasoline, natural gas into chemicals, and heavier oils into lighter, more useful oils. It also has a construction and building materials business and an industrial chemicals segment. GRA has a lean balance sheet, and because it was not allowed to return capital to shareholders while it was in bankruptcy, its transformed status should attract those looking for yield or buybacks. The sum of GRA's parts, according to the valuation of a Goldman Sachs analysts, would put the stock 26% higher than where it is now.
Cramer took some calls:
Tronox (TROX) has a great whitener product and should emerge well from its lawsuit.
FMC Corporation (FMC) has been lagging along with other ag plays because the spring was too wet. Cramer thinks the ag sector is coming back, and he would stick with FMC.
USNA Health Sciences (USNA) is a multi-level marketing personal care company that is reminiscent of the battleground that is Herbalife (HLF). While up 125% so far this year, Cramer thinks USNA is another battleground stock, and the fact that there have been several crucial departures among its management does not bode well. Cramer would stay away.
Clovis Oncology (CLVS) has run 320% year to date and rose 30% last month on its positive data for 2 cancer drugs. However, the drugs are only in phase 1 testing and the company did a dilutive secondary offering. Cramer likes CLVS' prospects, but he would wait for a decline before buying.
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.