Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday June 17.
Where The Fed Stops, Nobody Knows. Stocks discussed: Ford (NYSE:F), United Technologies (NYSE:UTX), Facebook (NASDAQ:FB)
There is much anxiety over the Fed meeting on Wednesday; some think the Fed is going to slow down its bond buying and raise interest rates. The main issue is whether or not the economy is really strong enough to justify the end of the Fed's rescue plan. Housing seems strong, but if interest rates rise, there might be less demand. The news from retail is mixed. Banks are improving, but employment is still sluggish. Europe seems to be bottoming, as indicated by some positive remarks by Ford's (F) management, but there is still a long way to go. Cramer doesn't think the Fed will alter its policy quite yet, and after Ben Bernanke makes his announcement on Wednesday, it will be business as usual for stocks.
Cramer took some calls:
United Technologies (UTX) is a stock Cramer's charitable trust took profits in, and Cramer says he likes UTX; "I'd like to get back in."
Facebook (FB) is another charitable trust holding. Cramer would only recommend owning Facebook with the caveat that it is speculative, and the bears love savaging it.
Bloomin' Brands (NASDAQ:BLMN), Jack in the Box (NASDAQ:JACK), Chuy's Holdings (NASDAQ:CHUY), Del Frisco's Restaurant Group (NASDAQ:DFRG), Red Robin Gourmet Burgers (NASDAQ:RRGB)
The restaurant space has been hot: Jack in the Box (JACK), Chuy's Holdings (CHUY), Bloomin' Brands (BLMN) and Del Frisco's Restaurant Group (DFRG) are up 50%, 94% 54% and 66% respectively since Cramer recommended them last year. Cramer compared Bloomin' Brands with Red Robin Gourmet Burgers (RRGB) to see which stock is worth buying. Both stocks have risen about 60% and have similar same store sales growth at around 2.5%. Red Robin has new menu concepts and is growing its store count by 4%. Bloomin's store growth is at 2%, but its remodeling plans are more aggressive than RRGB's. While RRGB is growing faster, it trades at a multiple of 22 compared to its 9.5% growth rate. Bloomin' trades at 18 with a 16.7% growth rate. Bloomin' Brands is the cheaper stock and the better buy.
Opko Health (NYSE:OPK), Clear Channel (NYSE:CCO), Questcor (NASDAQ:QCOR), Acadia Pharmaceuticals (NASDAQ:ACAD)
Opko Health (OPK) and Clear Channel (CCO) are speculative stocks that trade at around $7. In honor of the NBA Playoffs, Cramer discussed these two stocks because one company, Opko, is based in Miami, while Clear Channel is a San Antonio company. Clear Channel has been trading sideways and is up 6% for the year, while OPK has risen 47%. CCO is benefiting from increased demand for digital displays, but is more vulnerable to the economic environment than Opko, since the latter is a biotech. Opko is developing a diagnostic test for prostrate cancer and has some drugs which may receive FDA approval. OPK has made lucrative acquisitions and is run by CEO Dr. Philip Frost, who previously managed and sold two pharma companies, one returning 6,000%. With a CEO that has "the Midas touch," and other advantages, Cramer thinks that Opko is the stock to buy.
Questcor (QCOR) is a stock Cramer admitted he got wrong in the past; he recommended it and it got cut in half. He told a caller he didn't feel like offering an opinion about QCOR.
Acadia (ACAD) is developing a drug to treat Parkinson's disease. It has had a huge run, but is a good spec.
Three deals actually made the stock of the acquirer jump, rather than the stock of the company being taken over. "This isn't normal," said Cramer, and took a closer look at the deals. These takeovers are so beneficial to the parent company, that the stock price reflected the power of the deals. Gannett (GCI) rose 34% with its acquisition that transforms it into more of a broadcasting company with a newspaper business than chiefly a newspaper company. Since the latter industry is in secular decline, lower exposure to it is good for GCI. Actavis (ACT) ran up 14 points when it expanded its generic drug and women's health business with its acquisition. B&G Foods rose 2 points and has continued to go higher because it acquired a gluten-free brand that will expand the company's exposure to healthy food, which is a popular trend.
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.