Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday July 17.
Takeaways From the Delivering Alpha Conference: Pepsico (NYSE:PEP), Mondelez (NASDAQ:MDLZ), Coca-Cola (NYSE:KO), Dupont (NYSE:DD), Express Scripts (NASDAQ:ESRX), Qualcomm (NASDAQ:QCOM), SandRidge (NYSE:SD), EOG Resources (NYSE:EOG), WisdomTree Japan Hedged Equity ETF (NYSEARCA:DXJ), Caterpillar (NYSE:CAT), Xilinx (NASDAQ:XLNX)
Cramer discussed an interview with celebrated investor Nelson Peltz in which he said Pepsi (PEP) could move from $84 to $178 if the company buys Mondelez (MDLZ). Cramer said he thought Coca-Cola (KO) should buy Mondelez to diversify its offerings away from just beverages. Peltz has stakes in both PEP and MDLZ. Cramer thinks PEP could go higher without the acquisition.
Peltz is also buying a stake in Dupont (DD) and gave a one word response for his action; "Paint." Cramer interpreted that to mean that Peltz may believe that Dupont should split itself up into a science division and a commodity division, the latter would include paint. Cramer thinks Dupont should follow Peltz's implied advice.
Leon Cooperman recommends selling bonds and buying Express Scripts (ESRX), Qualcomm (QCOM) and SandRidge Energy (SD). ESRX should benefit from the Affordable Care Act, Qualcomm has become cheap on negative publicity, but Cramer prefers Xilinx (XLNX). SandRidge, Cramer believes, is too risky, because it is too levered to the price of oil. He prefers EOG Resources (EOG).
Mark Kingdon suggests buying Japanese auto companies, but Cramer prefers the WisdomTree Japan Hedged Equity ETF (DXJ) on the general comeback of Japan.
Jim Chanos wants to bet against Caterpillar (CAT) on the decline of the commodity supercycle. Cramer would not short CAT, but since it has had a 10% run, there are cheaper stocks in the sector one could buy on a decline.
Cramer discussed an interview he had with famed investor John Paulson, who shorted sub prime housing not long before the housing crisis and made billions from this move. Paulson's call on housing is now bullish; the call goes against the grain of those worried about rising mortgage rates. In spite of rates going higher, Paulson believes that increasingly, people are going to feel it is advantageous to buy rather than rent. Realogy (RLGY) is a good play on this trend, although Cramer would wait for a dip to buy. Bank of America (BAC) is roaring back, thanks to housing, and Cramer thinks it is a buy right here, along with Wells Fargo (WFC), the largest holding in Cramer's charitable trust. Radian (RDN) and Genworth (GNW) are buys in the mortgage insurance space. When it comes to homebuilders, Cramer would wait and see the earnings reports. "Go with Paulson," Cramer advised, "Not against him."
Cramer took some calls:
Amazon (AMZN): People have been suggesting to Cramer that he should recommend shorting Amazon, but he doesn't "feel it is right. Amazon is a great American company."
CSX (CSX) reported a strong quarter, and CSX has been helped by the switch from natural gas back to coal. "I'm a buyer."
Groupon (GRPN) has had a huge gain, and Cramer doesn't want to recommend it at this level. He approves of the change in management but is not comfortable with the business model.
How could Yahoo (YHOO) miss numbers and still rise higher? Cramer thinks that action is a "tell" for a winning stock. In the single year since Marissa Mayer took over as CEO, she has been making acquisitions (with a 24% stake in Alibaba), bringing in great technical minds to work at Yahoo and has developed almost from scratch a mobile strategy. The only advantage Yahoo had the day Mayer came in was that it was flush with cash, but Mayer put that cash to work. The challenges faced by the company this quarter were that search and revenues were challenged, but Yahoo is a much better company than it was a year ago; "Mayer is a winner and it looks like she is going to keep winning."
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