Cramer's Mad Money - Earnings Reports to Watch This Week (9/18/09)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday September 18.

Earnings Reports to Watch This Week

1. Research in Motion (RIMM). Cramer thinks RIM's report will be the most essential of the week and will be a gauge for the wireless group, particularly Apple and Palm. While the stock is up 20% in 20 days the proof is in the earnings report.

2. Rite Aid (NYSE:RAD) is a stock that should be sold prior to its earnings report on Thursday. Cramer prefers CVS Caremark (NYSE:CVS) and Walgreen (WAG) over Rite-Aid, which he says has been a serial underperformer.

3. and 4. Conagra (NYSE:CAG), General Mills (NYSE:GIS): These earnings reports on Tuesday and Wednesday will indicate whether investors believe a recession will continue. If these companies do well, there will be a sector rotation out of cyclical stocks like Caterpillar (NYSE:CAT) and Freeport McMoRan (NYSE:FCX) and into defensive stocks.

5. Autozone (NYSE:AZO): If Autozone announces a strong quarter on Wednesday, Cramer may reiterate his call on Munro Muffler Brake (NASDAQ:MNRO), which is already up 56% since August, and his bullishness on autos in general.

6. Paychex (NASDAQ:PAYX): Cramer would pay attention to Paychex report on Wednesday, since it is a tell for employment, but he would not buy the stock prior to its earnings.

7. Bed, Bath and Beyond (NYSE:BBY): If BBY, which is sitting at its 52-week high, drops after its earnings report, then it may indicate that the retail sector might be in for a decline after an amazing run.

The Forgotten Tech Spec: Tekelec (NASDAQ:TKLC)

Cramer has been a spokesman for the wireless trend; his wireless index is up 13% since August, while the S&P 500 has only risen about 7%. Speculative names Broadcom (BRCM) and Ciena (NASDAQ:CIEN) have seen 30% gains. However, one speculative tech pick has been unfairly left in the dust: Tekelec. The company creates technology that allows local number portability, or the ability to use the same number after changing carriers, and is dealing with solutions for wireless overload, particularly in the area of text messages.

Tekelec has been overlooked because some investors have sold after its run from $11 to $20, and The Street panned the company's earnings because of a delay in local number portability in India, but when the release is made, "India will be gigantic for Tekelec," as well as China, Brazil and Russia. Packages such as Sprint's, which includes text capability along with internet and television will also increase demand for Tekelec's technology.

Tekelec trades at just 12 times earnings, but Cramer expects to see a 68% gain in the stock price. Cramer reiterated the same rules that apply to any tech stock; do research and use limit orders when buying.

The SEC's Messed up Priorities

While the SEC looked the other way at Bernie Madoff, repealed the uptick rule and have allowed harmful UltraShort ETFs to wreak havoc with investments, why would it suddenly become militant about banning flash trading? “This is actually a part of the market that’s working," said Cramer. Fast computer trades allow investors to get the best bid on stocks and levels the playing field. Cramer thinks the SEC's priorities are out of whack.

Kraft (KFT), Hain Celestial (NASDAQ:HAIN), Cadbury (CBY)

Cramer thinks Kraft is making a big mistake buying Cadbury, and suggests making a bid for Hain Celestial, given the popularity of health food over sweets like Cadbury that "rot your teeth and make you fat." Popular food stores like Whole Foods doesn't stock a single Cadbury product, while Terra chips, Celestial Seasonings teas and other Hain products are always seen on the shelves at Wal-Mart and other stores.

Hain reported a 7% increase in sales year-over-year, a 1.56% uptick in gross margins and an improved balance sheet. If Kraft doesn't buy Hain, Cramer thinks another company will and the stock could see an 85% premium if it is bought at the same multiple -11.6- that Kraft plans to buy Cadbury.


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