Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday August 26.
The Electric Eclectic 52 Week High List: TJX (TJX), Cabot Oil & Gas (COG), Amgen (AMGN), Lockheed Martin (LMT), Raytheon (RTN), Viacom (VIA), Hess (HES), Chesapeake Energy (CHK), Halliburton (HAL), FedEx (FDX), Dollar General (DG), Netflix (NFLX), Best Buy (BBY), Dow Chemical (DOW), Wynn Resorts (WYNN), Humana (HUM). Other stocks mentioned: Onyx Pharmaceuticals (ONXX), MiX Telematics (MIXT), Altria (MO), AT&T (T), Red Hat (RHT)
With the Dow declining on Monday over concerns about possible strikes against Syria, Cramer thinks that the members of the new 52 week high list are "eclectic and electric" enough to indicate that the market has broad leadership. He doesn't think the bull market is on its last legs, but is on "different legs":
TJX (TJX) is one of retail's biggest winners and has been benefiting from the housing turnaround. Cramer predicts a good quarter.
Cigna (C) has been able to get higher prices for insurance and has exposure to real estate.
Cabot Oil & Gas (COG) is one of the fastest growing oil and gas companies and may be a takeover target.
Lockheed Martin (LMT) was not hurt by sequester, and it and Raytheon are performing well.
Viacom (VIA) has been aggressively buying its own stock.
Hess (HES) is bringing out value.
Chesapeake Energy (CHK) may be a takeover candidate.
Haliburton (HAL) is cashing in on high oil prices.
FedEx (FDX) is a surprise member of the 52 week high list, since it reported a disappointing quarter, but it is a play on the turnaround of the global economy.
Dollar General (DG) is the ultimate trade-down play and there is chatter about a possible takeover.
Netflix (NFLX) may be overvalued, but it has been overvalued for a long time and may have more legs, because it is a "cult stock."
Best Buy (BBY) has shown dramatic improvement, up 200% from its lows. The reason for the surge is the comeback in hardware.
Dow Chemical (DOW) is benefiting from its cheap feed stock products and plastics.
Wynn Resorts (WYNN) is up because China is coming back.
Humana (HUM) is another winning HMO, thanks to the Affordable Care Act.
Cramer took some calls:
MiX Telematics (MIXT): "It's not the cloud play you need."
Red Hat (RHT) is a good company, but there is some risk. Cramer likes it.
Tesla Motors (TSLA)
Why has Tesla Motors (TSLA) quintupled since the beginning of the year? The turning point was when the stock broke out from $58 to $88 following its earnings in May. It now has a $21 billion market cap, a valuation that CEO Elon Musk concedes is "very generous," and "more than we have a right to deserve." Prior to the quarter, there were rumors that there was no real demand for the cars, that they cost too much to produce, and that Tesla needed financing. To the amazement of the street, Tesla reported a profit, not a loss, that it had to increase production to meet demand, that it was spending less per car and gross margins had improved from 8% to 17%. Tesla management said it would expand its galleries by 50%, that 25% of people who test drove a Tesla bought one. The financing arrangements have increased the number of consumers, and with high oil prices internationally, it makes sense for more people to invest in a Tesla. Management said it had no plans to raise funding, so away went the rumor about a dilutive offering. "There is too much good news here to ignore," said Cramer.
Cyber security stocks are a huge theme, but stocks in the sector are down. After a lackluster quarter for Hewlett-Packard (HPQ) CEO Meg Whitman said she wants to expand into the anti-hacking space with an acquisition. Cisco (CSCO) recently bought internet security play Sourcefire (FIRE). With cloud computing rising in popularity, more sophisticated security systems need to be in place to protect data. Cramer discussed various ways to play the cyber security theme, with a view to potential takeovers:
Check Point (CKP) trades at 17 times earnings, and is not an expensive stock, but has lost its luster and lacks significant upside potential.
Palo Alto (PANW) was an IPO Cramer said to get into, because it rose 71%. However, he suggested taking gains, and the stock has fallen off since its IPO. The company reported an earnings miss, but Cramer thinks it is likely its network security firewall platform will become more popular. It is growing at a reasonable clip and has good risk reward.
Fortinent (FTNT) is $8 off its high and has a niche market with small to medium clients. Its firewall is built into its larger security package.
Cramer would consider buying either FTNT or PANW.
Cramer took some calls:
ADT (ADT) is going to have to face competition from AT&T, and Cramer prefers AT&T to ADT.
Susquehanna Bancshares (SUSQ) is a mid-Atlantic regional bank with wealth management and mortgages. It reported a good quarter, but was boosted by refinancing. Cramer would be careful about the banks.
Vonage (VG) was a company Cramer once nicknamed "Vonage the dog." It has turned itself around somewhat and has stabilized cash flows. Cramer is still worried about some aspects of its business and would stay on the sidelines.
Denny's (DENN) has done well and has been cleaning up its balance sheet, but doesn't have as much growth as some other restaurant plays. It has a stronger cash flow and has healthier choices on its menu. Cramer would consider recommending it as a speculative play.
Facebook (FB) is one of Cramer's largest positions in his charitable trust. It will likely rally into the quarter, and Cramer might recommend taking some profits.
Cobalt International Energy (CIE): Cramer is surprised it wasn't down more. He would stay away.
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