Cramer's Mad Money - Oh Yes, They Called It A Streak (9/12/13)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday September 12.

Raytheon (NYSE:RTN), Lockheed Martin (NYSE:LMT), Boeing (NYSE:BA), United Technologies (NYSE:UTX), EOG Resources (NYSE:EOG), Anadarko Petroleum (NYSE:APC), Noble Energy (NYSE:NBL), Starbucks (NASDAQ:SBUX), Humana (NYSE:HUM), Cummins (NYSE:CMI), Nike (NYSE:NKE), Wynn Resorts (NASDAQ:WYNN), Ulta Salon (NASDAQ:ULTA), Lumber Liquidators (NYSE:LL), Tractor Supply (NASDAQ:TSCO), Walgreen (WAG)

The streak in the Dow was broken on Thursday, when the index closed down 26 points after 7 consecutive positive sessions. The S&P 500 and Nasdaq were also down. One aspect of this winning streak that was unusual was that 10% of stocks in the S&P 500 were at 52 week highs and many have reached all time highs. In addition, a large diversity of sectors are performing well at the same time; usually industrials, for example, do not rise alongside defensive stocks.

One major surprise this year has been the strong performance of defense stocks in spite of worries about sequester. Raytheon (RTN) and Lockheed Martin (LMT) have been winners. Boeing (BA) is flying, given the strong demand for the Dreamliner, and United Technologies (UTX) is also benefiting from strength in aerospace. High oil prices actually help BA, because the Dreamliner is a fuel efficient plane, and when energy prices rise, so does demand for the Dreamliner. EOG Resources (EOG), Noble Energy (NBL) and Anadarko (APC) are turning more profits because of advanced drilling techniques.

It is worthy of note that a stock like Starbucks (SBUX) can be on the 52 week high list along with an HMO like Humana (HUM), when these two sectors usually trade in opposite directions. The same is true of an industrial like Cummins (CMI) and the drugstore, Walgreen (WAG). Both stocks are hitting new highs, but it is unusual to see an industrial on the same 52 week high list as a drug store. CMI, Nike (NKE) and Wynn Resorts (WYNN) are benefiting from the comeback in the Chinese economy. Ulta Salon (ULTA) was also on the 52 week high list, and Cramer thinks Ulta, along with Lumber Liquidators (LL) and Tractor Supply (TSCO) are 3 keys to gauging where growth stocks are going in this market.

CEO Interview: Michael Weiss, Express (NYSE:EXPR)

In the hit or miss sector that has been apparel, Express (EXPR) has been a hit. The stock is up 46% and is still cheaper than many other retailers; it trades at a multiple of 12.6 and has a 14.5% growth rate. Same store sales improved 6%, and on its conference call, management talked about expansion domestically and internationally. CEO Michael Weiss explained the success of his company; "We believe there are patterns in what people buy and the way they buy it. The talent is to identify those patterns and go with them." The company undertakes extensive testing to try to predict what the next big thing will be. Weiss is confident about the future of bricks and mortar retail, as consumers will sometimes prefer the experience of going to a store to ordering at home. "This is a winning stock," Cramer said.

Molex (NASDAQ:MOLX), TE Connectivity (NYSE:TEL), Amphenol (NYSE:APH), OSI Systems (NASDAQ:OSIS), VirnetX Holding (NYSEMKT:VHC)

Molex (MOLX) is going to be taken over at a 31% premium, and the stock has soared. Cramer thinks it is too late to buy this producer of connectors for electrical devices, but the sector is "hot" and there are two other major players: TE Connectivity (TEL) and Amphenol (APH). Cramer believes APH is too expensive and prefers best-of-breed TEL, which has 18% market share and is the biggest pure play on connectors. It sells at 9.4 times earnings with a 10% growth rate. Given its market cap, TEL is unlikely to be taken over, but the company is strong on its own. Around 40% of its sales are from the auto industry, which is in bull market mode and it will benefit from the turn in Europe. Operating margins are at a healthy 14% and growing. Cramer predicts it is likely TEL may rise 29% from its current levels.

Cramer took some calls:

OSI (OSIS) is expensive. "Don't chase it up here."

VirnetX (VHC) has patents that are "not going to be worth as much as people think."


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