Cramer's Mad Money - Earnings and IPOs to Watch (11/6/09)

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Includes: ACOM, AMAT, BNI, CAG, CBIO, CLNE, DIS, DSX, EXEL, FDO, FLR, FSYS, JOY, JWN, KSS, M, URBN, VMC, WMT
by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday November 6.

Next Week's Game Plan: Clean Energy Fuels (NASDAQ:CLNE) Fuel Systems Solutions (NASDAQ:FSYS), Fluor (NYSE:FLR), Vulcan Materials (NYSE:VMC), Diana Shipping (NYSE:DSX), Burlington Northern (BNI), Joy Global (JOYG), Ralcorp (RAH), Applied Materials (NASDAQ:AMAT), Macy's (NYSE:M), Kohl's (NYSE:KSS), Wal-Mart (NYSE:WMT), Urban Outfitters (NASDAQ:URBN), Nordstrom (NYSE:JWN), Walt Disney (NYSE:DIS), Ancestry.com (NASDAQ:ACOM)

The "awful" unemployment number of 10.2%, the highest in 26 years, was not enough to prevent a 17 point increase in the Dow and a 2 point uptick in the S&P 500; Cramer thinks this is incredible on such bearish news and is an indication that the economy is definitely making a comeback. Cramer gave viewers a game plan on how to trade next week's earnings.

Cramer doesn't expect a good quarter from Clean Energy Fuels (CLNE) which is scheduled to report after hours on Monday, but he says that doesn't matter; he likes the company for its exposure to natural gas, not for its current earnings. A related pick is Fuel Systems Solutions (FSYS), which fixes retrofits cars so they will operate on natural gas. Although the stock has risen 46% since it reported earnings on Thursday, Cramer thinks the stock could go higher.

Fluor's (FLR) report on Monday will provide clues as to when government funding will reach the infrastructure sector. Vulcan Materials said it has received few federal funds, so Cramer predicted a strong quarter for Vulcan (VMC).

Warren Buffett's Burlington Northern (BNI) acquisition bodes well for coal, and in turn, for China which according to Joy Global (JOYG), is currently the world's biggest market for coal equipment. Cramer predicts the dry bulk shippers will be the next to rally, and while Diana's (DSX) Tuesday report isn't expected to be so strong, he thinks 2010 will be a better year for Diana than 2009.

Ralcorp's (RAH) earnings on Tuesday will be a good tell on the mood of the consumer. If this private label cereal maker says sales are strong, the trade-down thesis is probably still intact.

A downgrade in the semi-conductor sector hasn't stopped Cramer from being bullish on Applied Materials (AMAT). On its Wednesday report, he expects to hear good news about orders, which he thinks are more important than earnings.

Retailers Wal-Mart (WMT), Kohl's (KSS), Nordstrom (JWN), Urban Outfitters (URBN), Macy's (M) report in the coming week, and Cramer would recommend buying Macy's prior to its earnings on Wednesday if the stock weren't up by a dollar. He doesn't expect strong results from Wal-Mart or Kohl's, but thinks Nordstrom and Urban Outfitters will report solid earnings.

Cramer thinks Disney (DIS) is a crucial measure of consumer confidence, and is not yet sure what call to make on the stock. With the success of recent IPOs like Ancestry.com (ACOM) and Hyatt, Cramer might recommend buying Dollar General's IPO, but wants to do more research.

CEO Interview: Howard Levine, Family Dollar (NYSE:FDO)

Cramer urged investors to sell Family Dollar in August, and began Friday's show just as bearish on the stock, given competitor Dollar General's upcoming IPO and the potential turnaround in the economy, which may make consumers less likely to shop at discount stores. However, CEO Howard Levine inspired Cramer to change his tune.

Howard Levine emphasized the new look and feel of Family Dollar stores, and invited Cramer on a tour through the aisles. Levine says the company is updating its technology to allow it to accept credit and debit cards and food stamps, and is improving the quality and the packaging of private label brands, which he wants to increase from 10% of the merchandise to 15-20%. Cramer said he was amazed by the bargains and said Family Dollar has been "overly punished. Even if the economy does get better, Family Dollar is still a buy, buy, buy."

CEO Interview: Dr. George Scangos, Exelixis (NASDAQ:EXEL)

How can a company that isn't profitable and whose stock is hovering at the $10 level for seven years be a buy? Exelixis has partnerships with the leaders in the pharmaceutical industry: Bristol Myers Squibb (NYSE:BMY), GlaxoSmithKline (NYSE:GSK), Roche/Genentech (Private:DNA) and Sanofi-Aventis (NYSE:SNY); any of these might be likely to buy Exelixis, whose drug XL184 is designed to block the growth of tumors. The drug is undergoing trials to find additional indications for various types of cancers. Dr. Scangos emphasized that drug discovery and development can take some time, sometimes as much as 10 years. He also says the company has been relying on partners to defray development costs and has not had to raise cash in capital markets.

Cramer says Exelixis is interesting but would wait until the company's update on drugs' performance on November 15 before recommending it.

Targacept (TRGT)

Targacept is hoping to find a partnership for its anti-depressant drug TC-5214. The stock rallied $4 on the Phase II data on October 15 and is back to its former levels. Currently, 14 million Americans suffer from depression and most medications carry serious side effects, including weight gain. So far, the drug is shown as more effective than other drugs without producing side effects. Cramer recommends Targacept as a speculative play with significant risk and reward potential.

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