Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday October 17.
Great Companies Don't Make Excuses: Verizon (NYSE:VZ), American Express (NYSE:AXP), Goldman Sachs (NYSE:GS), UnitedHealth (NYSE:UNH), IBM (NYSE:IBM), PPG (NYSE:PPG), eBay (NASDAQ:EBAY), Xilinx (NASDAQ:XLNX). Other stocks mentioned: Harley Davidson (NYSE:HOG), Walgreen (WAG), Aqua America (NYSE:WTR)
"With Washington, without Washington, great companies don't make excuses," said Cramer on a day the Dow fell just 2 points because new Dow additions, IBM (IBM), Goldman Sachs (GS) and UnitedHealth (UNH) reported disappointing numbers. Cramer thinks the winners are more representative than the losers, and discussed a few:
Verizon (VZ) delivered everything Cramer looks for in an earnings call: double digit growth, revenue growth, operating cash flow, increase in margins, customer loyalty, innovation, more market share and beating and raising the estimates. While some think VZ is overpaying for the rest of Verizon Wireless, the company is doing everything right, and it has been a beloved pick on Mad Money.
American Express (AXP) seemed like it was on the ropes, but beat estimates and raised net income by 9%.
PPG (PPG) is spinning off its more commoditized businesses and is confounding those who think there is not enough growth opportunity for industrials. Management reported improvement in Europe.
IBM: Cramer was "aghast" at IBM's quarter, which he thinks is one of the worst of 2013. It has minuscule growth and is performing poorly in China. One analyst confronted management; "You've missed consensus revenue expectations for 7 quarters." The only remedy IBM offers is to buy back stock. IBM is a sell.
eBay (EBAY) claimed ecommerce is decelerating, while AXP told a very different story.
Xilnx (XLNX) is a holding in Cramer's charitable trust and the name disappointed him, but he admitted he bought more on weakness because the underlying company is good. However, XLNX lost out on a deal to a competitor, and is disappointing.
Cramer took some calls:
Harley Davidson (HOG) is doing incredibly well. "People try to second guess Harley Davidson," but it is a well-loved brand.
Walgreen (WAG) has seen a remarkable turnaround and is not done going higher.
Aqua America (WTR) is a buy because of its steady dividend.
CEO Interview: Michael Kneeland, United Rentals (NYSE:URI)
United Rentals (URI) has its finger on the pulse of the American economy. URI rents machinery to large companies and reported a 4 cent earnings beat with slightly light revenues that came in at 7% compared to the street's expectations of 8%. The company reaffirmed guidance and announced a buyback of 8% of URI's shares. CEO Michael Kneeland talked of an 8% rise in rental revenues and the company's ability to raise prices; "There are undertones of a recovery underway," and he expects a strong 2014. Domestic drilling has created more demand and while non-residential construction was stalled for a time, Kneeland says he sees it coming back.
2 Undervalued Stocks: Best Buy (NYSE:BBY), Pioneer Resources (NYSE:PXD). Other stocks mentioned: U.S. Silica (NYSE:SLCA), American Capital Agency (NASDAQ:AGNC), Nokia (NYSE:NOK), Microsoft (NASDAQ:MSFT)
Stock prices sometimes are divergent from their fundamentals. Cramer discussed 2 undervalued stocks: Best Buy (BBY) and Pioneer Resources (PXD). Last year, many thought that Best Buy would go under because it was seen as a showroom for ecommerce. BBY has a hot new consumer products cycle and many consumers are making the shift from apparel to hard goods. Management is improving price controls and customer service. Cramer expects a buyback and improved same store sales from BBY.
Pioneer Resources (PXD) has exposure to the second largest oil play in the world, located in the U.S. Cramer thinks the stock will be fairly valued only when it reaches $300, because it has discovered more oil than its market cap indicates.
Cramer took some calls:
U.S. Silica (SLCA) is a good fracking play, but since it is up 106%, investors should take some off the table.
American Capital Agency (AGNC) is a sell, because Cramer doesn't like mortgage REITs because their dividends are red flags and Fed tapering will be hard for them to cope with.
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