Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday January 3.
7 Things To Watch In The Week Ahead: The Container Store (NYSE:TCS), Micron (NASDAQ:MU), Bed Bath & Beyond (NASDAQ:BBBY), Monsanto (NYSE:MON), Alcoa (NYSE:AA). Other stocks mentioned: General Mills (NYSE:GIS), Xerox (NYSE:XRX)
Even though stocks were up 20% for 2013, Cramer does not see a correction on the horizon. He pointed out that in 14 of the last 17 years when the market was up 20%, it rose around 15% the following year. The two greatest determinants of stock prices are the jobs report and earnings. If companies report better than expected sales, earnings and outlook, then the stock prices usually rocket higher. If one of these elements is lackluster, the stock can get dinged. Cramer discussed earnings and other events to look for in the week ahead.
China Services PMI: China has been tepid. If this number is strong, Monday will be a great day for industrials.
Container Store (TCS) is a pricey stock, but could go higher if it reports strong same store sales and an aggressive expansion plan.
Micron (MU) is going to report a strong quarter, but if it reports that new factories for chips are being built, it might face lower prices, and the stock may go lower.
Bed Bath & Beyond (BBBY) tends to fall after earnings, but its conference call tends to be a bit too "cryptic" and truncated. Cramer wouldn't try to trade around this conference call.
Alcoa (AA): "I can't wait for this call," Cramer said. "There is not a piece of commerce that AA doesn't touch." This conference call is the highlight of the week, and Cramer would pay special attention to what management has to say about commercial construction, aerospace and auto numbers.
Non-Farm Payroll Number: This will likely set the tone for the year. Cramer expects it to be strong.
Cramer took some calls:
Xerox (XRX) has not executed well, but has a sound business plan. The stock has had a monster run without monster results. Cramer would look at the next earnings call to figure out why.
Top S&P 500 Performers of 2013: Netflix (NASDAQ:NFLX), Best Buy (NYSE:BBY), Delta Airlines (NYSE:DAL), E*Trade (NASDAQ:ETFC). Other stocks mentioned: KCG Holdings (NYSE:KCG). USAirways (LCC)
Cramer took a look at the strongest performers of the S&P 500 and discussed which ones are still worth buying:
Netflix (NFLX) shot up 297% in 2013, and is such a hot cult stock with such a huge concept that Cramer thinks it might be undervalued, even with a monster market cap. Still, in case its subscriber numbers drop suddenly, he would buy with deep in the money calls for added protection.
Micron (MU) is up 242% and is one of the dominant players in the DRAM space. However, those who would buy it now are coming in late, and there is chatter about new factories, which might cause lower prices. He would not buy MU now, although he likes it long term.
Best Buy (BBY) rose 230% because it closed weak stores, has competitive prices and has won over the skeptics. In fact, BBY is so well-loved right now, that Cramer would not buy it at its current price, but would wait for a pullback.
Delta Airlines (DAL) is Cramer's favorite S&P 500 stock, and can go higher even though it has already flown up 131%. Airline stocks have gone from being pariahs to powerhouses in 2013. DAL should benefit from the merger between USAirways (LCC) and American Airlines, and this space is in a multi-year bull market.
E*Trade (ETFC) is up 119% for the year, and is benefiting from the comeback of the individual investor. Cramer prefers to buy KGC Holdings (NYSE:KGC), which has a bad balance sheet, but may go higher when it refinances.
Google (NASDAQ:GOOG) vs. Amazon (NASDAQ:AMZN). Other stocks mentioned: Facebook (NASDAQ:FB), Yahoo (NASDAQ:YHOO), Citrix Systems (NASDAQ:CTXS), Salesforce.com (NYSE:CRM)
1. Potential for multi-year growth: Both have huge global potential, but Google's disadvantage is its inability to do business in China. Amazon scores 10. Google scores 7.
2. Total Addressable Market: Both score a 10, because both have potentially huge addressable markets.
4. Return of capital to shareholders: Both companies need to spend a lot of money on growth. However, Cramer questions some of the spending decisions Google has made, so it earns a 7 compared to AMZN's 9.
5. International expansion: The sky is the limit for AMZN, but again, Google is held back by China. Amazon,10. Google, 8.
6. Balance sheet: Both score a perfect 10.
7. Expensive or cheap on the outyears: Amazon is expensive in the outyears, and has some risk, but Google is cheap. Google, 10. Amazon, 5.
8. Management: Amazon earns an 8 compared to Google's 10 because Cramer's one worry is what will AMZN do when CEO Jeff Bezos retires, since the company depends so greatly on his management.
9. Dependence on the macro situation: Amazon earns a 10, and Google gets a 9, because companies cut back on advertising when times are tough.
10. Maintain or grow margins? Both companies see margins under pressure because of the amount they need to re-invest. Amazon has the difficulty of having to charge very low prices to stay competitive, so it earns a 7 compared to Google's 10.
Final score: Amazon beats Google by a nose, 89 to 87.
Cramer took some calls:
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