Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, January 17.
16 Earnings To Watch In The Week Ahead: Delta Air Lines (NYSE:DAL), Johnson & Johnson (NYSE:JNJ), IBM (NYSE:IBM), Coach (NYSE:COH), Norfolk Southern (NYSE:NSC), United Technologies (NYSE:UTX), Netflix (NASDAQ:NFLX), ebay (NASDAQ:EBAY), Lockheed Martin (NYSE:LMT), Microsoft (NASDAQ:MSFT), Starbucks (NASDAQ:SBUX), Bristol Myers (NYSE:BMY), Stanley Black & Decker (NYSE:SWK), Honeywell (NYSE:HON), Kimberly Clark (NYSE:KMB). Other stocks mentioned: American Express (NYSE:AXP), Intel (NASDAQ:INTC), General Electric (NYSE:GE), Michael Kors (NYSE:KORS), CSX (NASDAQ:CSX), Wendy's (NASDAQ:WEN), American Airlines (NASDAQ:AAL)
This coming week ushers in earnings fever, and Cramer cautioned viewers to look beyond the headlines. Following American Express' (AXP) recent report, the news painted a dull picture, but on further investigation, the numbers were not so bad, and the stock rallied $3. Management of Intel (INTC) and General Electric (GE) gave cautious reports, but both stocks rose. Cramer thinks INTC and GE are buys for 2014. He discussed earnings to watch in the week ahead.
IBM (IBM) is facing low expectations, and management needs to give a clear plan for 2014.
United Technologies (UTX) has already tempered expectations and might be set to go higher on the strength of aerospace and commercial construction.
Netflix (NFLX) has jumped so much that it needs a perfect story to avoid a selloff. NFLX tends to get hammered after earnings, so Cramer might buy it then if there is no are no problems mentioned by management concerning competition or higher fees. It is down 10% so far this year.
eBay (EBAY) has gotten some negative chatter on the street, but the stock has not fallen. It could sell off on any bad news.
Lockheed Martin (LMT) was thought to have been vulnerable to sequester last year, but the shorts had to cover. LMT seems like a "charmed" stock, since it seems to resist declines.
McDonald's (NYSE:MCD) is on the wrong side of history, given the healthy eating trend. However, despite its lackluster fundamentals, MCD consistently refuses to decline beyond the lower $90s. Cramer thinks Wendy's (WEN) is a better stock.
Microsoft (MSFT) is not a call people will listen to for earnings, but to find out who the new CEO will be. Cramer thinks if the new CEO is an outsider who can unlock value, the stock will perform better than if it is an insider.
Starbucks (SBUX): CEO Howard Schultz admits SBUX is not immune from weakness in mall traffic, but it is doing well with gift cards. Cramer is bullish on SBUX for the long-term.
Bristol Myers (BMY) has embraced biotech like no other big pharma.
Stanley Black & Decker (SWK) is unlikely to report as horrid a quarter as it did previously. There could be a turn at hand.
Honeywell (HON) is a holding for Cramer's charitable trust, and he is not selling going into earnings because he believes in visionary CEO, David Coty.
Kimberly-Clark (KMB) should give information about the spin off of its healthcare business.
Cramer took some calls:
CSX is a company whose conference call Cramer didn't like the last time around, since management did not discuss the decline in coal.
There is a bull market in video game consoles; sales are up 50%. Actual games still have to catch up, and Cramer thinks that companies like Take Two Interactive (TTWO), creator of the hugely popular "Grand Theft Auto" series, will not be hurt excessively by weakness in Best Buy (BBY) or Gamestop (GME), since many of its games are purchased digitally. The new version of "Grand Theft Auto" was released in September, but the stock has barely moved since then. CEO Strauss Zelnick says he thinks the street's perception is that TTWO is all about "Grand Theft" auto, when it has many other great titles, including sports simulation games, for which it sells advertising. Cramer thinks TTWO should be much higher.
Robotics is becoming popular, with Google (GOOG) buying Nest, a producer of smart smoke detectors and Amazon (AMZN) making acquisitions to include the use of robots for moving inventory, a move that could shave off 20-40% from the cost of filling orders. iRobot (NASDAQ:IRBT) is a small, pure play on robots and rose 85% last year. It specializes in robots for commercial use, particularly for cleaning tasks, such as vacuuming, mopping and cleaning drains. Around 90% of its robots are for private customers and 10% of its business is for military use. With troop withdrawal from Afghanistan and Iraq, IRBT is researching other uses, such as healthcare and video conferencing. The company reported weaker than expected revenues last time around and lowered guidance; it got hit and then rebounded quickly. Although it may seem expensive with a multiple of 32, the number is actually 27 when taking into account the amount of cash it has. Cramer would do homework on this spec before buying.
On news that Beam (BEAM) is being bought by Japanese liquor company Santori at a 25% premium, Cramer discussed how breaking up a company can unlock value. Beam was once a part of Fortune Brands, whose management in 2010 divided the company into Fortune Brands and Home Security (FBHS), a golf business and Beam (BEAM). Those who bought FBHS and BEAM on the breakup tripled their money in 3 years. The street doesn't like conglomerates and prefers pure plays that can be analyzed more easily. In addition, pure plays are more likely to attract buyers, as Beam did in the case of Santori.
Twitter (NYSE:TWTR): Almost Unheard of Skepticism
Twitter (TWTR) has been downgraded aggressively, but the stock is steadfast. Of the analysts covering the stock, there are 8 buy ratings, 9 sells and 10 holds; "That level of skepticism is almost unheard of." The opportunity in Twitter is so great, it may well defy traditional valuation. While the stock is not cheap and has no earnings, it has substantial revenue growth. Cramer thinks any good news could lead to a slew of upgrades. Those wanting to buy should wait for a dip in Twitter, but it is likely they will not get one.
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