Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday April 5.
10 Raging Bull Markets: Urban Outfitters (NASDAQ:URBN), Abercrombie & Fitch (NYSE:ANF), Aeropostale (NYSE:ARO), Jones New York (NYSE:JNY), VF Corp (NYSE:VFC), Foot Locker (NYSE:FL), Skechers (NYSE:SKX), Nike (NYSE:NKE), Radio Shack (NYSE:RSH), Best Buy (NYSE:BBY), Sony (NYSE:SNE), Corning (NYSE:GLW), Tiffany (NYSE:TIF), Whole Foods (WFMI), Williams Sonoma (NYSE:WSM), Coach (NYSE:COH), Yum Brands (NYSE:YUM), Darden Restaurants (NYSE:DRI), Cheesecake Factory (NASDAQ:CAKE), Marriott (NASDAQ:MAR), Starwood Hotels (NYSE:HOT), Royal Caribbean (NYSE:RCL), Carnival Cruises (NYSE:CCL), Boeing (NYSE:BA), Rockwell Automation (NYSE:ROK), Honeywell (NYSE:HON), Caterpillar (NYSE:CAT), Disney (NYSE:DIS), Ingersoll Rand (NYSE:IR), Emerson Electric (NYSE:EMR), Eaton (NYSE:ETN), CarMax (NYSE:KMX), AutoZone (NYSE:AZO), Johnson Controls (NYSE:JCI), UPS (NYSE:UPS), FedEx (NYSE:FDX), CSX (NYSE:CSX), Union Pacific (NYSE:UNP), Norfolk Southern (NYSE:NSC), Wellpoint (WLP), Aetna (NYSE:AET), General Dynamics (NYSE:GD), Lockheed Martin (NYSE:LMT), Northrop Grumman (NYSE:NOC), MetLife (NYSE:MET), Lincoln National (NYSE:LNC), BB&T (NYSE:BBT), PNC Financial (NYSE:PNC), Huntington Bancshares (NASDAQ:HBAN)
The bears are being chased into oblivion with nowhere to hide. The government is much less of a threat than many feared and now it seems that nothing can stop the recovery. Cramer discussed ten bull markets driving the economy.
1. Retail. Parents are being profligate and giving their kids money as evidenced by the upturn in teenage retail names Urban Outfitters (URBN), Abercrombie & Fitch (ANF) and Aeropostale (ARO). Regular apparel names Jones New York (JNY) and VF Corp (VFC) are performing well, with footwear companies Foot Locker (FL), Skechers (SKX) and Nike (NKE) running. Electronics are flying off the shelves as demonstrated by an uptick in Radio Shack (RSH), Best Buy (BBY), Sony (SNE) and Corning (GLW).
2. Restaurants. Although in the category of retail, restaurants deserve special mention because they are a barometer of consumer confidence. Cramer is impressed with the charts of Yum Brands (YUM), Cheesecake Factory (CAKE) and Darden Restaurants (DRI).
4. Aerospace. Airlines don't seem to have enough planes to accommodate all the new travelers. Cramer would buy Boeing (BA) on a decline, and would also take a look at Rockwell Automation (ROK) and Honeywell (HON).
5. Industrials. Many of these names are at their 52 week highs or are not far off in spite of the fact they should be down because of Obama's agenda: Caterpillar (CAT), Eaton (ETN), Ingersoll-Rand (IR) and Emerson Electric (EMR).
6. Autos are revving up with the prediction that there will be 12 million new cars on the road this year, a 50% increase in production over 2009. Cramer's auto picks include CarMax (KMX), AutoZone (AZO), Johnson Controls (JCI).
8. "The market has spoken on healthcare...the more customers the merrier," Cramer said. Now anything with the word "health" in it is headed up, including HMOs like Wellpoint (WLP) and Aetna (AET).
10. Financials. Everyone thought insurance companies were toast, but now insurance is one of the strongest spaces, as shown by strong performance in MetLife (MET) and Lincoln National (LNC). Regional banks are also showing signs of strength: BB&T (BBT), PNC Financial Services (PNC), Huntington BancShares (HBAN).
California Here I Come: Nordstrom (NYSE:JWN), Ross Stores (NASDAQ:ROST), 99 Cents Only (NYSE:NDN), Dollar Tree (NASDAQ:DLTR), Family Dollar (NYSE:FDO), Costco (NASDAQ:COST)
With 12.5% unemployment, well above the 9.5% national average, a slow housing market and $20 billion in debt, California has certainly seen better days. However, Cramer says the Golden State is headed for a turn. Population in Southern California is slowly increasing, as are housing prices. Although California's debt is substantial, it is apparently attracting more buyers than Greece's debt. Cramer devoted a segment Monday to discussing California's retail sector.
Mall vacancies are peaking, and should turn around in 2011. Cramer suggests playing the expected turnaround in California's malls with retailers that have at least 25% of their stores in the Golden State. Nordstrom (JWN), with 29% of its stores in California, should benefit from the state's recovery, since stores located there are among the most productive in the country and 50% of JWN's credit card delinquencies are among Californians. Ross Stores (ROST) has a strong dividend and 26% of its stores are in the Golden State. While 75% of 99 Cents Only Stores (NDN) are in California, Cramer thinks Dollar Tree (DLTR) and Family Dollar Stores (FDO) are better-run.
Cramer's favorite retail play on California is Costco (COST), which has had none of the state's recovery priced in and has 28% of its stores located in the state. On its latest conference call, Costco discussed improvement in California the last three months and same store sales are positive in the state. Costco will also benefit from recovery in other states and is already seeing increased sales from the rise in discretionary spending. While the company missed estimates by a penny last quarter because of a temporary increase in expenses, Costco impressed at its latest analyst day with its goal of opening 30 new stores per year.
Mergers and Acquisitions Phillips Van Heusen (NYSE:PVH)
Cramer devoted the week to discussing mergers and acquisitions, which are up 18% over last year. One thing to consider in an acquisition is the stock price of the acquirer. Usually shares of the acquirer fall on worries of stock dilution, leverage required to make the purchase and whether the deal will work. However, when the stock price of the acquirer rises, that is a sign that the deal will be healthy. When Phillips Van Heusen (PVH) announced it would buy Tommy Hilfiger for $3.1 billion, PVH's stock price rose on the news and is now just one point off its 52-week high. The deal should generate $5 billion in sales, will make PVH the fourth largest apparel company and give it a huge 45% market share in dress shirts. The acquisition should add 20-25 cents in earnings per share to the 2010 fiscal year and 75 cents to a dollar for the first complete year. Tommy Hilfiger's strong performance in Europe will be good for PVH and there is tremendous opportunity to expand into Asia.
What to do about Apple (NASDAQ:AAPL)
Cramer confessed that Apple's (AAPL) performance has been "better than I ever dreamed" after the release of the iPad. Now what to do with Apple? He said whether Apple is a trade or an investment, it is important to take some profits, since 40 buys on the stock, even if it is loaded with cash and is trading at a multiple of only 17, are "way too many buys."
Jim Cramer was up 31% in 2009. Click here now to trade alongside him.
Get Cramer's Picks by email - it's free and takes only a few seconds to sign up.