Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday April 7.
California Banks: City National (NYSE:CYN), CVB Financial (NASDAQ:CVBF), US Bancorp (NYSE:USB), Wells Fargo (NYSE:WFC), Westamerica Bancorp (NASDAQ:WABC)
Cramer said California was "the biggest turnaround story in America, if not the world." This might sound far-fetched given the San Jose Mercury's prediction that Los Angeles could go broke by June 30, Cramer thinks the headlines are obscuring the "monumental" improvement in the state's economy. California was home to a third of the country's bank failures, but with double digit growth in loans and deposits, Cramer feels optimism is justified.
National banks with significant exposure to California include U.S. Bancorp (USB) and Wells Fargo (WFC) with 23% and 21% of deposits in the state respectively. While national banks deal with loans to consumers, regionals like CVB Financial Corp (CVBF) in Southern California and Westamerica (WABC) Bancorp in Northern California do the majority of their loaning to businesses. Cramer thinks CVB is more compelling, since its price is at $9.63 and it operates out of the "decimated" yet recovering Inland Empire region.
However, Cramer said his favorite bank is more conservative and doesn't need a California recovery to perform well; City National (CYN). The bank has $21 billion in assets, $17 billion in deposits, has repaid TARP and has acquired failed banks. City National operates all over the state and is well-capitalized. CYN has business and private accounts and intends to double the latter.
Keep Your Eyes Open: Tractor Supply Company (NASDAQ:TSCO), Scotts Miracle Gro (NYSE:SMG), International Paper (NYSE:IP), Micron Technology (NASDAQ:MU), Advanced MicroDevices (NYSE:AMD), KeyCorp (NYSE:KEY), Huntington Bancshares (NASDAQ:HBAN), Sun Trust Banks (NYSE:STI), Urban Outfitters (NASDAQ:URBN), Staples (NASDAQ:SPLS), Ralph Lauren (NYSE:RL), EOG Resources (NYSE:EOG), Bed Bath & Beyond (NASDAQ:BBBY),
The bears are back in town as the Dow fell 72 points and the S&P lost half of a percent. Cramer thinks it might have been caused by the Fed Reserve Chairman Ben Bernanke's (a.k.a. "Downer in Chief") doubts about the sustainability of recovery.
So why not be bearish? Cramer says all of the signals show that recovery is on track and will continue. While the economy is still not so strong that the Federal Reserve needs to raise interest rates, it is strong enough to justify continued bullishness, according to Cramer.
The news on Wednesday was not all bad. Tractor Supply Company (TSCO) gave some strong numbers about its business which involves selling pricey farm and gardening equipment. Cramer thinks Scott's Miracle Gro (SMG) is a buy on TSCO's success. News of a price hike for uncoated sheet paper is good for International Paper (IP) and news of a multi-year positive cycle in semiconductors is a good reason to buy Micron Technology (MU) and Advanced Micro Devices (AMD). KeyCorp (KEY), Huntington Bancshares (HBAN) and Sun Trust Banks (STI) will be paying almost nothing for CDs, a development that should mean an earnings upside for these banks. Retailers Urban Outfitters (URBN), Staples (SPLS) and Ralph Lauren (RL) are receiving upgrades even though their last quarters were less than stellar.
EOG Resources (EOG) got "smashed down" 4 points on dismal earnings recently, but today jumped 6 points because of a successful analyst meeting. Bed, Bath & Beyond (BBBY) blew away numbers on Wednesday.
Cramer urged viewers not to shut their eyes to the bullish data in spite of the occasional lackluster performance of the averages.
CEO Interview: Bill Marth, North American CEO of Teva Pharmaceuticals (NYSE:TEVA)
It is hard to know which mergers are going to be successful, but one bullish sign is an increase, rather than an expected decline, in the stock price of the acquirer. When the largest supplier of generic drugs in the world, Israeli pharmaceutical company Teva, announced it would acquire Ratiopharm, the stock jumped 3.5% in one day. Teva is a great business even without the merger given the huge patent expirations on the way and healthcare reform. The addition of Ratiopharm will double Teva's sales in Southern Europe and will make the company's 15% growth rate more credible.
Bill Marth says the Ratiopharm acquisition "gives us the down payment in Europe," where Teva is in the top 3 in 17 of those markets. When Cramer asked Marth if he is worried about what will happen when Teva's own proprietary drugs for MS and Parkinson's disease go off patent, Marth replied, "We believe in a balance between access and innovation. And you innovate when the time is right. And you get access to generic products when the market is right. So over time it is likely to happen. It is a matter of planning and understanding when it is likely to happen."
When Cramer asked if there is concern that another company could produce generics as quickly as Teva, Marth responded that his company has the expertise to try "to get there first" and often gains some degree of exclusivity for its generics.
Cramer says he is "putting all the money "on Teva.
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