Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday January 30.
Dow Report Card: JPMorgan (NYSE:JPM), American Express (NYSE:AXP), Dupont (NYSE:DD), Caterpillar (NYSE:CAT), Microsoft (NASDAQ:MSFT), United Technologies (NYSE:UTX), Procter & Gamble (NYSE:PG), Pfizer (NYSE:PFE), Visa (NYSE:V), Goldman Sachs (NYSE:GS), General Electric (NYSE:GE), Verizon (NYSE:VZ), Johnson & Johnson (NYSE:JNJ), Travelers (NYSE:TRV), Intel (NASDAQ:INTC), McDonald's (NYSE:MCD), AT&T (NYSE:T), Boeing (NYSE:BA), Exxon (NYSE:XOM), 3-M (NYSE:MMM), IBM (NYSE:IBM). Other stocks mentioned: Xerox (NYSE:XRX), Bank of America (NYSE:BAC)
Does the Dow deserve to be down more than 4% for the year? Most of the Dow stocks have reported already, and Cramer thinks the punishment has more than fit the crime. Cramer gave a report card of all of the Dow stocks.
He began with the "A" students. JPMorgan (JPM) is one of the best financials, but has gone down on concerns about China and emerging markets exposure. Cramer thinks it is a buy, because it has a lot going for it. American Express (AXP) has its expenses under control and significant growth; its drop in stock price is "comical." Dupont (DD) is successfully transforming itself from a commodity to a proprietary chemical company. The stock was slammed from $64 to $59 but went back to $61. Cramer thinks it will go higher. Caterpillar's (CAT) quarter was better than expected, as it showed improvement even without China. The stock got hammered because the shorts were all over it, and management is buying back stock on weakness. Microsoft (MSFT) was executing in all of its segments, and the stock should be at $40 rather than $36. United Technologies (UTX) was showing strength in non-residential construction and aerospace, and even had strong sales in China, but the stock got pummeled. Procter & Gamble (PG) delivered organic growth; it still declined. Pfizer (PFE) is managing better than anyone expected after its patent cliff, and it has a strong pipeline. If it falls to $29, PFE could be "one of the biggest bargains in the Dow." Visa (V) is now "out of its funk," has global growth and a buyback, but it was downgraded.
Cramer moved on to the "B" students. Goldman Sachs (GS) got hammered after reporting strong numbers and healthy M&A activity. Its decline from $179 to $165 was "ridiculous." General Electric's (GE) quarter was not as bad as the street thought; aerospace and oil and gas were strong. It is in the process of repositioning itself, and the 10% drop was a serious overreaction. Verizon (VZ) can't seem to shoot the lights out, but it has a respectable 4.5% yield. Johnson & Johnson (JNJ) gave disappointing earnings, but revenues were terrific, and it has a strong pipeline. The stock should not have fallen from $95 to $85. Travelers (TRV) has a hearty buyback and reported a strong quarter, but management unfortunately used the word "competition," and the stock got clobbered beyond all reason; "I'd buy it here."
The list of "C" students begins with Intel (INTC), which is hated by the street because the upgrades going into the quarter set the bar too high. Cramer bought INTC for his charitable trust on Wednesday. McDonald's (MCD) disappointed yet again, but those who own it should keep it for the yield; "It is one good quarter away from $100." AT&T (T) disappointed, but not as badly as many think. It has the highest yield in the Dow at 5.5%. Boeing (BA) reported a decent quarter, but its guidance was "horrendous," and the stock got shot down from $144 to $127. Cramer suspects this could be a classic "under promise, over deliver" situation and would buy it at its current level. Exxon (XOM) gave the impression of more production growth, but slipped into negative mode; "Let Buffett buy it, but don't follow him." 3M (MMM) is "just okay," and the stock has run a bit. There is one "D" student in the Dow: IBM (IBM), which reported a quarter devoid of growth and has little going for it. Cramer thinks Buffett should bolt.
Investors should be pleased with this report card, and it demonstrates that most of these stocks have been unfairly sent to detention.
Cramer took some calls:
Xerox (XRX) ran quite a bit, but reported a tepid quarter. Don't buy.
Bank of America (BAC) reported a great quarter. People have trouble forgiving BAC for the money it lost them in the past, but the future is what counts.
Multi-Year Game Changers: Facebook (NASDAQ:FB), Google (NASDAQ:GOOG), ServiceNow (NYSE:NOW), Concur (NASDAQ:CNQR), Amazon (NASDAQ:AMZN). Other stocks mentioned: Las Vegas Sands (NYSE:LVS), Wynn Resorts (NASDAQ:WYNN), Universal Display (NASDAQ:OLED), Johnson Controls (NYSE:JCI), Cree (NASDAQ:CREE)
Thursday was a "terrific day for stocks," with the S&P 500 up 110 points. It was an especially good day for "multi-year game changers," stocks associated with social media, mobile and cloud. Facebook (FB) reported a magnificent quarter and rallied 14%. The company has accelerating revenue growth and may be "the greatest advertising vehicle of all time." FB is actually cheap, and given its growth rate, it could go up another 50% before it can be considered overvalued.
ServiceNow (NOW) and Concur (CNQR) are two cloud-based companies that reported strong quarters. Google (GOOG) missed earnings, but had fabulous revenue growth, up 17%. The click rate increased 31%, including the number of paid clicks. Google is doing a 2 for 1 stock split, which has a mainly positive psychological impact on potential investors; even though the amount invested is the same, people prefer a lower stock price. Expectations got out of hand for Amazon (AMZN) which missed on earnings, revenue estimates and gave disappointing guidance. However, Amazon has a ton of things up its sleeve, and it often gets hit after the quarter only to bounce back.
Cramer thinks the current prices of these multi-year game changers will seem cheap a few years from now.
Cramer took some calls:
Johnson Controls (JCI): Cramer is "furious" this stock is down $5 and blames management for being too downbeat about the European business. "They made it sound worse than it is. They killed their own stock. Note to management: you don't need to be so darn downbeat when business is as good as it is."
CEO interview: Steve Singh, Concur (CNQR)
Concur (CNQR) enables companies to manage expense reports and travel bookings with one software program, and since it tracks money actually spent, the software creates fantastic savings for companies. CNQR has 20,000 clients and is growing steadily. It beat earnings by 9 cents with a 32.8% increase in revenues, 32% billing growth and strong guidance. Goldman Sachs has a "sell" rating on the stock, because the analyst is worried about margin pressure, but CEO Steve Singh said the priority is to invest in the business; "We are best in class in gross margin and operating margin opportunity." Cramer disagrees with the Goldman Sachs analyst, and is bullish on the stock.
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