Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday March 18.
The Dow rose 89 points, and Cramer thinks it had as much to do with profits as Russian President Vladimir Putin's relatively mild statements regarding the Ukraine. Many hedge fund managers shorting stocks were counting on bad news and didn't find very much; there was no data from China, European car sales were up, housing starts in the U.S. are promising and Japan rallied. Even Nucor (NUE) saw its stock price rise on a pre-announcement to the downside, because its lackluster fundamentals are due mainly to the inclement weather, and management gave hopeful news about the return of non-residential construction.
Cramer took some calls:
Hertz (HTZ) is worth buying, because its split is going to be a positive. HTZ is undervalued. Cramer would let the numbers come down and then buy the stock.
CEO Interview: Jim Foster, Charles River Labs (NYSE:CRL)
Charles River Labs (CRL) provides drug testing resources for companies and universities. CRL's stock rose 49% since Cramer spoke with CEO Jim Foster last year. Foster discussed the acquisition of a research division which should contribute to earnings this year. CRL is benefiting from the increase in outsourcing and companies trimming their internal infrastructure. Foster discussed new tests that determine whether it is worthwhile to test a drug on an animal, therefore, saving companies time and expense. New technology enables a simulation of testing on humans by injecting human DNA into an animal used for testing. Cramer thinks CRL is a stock that has the right technology and will go higher.
Cramer's Playbook: Retirement versus Discretionary Portfolios. Stocks discussed: EOG Resources (NYSE:EOG), Google (NASDAQ:GOOG), Johnson Controls (NYSE:JCI), Johnson & Johnson (NYSE:JNJ), Bristol-Myers Squibb (NYSE:BMY), Gilead (NASDAQ:GILD), Celgene (NASDAQ:CELG), Rite Aid (NYSE:RAD), Alcatel Lucent (ALU)
Cramer discussed the importance of having both a retirement and a discretionary portfolio. A follower on Twitter asked about Cramer's 5-10 stock rule (no less than 5 stocks in a portfolio and no more than 10), and how this applies to having two portfolios. To keep a portfolio diversified, no single stock or sector should represent more than 20% of the portfolio, which explains the 5 stock minimum. Cramer recommends an hour of "homework" per stock, per week, and thinks that, for this reason, 10 stocks is the maximum. There can be overlap between stocks held in a discretionary and a retirement portfolio. For instance, EOG Resources (EOG) is the kind of stock that can be held in both kinds of portfolios, as well as Johnson Controls (JCI). Salesforce.com (CRM) has slightly more risk than Google (GOOG), so the former is better for a discretionary portfolio, and Google is a good choice for retirement. A retirement portfolio could have stocks like Macy's (NYSE:M), Johnson & Johnson (JNJ) and Bristol Myers (BMY), while the discretionary portfolio can have more aggressive growers like Gilead (GILD), Celgene (CELG) and Whole Foods (NASDAQ:WFM), as well as comeback plays like Rite Aid (RAD) and Alcatel-Lucent (ALU). Finally, a retirement portfolio should have both an IRA and a 401(k).
Don't Trade On Emotion: Fuel Cell (NASDAQ:FCEL), Plug Power (NASDAQ:PLUG), Ballard Power (NASDAQ:BLDP), Tesla (NASDAQ:TSLA). Other stocks discussed: Walgreen (WAG), CVS Pharmacy (NYSE:CVS), Siemens (SI), SolarCity (NASDAQ:SCTY)
Some people get as emotional about stocks and sectors as they do about their local sports team. Reason rather than emotion is required when investing, and that is why Cramer would avoid overly-hyped stocks like Fuel Cell (FCEL), Plug Power (PLUG) and Ballard Power (BLDP), because these stocks have risen too far too fast without significant profits to show for it. Tesla (TSLA), while a "hot stock," is not in this category, because it has real earnings with a superior manager, Elon Musk, behind it. Cramer would use caution with TSLA, but it might be good as a trade.
Cramer took some calls:
Rite Aid is making a comeback, is revamping its stores and is doing more with generics. Cramer also likes Walgreen (WAG) and CVS Caremark (CVS).
Siemens (SI) has a great yield and is a strong company.
SolarCity (SCTY) is fine as a trade or speculation, given the brilliance of Chairman Elon Musk.
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