Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday April 7.
The ferocious decline in the Nasdaq might make some feel that it is the turn of the 21st century all over again. Some insist that this is not like the dotcom era, but Cramer notes a few similarities, as money managers have been addicted to growth at all costs while ignoring earnings per share. Since software-as-a-service IPOs have been flooding the market, there are not enough buyers for these IPOs. Money managers have been getting out of these names and even shorting baskets of them. One major cause for concern is that the lockups from last year's IPOs are starting to expire, which will lead to more selling. As soon as the selling ceases, Cramer would be careful about hot stocks on the Nasdaq.
Cramer took some calls:
Concur Technologies (CNQR): There may be a rebound in stocks like this if there is a cessation in insider selling. This stock is in better shape than others, but stay away for now.
CSX (CSX): Since coal is not a big problem now, the railroads are good. It has been downgraded, but CSX is a buy, not a sell.
The Dow sold off 167 points on Monday, and the only stocks that were up were those that tend to rise prior to a recession. However, this does not mean that we are headed into an economic downturn; the stock market was taking cues from bonds, which are being bid up and, as a result, interest rates are falling. Rates are supposed to rise in an environment of economic improvement, Procter & Gamble (PG) is supposed to go lower, instead of rising as it did on Monday, and industrials, which were seeing gains previously, dropped. However, Cramer thinks the sell-off may be temporary and even reverse if Alcoa (AA) reports a strong number, ushering in earnings season Tuesday. The Fed minutes on Wednesday may also influence the direction of stocks. Right now, sellers want to take their gains in certain stocks, like industrials, that have seen large moves recently. Cramer cautions patience and urges viewers not to be too negative.
Cramer took some calls:
Target (TGT): Cramer said he was wondering when TGT will go back to the pre-security breach level. It hasn't yet, but every time the stock goes to a 3% yield, the buyers come in, "and I'm with them," said Cramer
Visa (V) is "right." People should own Visa.
Priceline (NASDAQ:PCLN): The Cheapest Momentum Stock.
Priceline (PCLN), which has increased 5,180% since Cramer got behind it when Mad Money started 9 years ago, has a price tag over $1,000, and may not sound cheap. However, it trades at a multiple of 19 with a 19% growth rate, and is "the cheapest momentum stock I follow," says Cramer. PCLN has emerged from the dotcom rubble to have the first-mover advantage in online travel savings. Around 85% of its bookings are from overseas, and PCLN might have some upside as Europe turns. About 90% of its bookings are from hotels, which are more profitable than airline tickets. PCLN is Cramer's favorite stock over $500.
With the voracious appetite for value stocks, Cramer would take a look at potential value names that have gotten tossed out in the sell-off. One "stealth" value name is First Solar (FSLR), which, prior to the recession, was a bubble stock. First Solar is best-of-breed and has made dramatic changes to its structure. The stock has rallied 24% year-to-date and has doubled since last year. A major catalyst was its analyst day last month, which took the stock up 21% in one day. Cramer thinks FSLR still has further to rise. CEO Jim Hughes discussed changes in the company's business model; it is now vertically integrated and is spending more money on research and development. FSLR is translating its successes in the lab onto the factory floor and is producing more efficient results than those seen with silicon. FSLR has a profitable joint-venture with General Electric (GE), and both companies are seeing greater market opportunities as solar is poised to penetrate into the grid. "It is hard to find such an inexpensive stock in the solar space," said Cramer.
CEO Interview: Mark Trudeau, Mallinckrodt (NYSE:MNK). Other stocks mentioned: Questcor (QCOR), Covidien (COV)
Mallinckrodt (MNK), which was spun off last year by Covidien (COV), announced that it would acquire Questcor (QCOR), and the stock declined 2.5% before rebounding on Monday. Through this acquisition, the parent company will have access to a drug that treats lupus, rheumatoid arthritis, and has other applications. The fact that the deal is in Ireland means a lower tax level, which should benefit Mallinckrodt. The company is under investigation by the United States Department of Justice, but CEO Mark Trudeau discussed the thorough due diligence prior to the acquisition that should make the investigation not a major concern; "We feel comfortable with this acquisition." One of the most attractive aspects of the acquisitions is that Questcor's drug is not easy to replicate, and this makes the company safe from generic competition down the line. "If the deal works out, the stock is exceedingly cheap," said Cramer.
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