Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday April 8.
A Look At Buffett's Portfolio: Berkshire Hathaway (NYSE:BRK.B), (NYSE:BRK.A), Wells Fargo (NYSE:WFC), Coca-Cola (NYSE:KO), American Express (NYSE:AXP), IBM (NYSE:IBM), Procter & Gamble (NYSE:PG), Exxon (NYSE:XOM), Wal-Mart (NYSE:WMT), U.S. Bancorp (NYSE:USB), DirecTV (NASDAQ:DTV), DaVita Healthcare (NYSE:DVA)
Warren Buffett's Berkshire Hathaway (BRK.A), (BRK.B) may be a buy on a recent negative New York Times article implying that the Oracle of Omaha might have lost his magic. Cramer has noticed that when the media second guesses Buffett, that is usually time to buy his holdings. While Cramer is not bullish on all of these stocks, these 10 represent non-momentum pure value plays as an antidote to the madness in the market:
1. Wells Fargo (WFC) reports Friday and has been diligently returning capital to shareholders in the form of dividends and buybacks. It has a fortress balance sheet, is U.S.-based and has a strong mortgage business. If it declines after earnings, Cramer believes that Buffett may be buying more.
2. Coca-Cola (KO) is the subject of a reasonable concern over the future of carbonated beverages, but its brand is still strong overseas, and it has a solid yield.
3. IBM (IBM) is the beneficiary of the fall of high-flying cloud plays, is buying back stock and revamping its software business. Cramer thinks 2014 will be the year that IBM generates better margins and revenues; "Buffett is a very patient man. You should be too."
4. Procter & Gamble (PG) is trying to get back on its game and needs to do better in emerging markets. Management will most likely come up with a good strategy, and in the meantime, it has a healthy buyback and dividend.
5. Exxon (XOM) stopped declining and is going to stay lucrative, even as there are challenges in its production. It is buying back stock aggressively.
6. Wal-Mart (WMT) has some serious headwinds with competition in retail, but it has stabilized its decline and boosted its dividend.
7. U.S. Bancorp (USB) returns capital to shareholders and raised its dividend. This is a bank few talk about, because it doesn't get into trouble.
8. DirecTV (DTV) is one of the most coveted names in the market.
9. Davita Healthcare (DVA) is a good baby boomer play and recently got a break with Medicare reimbursement.
10. American Express (AXP) made it through the downturn with flying colors and has a strong overseas business. "Who doesn't want to own this stock?" asked Cramer.
On Tuesday, the Dow rose 10 points and the Nasdaq climbed back from the abyss, but Cramer noted that the market is not reflecting the strength of underlying companies. CBS (CBS) and Time Warner (TWX) both declined on no negative news, but simply because of "hedge funds gone wild." While Tuesday marked a hiatus from the slew of IPOs, the week will turn out to be the largest for initial public offerings since 2007. The excess supply of these stocks on the market is likely to cause sell-offs in their relevant industries, and Cramer urges caution.
Harman International (NYSE:HAR). Other stock mentioned: General Motors (NYSE:GM), Yahoo (NASDAQ:YHOO), Micron (NASDAQ:MU).
While the price-to-earnings multiple, and not price, should be a primary way to measure whether or not a stock is cheap, the dollar amount of a stock still has a strong psychological pull on the investor. Cramer looked at his favorite stock in the $100-$500 range, which is Harman International (HAR), the gold standard in audio for professionals and consumers. HAR is benefiting both from the turnaround in the auto market, as well as the fact that infotainment systems are not just for luxury cars anymore, but ordinary vehicles. The company has a strong software business and significant patent protection. It is an innovator in navigation and safety software and has a lucrative joint venture with General Motors (GM). The stock has had a 189% run since Cramer got behind it in 2012, but it is still cheap, trading at a multiple of 19 with a 24% growth rate. The stock rose on Tuesday following an upgrade, but it is still inexpensive. Cramer would wait for a pullback and buy it ahead of its earnings in 3 weeks, because HAR has beaten numbers in recent quarters.
Cramer took some calls
Yahoo (YHOO) has been a remarkable performer. It has come down too much, and it is a Buy.
Micron (MU): the guidance wasn't so exceptional. Pricing has peaked, and Cramer says it is a "toss up" whether to be bullish or bearish.
CEO Interview: Klaus Kleinfeld, Alcoa (NYSE:AA)
The Alcoa (AA) conference call, which tends to kick off earnings season, might be among the most informative when it comes to gauging the health of many industries. The stock has run from $7 to $12 recently, and has gained 17% since January. CEO Klaus Kleinfeld discussed the health of all of its segments, some of which are increasing in profitability or at least, are beginning to improve. The company is seeing a dramatic turnaround thanks to concentrating on more proprietary forms of aluminum, other metals and because of the boom in autos and aerospace. The company beat earnings estimates by 4 cents and gave bullish guidance. Kleinfeld discussed Alcoa's development of a wheel that is 40% lighter, products that are stronger and that retain their shine. Cramer would buy AA on a pullback; "The company has re-invented itself."
Off the Charts: Amazon (NASDAQ:AMZN) vs. IBM
The sector rotation out of growth and into value doesn't necessarily reflect the fundamentals of the underlying companies, but it is reflected on the charts. Technical analyst, Ed Ponsi of RealMoney.com, took a look at the chart of Amazon (AMZN) and IBM. Since last year, the stocks have been traveling in opposite directions; in 2013, AMZN was rising while IBM was falling, but now, the opposite is happening. AMZN is making lower highs and lower lows; last week it fell under its 200 day moving average and its 50 day moving average is poised to cross underneath the 200 day. Ponsi thinks AMZN could fall from $327 to $280, its floor of support.
Meanwhile, IBM's 50 day moving average seems ready to cross its 200 day moving average; this pattern is called a "bullish crossover." If it breaks through its ceiling of resistance of $195, it could rise to $215, and from there, it is smooth sailing, since there is no further resistance. While Cramer agrees with Ponsi about IBM and the short-term picture for Amazon, he is not so sure that AMZN will make a dramatic decline, since the stock "has 9 lives."
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