Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday April 15.
The recent action in the market is characterized by "fear and loathing." There are many things causing uncertainty on Wall Street, including weakness in Japan and China and fears over the conflict between Russia and the Ukraine. Money is flowing into the bond market, and a long-term pattern of stocks having an inverse relationship to interest rates is reversing. Intraday moves have been dramatic and almost impossible to game. This is a tough environment for stocks.
Cramer took some calls:
Kinder Morgan (KMI): People are saying Kinder Morgan is too big and it can't grow the way it used to or maintain its distribution. Cramer believes in KMI and doesn't think it needs to issue more equity.
ITC Holdings (ITC): As long as interest rates go lower, ITC should do well. Cramer would ring the register on half, because it has risen aggressively.
Why Are There So Many IPOs? Yelp (NYSE:YELP), Priceline (NASDAQ:PCLN), Zillow (NASDAQ:Z), Trulia (NYSE:TRLA). Other stock mentioned: PepsiCo (NYSE:PEP)
There is a reason behind the recent plethora of IPOs, and it isn't necessarily good news; if these IPOs were such good companies, they would have been acquired rather than going public. Yelp (YELP) received an offer before it went public, and Priceline (PCLN) purchased Kayak, which has been a smart acquisition, so the same could have happened with the recent IPOs rather than their having to go public. It isn't that all of these companies are mediocre; some, like TripAdvisor (NASDAQ:TRIP), are now too expensive to be acquired. It might be a good idea for Zillow (Z) to merge with Trulia (TRLA), but the companies would rather lock horns. Meanwhile, Yahoo (NASDAQ:YHOO) is more interested in buying back its own shares and making an acquisition. Cramer thinks it was the Twitter (NYSE:TWTR) deal that threw the IPO market out of whack and led to inflated pricing for recent deals. The problem won't be reversed until the insider sellers are finally finished selling. Until then, these newly-minted IPOs are perilous.
Cramer took some calls:
PepsiCo (PEP): If it has a good number, the stock could go past $85. If it doesn't do well, activist investor Nelson Peltz will urge a restructuring. Either way, PepsiCo is worth holding onto.
Cramer's Playbook: Take Advantage of Sell-offs.
Cramer was asked about stop-loss orders, and he says these might protect against downside, but, for long-term investors rather than traders, there is no reason to sell a good stock just because it has declined. In some cases, a sell-off is an opportunity to buy more. He urged viewers to think of a major decline as a "sale." It always pays to have a diversified portfolio to protect against the decline in a certain sector and plenty of cash to take advantage of a "sale" in decent stocks.
Interview with Daymond John: Under Armour (NYSE:UA), Facebook (NASDAQ:FB), Walgreen (NYSE:WAG), Tesla (NASDAQ:TSLA), Netflix (NASDAQ:NFLX), AOL (NYSE:AOL), Wells Fargo (NYSE:WFC), Whole Foods (NASDAQ:WFM), Starbucks (NASDAQ:SBUX).
Cramer spoke with Daymond John, CEO and creator of the FUBU brand and a regular on "Shark Tank." John came up with a "lifestyle brand index" that has performed twice as well as the S&P 500. Daymond John discussed some of the holdings with Cramer. Under Armour (UA) is "smoking" and is focusing more on fashion. Facebook (FB) might be losing some of its allure with younger users, but FB still has general appeal to every age group and is a great marketing tool. Walgreen (WAG) has attractive stores people like to go into. Tesla (TSLA) is eventually going to create a more affordable car, and Netflix (NFLX) and AOL (AOL) are "delivering new concepts." Wells Fargo (WFC) will be a winner in the area of inner city real estate. Whole Foods (WFM) and Starbucks (SBUX) are still great brands.
Off the Charts: Where Is Merck (NYSE:MRK) Headed?
Merck (MRK) has climbed 10% so far this year and yields 3.1%. Cramer discussed the technical analysis of Bob Lang of explosiveoptions.net and TheStreet.com. Merck has been trading sideways since March but seems to be creating a "launch pad." The stock is above its 200 day moving average and has been bumping against a ceiling of resistance. If Merck goes above $58, it could rise to $70. Merck is showing a bullish flag pattern and while the Williams oscillator is signaling it is overbought, MRK could stay overbought for many months, as it did in 2012. Cramer likes Merck's fundamentals, with its vaccine business, diabetes and anti-psychotic drugs. Cramer thinks MRK might spin off its animal health division and would buy the stock.
Get Cramer's Picks by email - it's free and takes only a few seconds to sign up.