Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday July 16.
Don't Miss These Earnings Next Week: IBM (NYSE:IBM), Accenture (NYSE:ACN), Schlumberger (NYSE:SLB), Pepsi (NYSE:PEP), United Technologies (NYSE:UTX), Caterpillar (NYSE:CAT), Verizon (NYSE:VZ), AT&T (NYSE:T)
Cramer discussed a trading strategy he perfected as a hedge fund manager. When he lost $10,000 or more on a stock, he would put the name of the stock in a box. After recovering from the shock of the loss, Cramer would go over information about the losing stocks and try to figure out where he went wrong; usually the key to the slip up was in earnings reports. He confesses most of his mistakes were made because he was too rushed to pay attention to conference calls and he ended up trading according to the headlines.
Cramer compiled a list of "not to be missed" earnings for the coming week, but he cautioned that he would just listen rather than trade based on the results. On Monday after the close, IBM (IBM) reports. Cramer would pay attention to information about stock buybacks and dividend raises, but would really listen to their comments on how their consulting business is going. If IBM is less positive about this business than Accenture (ACN) was last week, he would buy more of the latter, since the two companies are in close competition.
Pepsi (PEP) should report an in-line quarter on Tuesday, and Cramer thinks the stock is a tell on consumer confidence; a significant increase may indicate a general feeling that the economy is getting softer. United Technologies (UTX), which reports on Wednesday, is a good indication of how things look overseas, since 50% of its business is international.
Caterpillar (CAT) reports on Thursday; "This machinery maker gives, without a doubt, the most complete breakdown of the world's economies of any company on earth." AT&T (T) and Verizon (VZ) are reporting on Thursday and Friday respectively. Cramer wants to see how these enemies are duking it out. Finally, Cramer thinks Schlumberger (SLB) is an important tell on the state of the oil industry at home and abroad.
AK Steel (NYSE:AKS)
Cramer has changed his mind about AK Steel (AKS), a stock he has disliked in the past because it needs to buy its raw material, iron ore, and it doesn't own its mines. He has also been critical of the company's lack of international exposure and its flawed balance sheet. In fact, he doesn't think the quarter will be that strong, and yet Cramer predicts the company will have a stronger second half of the year.
Things are looking up for AK Steel. The company is reducing its workforce, increasing production, cutting its costs and fixing the balance sheet. Prices of iron ore have plummeted, and now AKS's main raw material is much cheaper. While steel is in "glut mode" right now, Cramer thinks this will not last long as emerging markets start building their infrastructures. With a 37% drop so far this year, AK Steel is finished going down.
CEO Interview: Charles Bunch, PPG Industrials (NYSE:PPG)
PPG reported a "blowout" quarter, and yet the stock is down 2 points. The company beat estimates by 21 cents. PPG is benefiting from the "global economic love train" in Latin America and China where its coatings business has seen a 27% increase. Charles Bunch said the company prides itself on the fact that 60% of its revenues are from overseas. PPG is the number one name in automotive coatings in China. While Europe has been weak, Bunch thinks demand will improve there, and is pleased with the company's performance in Latin America. Cramer said he is bullish on PPG.
Anything That Goes Up Must Come Down: BP (NYSE:BP)
It might have looked like the sky was falling on Friday with the Dow tumbling 261 points and the S&P's 2.9% decline. Cramer said "The market is crazy, but it's not that crazy," since with seven days of gains, it was only reasonable that there should be a dip. Financial regulation, the near resolution of the BP (BP) oil spill, and growing strength in Europe are signs that things are generally improving. "Did anything in the world really change in the last 24 hours?" asked Cramer who said he relies on that famous "economist" Isaac Newton; "Anything that goes up must come down." Cramer added a corollary, "It always comes down harder than it goes up."
Companies are reporting strong numbers which is a clear case of a market that was overbought. Cramer thinks things are steadily improving, but would still use extreme caution when investing.
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