Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday May 16.
15 Earnings To Watch In The Week Ahead: Campbell Soup (NYSE:CPB), Urban Outfitters (NASDAQ:URBN), Home Depot (NYSE:HD), TJX (NYSE:TJX), Staples (NASDAQ:SPLS), Dick's Sporting Goods (NYSE:DKS), Salesforce (NYSE:CRM), Target (NYSE:TGT), Williams-Sonoma (NYSE:WSM), Best Buy (NYSE:BBY), GameStop (NYSE:GME), Hewlett-Packard (NYSE:HPQ), The Fresh Market (NASDAQ:TFM), Whole Foods (NASDAQ:WFM), Foot Locker (NYSE:FL). Other stocks mentioned: Take-Two Interactive (NASDAQ:TTWO), Whole Foods (WFM), Las Vegas Sands (NYSE:LVS), American Realty (ARCP)
Cramer discussed earnings to watch in the week ahead:
Campbell Soup (CPB) is making a real comeback and may catch a bid. If the stock goes down so that it yields 3%, it is a buy.
Urban Outfitters' (URBN) divisions are doing well, but it still needs to do a massive restructuring. It is probably not done going down
Home Depot (HD) has been trading poorly on sluggish housing sector. HD is down 6%. Cramer would be a buyer of HD, and would buy a half a position before it reports and half a position after. Cramer thinks management will deliver.
TJX (TJX) has been hammered and is down 8% for the year. "I smell opportunity," said Cramer.
Staples (SPLS) may actually report a decent quarter; "The risk is coming out of Staples."
Dick's Sporting Goods (DKS) is in the hot athletic category, and should report a good quarter.
Salesforce (CRM) is "the most important earnings of the week," because other stocks in the sector should follow its lead.
Target (TGT) has recently seen the departure of its CEO, but yields 3% and may be a buy.
Lowe's (NYSE:LOW) and Williams-Sonoma (WSM) both reported decent quarters last time, but the stocks fell. These companies tend to make more sales with lower interest rates, so they might see some upside.
Best Buy (BBY) might bounce on its report if Lowe's and Home Depot give good numbers.
Hewlett-Packard (HPQ) may be a buy into earnings. It is gaining strength on the stabilization of the PC market. Management should discuss 3D printing.
Foot Locker (FL) has risen significantly, but if it gets a couple of down days before Friday, Cramer would own it into earnings. "I think their results are going to be terrific," he said.
Cramer took some calls:
Las Vegas Sands (LVS) is a buy. It is a "long-term winner."
American Realty (ARCP) is stuck in the mud at $13, but it is a winner.
The Chinese Speculative Trade: VipShop Holdings (NYSE:VIPS). Other stock mentioned: Baidu (NASDAQ:BIDU)
The Alibaba deal could be the largest initial public offering in history, and it might be hard to get this Chinese IPO at a decent price. Cramer thinks VipShop Holdings (VIPS) is a good alternative to Alibaba. It is "the reigning king of growth companies worldwide," and can be valued on a price/earnings multiple.
The company sells branded merchandise at deep discounts online. Cramer is usually averse to recommending Chinese stocks because of uncertainties over regulation and the markets in China, but VIPS offers unique opportunities. There is relatively little competition for VIPS in China. It reported a 17 cent earnings beat, and revenues rose 126% year over year, 9% higher than analysts expected. Its net income increased by 359%, and mobile sales increased 71%. The stock rose from $150-$164 after the quarter, but it has pulled back to under $160, and may be a buy for speculation. As China builds out its web infrastructure, it could double its customers. The stock has quadrupled in the last 12 months, but it may still be worth buying, given its multiple of 36 compared to its 58% growth rate. Baidu (BIDU) has long been Cramer's only Chinese stock he has recommended as an investment. Now VipShop is the one Chinese stock he would get behind as a trade.
Avis Budget Group (NASDAQ:CAR) Is Revving Up. Other stocks mentioned: Hertz Global Holdings (NYSE:HTZ), Spirit Airlines (NASDAQ:SAVE), American Airlines (NASDAQ:AAL), Delta Airlines (NYSE:DAL), Sprint (NYSE:S), T-Mobile (NASDAQ:TMUS), Verizon (NYSE:VZ)
Avis Budget Group (CAR) has been on a tear lately, and has rallied 36% for the year so far, even as the top player in the industry, Hertz (HTZ), is down year to date. "We try harder," is Avis' tagline, and it sums up the reasons behind Avis' recent success. Avis is the best-run company in the car rental business.
The rental car industry is basically an oligopoly; 96% of airport-based car rentals are handled by only 3 companies. This will lead to higher prices. The companies are seeing an uptick in demand and no longer need to rely on online travel sites, which require a commission. Avis has expanded its higher margin parts of the business, and it is able to sell its used cars at higher prices. Avis acquired Zipcar, and the synergies should lead to more upside. Avis is improving its balance sheet, which will positively impact earnings per share, and it has a generous buyback. The company has a multiple of 15 with a strong growth rate. Hertz may be cheaper, but Avis is best of breed.
Cramer took some calls:
United Rentals (NYSE:URI) is "the real deal," and should benefit from the rise of residential construction.
CEO Interview: Nicholas DeBenedictis, Aqua America (NYSE:WTR)
Aqua America (WTR) was growing aggressively by making acquistions, but has stalled recently. It beat earnings by one penny and saw rising revenues. The company is rebalancing assets, focusing on more successful areas and paring back weaker aspects of the business. CEO Nicholas DeBenedictis says the tap water produced and treated by WTR has a significant cost savings over bottled water, and more customers are turning away from storebought bottles and are returning to tap water.
Congratulations, J.C. Penney (NYSE:JCP)
Retail turnarounds are next-to-impossible, because once customers are turned off, it is hard to get them back again. Once same-store sales go negative, things usually get worse. The recovery of J.C. Penney (JCP) has been staggering. Mike Ullman was brought back as CEO to revamp the retailer, and he revitalized its private label brands. JCP shoppers are returning, as Ullman has re-instituted the special deals that made JCP popular. JCP reported an outstanding 6% increase of same store sales. There may be setbacks in this comeback story, but Ullman has accomplished a "huge amount" in just a year.
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