Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday May 22.
"Too many people are walking away from Yahoo (YHOO)," said Cramer. The success of JD.com (JD) might indicate a potential enthusiasm for Alibaba, which Yahoo is spinning off. Yahoo is down significantly because of what Cramer calls "Yahoo ennui." Cramer is concerned that Yahoo will spend the cash it generates from the Alibaba deal on just buying back stock. With the popularity of app plays like GrubHub (GRUB), Yelp (YELP) and OpenTable (OPEN), customers would benefit from the aggregation of these apps. Cramer pointed out that the market caps of these three companies are nearly equal to that of Alibaba alone. He thinks these should be bought by Yahoo.
"This market is crazy," said Cramer on the day the Dow rose 10 points in a volatile week. Everything that happened on Wednesday reversed on Thursday. Earlier in the week, growth stocks were out of fashion, but the mood of the market is changing again and is favoring momentum names. "Growth at any cost is 'in' now," said Cramer. JD.com had a successful IPO on Thursday, signaling a turn in favor of growth stocks. For the past 2 months the market has turned away from hot IPOs, but this changed with JD.com. Salesforce.com (CRM) reported a strong quarter a few days ago, but because it is a growth stock, the stock was sold off anyway. Salesforce rose on Thursday along with JD.com; CRM's gains on Thursday were for the opposite reason it sold off earlier in the week. Other growth stocks followed suit and saw gains.
"This market is punch drunk," said Cramer.
Cramer took some calls:
National Oilwell Varco (NOV) bounced back after a weak quarter. Cramer likes its proposed spin-off.
Dick's Sporting Goods (DKS) fell 18% after a "truly hideous quarter." Same store sales rose just 1%, its golf and hunting businesses were terrible, with a 10% drop in golf and a high-teens drop in hunting products. DKS' awful quarter knocked down the entire sector. Cramer thinks sellers made the mistake in assuming DKS' weakness was from the industry rather than company-specific execution problems.
DKS has made a lot of mistakes, including concentrating too much on golf stores. DKS stopped stocking a popular brand of rifles, and this decision was bad for business. Weather was a factor in the decline, but Cramer doesn't think Cabela's (CAB) should have sold off so hard on DKS' dismal results. Cabela's has a better concept in its big destination stores which provide a fun shopping experience. Cabela's sells a large number of high margin private label brands.
Sportsman's Warehouse (SPWH) fell 16% because of DKS' quarter. This recent IPO is a speculative play, but it is the cheapest in the sector, selling at just 11 times earnings. It is building out its own niche and is a regional to national growth story. Cramer thinks it could grow from 50 stores to 300 locations. The company is expanding its gross margins by increasing sales of high-margin products. The stock has fallen after its IPO, and Cramer thinks Sportsman's Warehouse deserves to be bought. Neither CAB or SPWH has a golf business, and their hunting segments should perform better than DKS'.
Cramer took some calls:
Crocs (CROX) is "dicey. I have a lot of good footwear companies. There is no reason to go down the food chain and buy CROX."
Under Armour (UA) is a buy for the long-term on its current weakness.
CEO Interview: Dan Welch, InterMune (NASDAQ:ITMN)
Intermune (ITMN) is an orphan drug developer and is awaiting approval in the U.S. for its treatment Pirfenidone for a rare lung disease. The stock is already at its 52-week high, but could go higher on approval. CEO Dan Welch says the data for the treatment are compelling. It has been approved in Europe, China, Japan and Canada, and he thinks the current trials will mean "the finish line" for approval, which Welch thinks could come by the first quarter 2015. The safety and tolerability profiles for the medication are strong, and survival rates are high. Welch thinks the drug could have multiple applications for similar diseases.
CEO Interview: Dr. Phillip Frost, Opko Health (NASDAQ:OPK)
The market has not been kind to biotech, but Cramer thinks these stocks have suffered enough. Opko Health (OPK) develops diagnostic test equipment and has two products set to launch this year and next. One is a test for prostate cancer and and another provides rapid blood test results that can be obtained while the patient is still at the doctor's office. Opko also has a drug business, and has a treatment for vitamin deficiencies in patients suffering from kidney problems and for chemotherapy-induced nausea. The company's diagnostic tests can save money and crucial time in treating illnesses. Opko Health also has inhalation devices to deliver drugs to patients.
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