Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday June 6.
7 Things to Watch in the Week Ahead: Ulta Salon (NASDAQ:ULTA), United Natural Foods (NASDAQ:UNFI), Restoration Hardware (NYSE:RH), Lululemon (NASDAQ:LULU). Other stocks mentioned: Anadarko Petroleum (NYSE:APC), AMC Entertainment (NYSE:AMC)
"What really matters is how companies are doing," said Cramer on a day the Dow climbed 88 points to an all-new high. Money managers have been "trading like madmen," and shorting, but individual investors who have bought stocks in good companies have been rewarded. We need to see strength overseas and data that the American consumer is confident and that inflation is tame. If so, stocks could go higher.
China Inflation Data: The market in the U.S. needs good numbers from China; "We need help from China," to keep industrial stocks going higher.
Ulta Salon (ULTA) this one-time momentum stock has gotten "stuck in the mud." Cramer would beware.
United Natural (UNFI): There is a lot of competition in the healthy food sector, but Cramer thinks some of these companies may be doing alright. Cramer would listen to this quarter.
Restoration Hardware (RH) is a stock Cramer has been following. It is a "playground" for the "aspirational consumer." It might be headed higher.
Lululemon (LULU) has missed numbers and has seen the departure of a good CEO. It is down 25% for the year. Cramer thinks the stock could see a stabilization of fundamentals and could be a takeover target.
U.S. Consumer Confidence and Consumer Price Index: These numbers are important. The PPI number could be down, and if so, it is a reason to be cautious, but Cramer urges against panic.
Cramer took some calls:
Anadarko Petroleum (APC) is one of the largest positions in Cramer's charitable trust. Cramer thinks "by this time next year, it will not be independent. It is too cheap. I cannot emphasize enough how much I like Anadarko."
AMC Entertainment Holdings (AMC) may be fine, but Cramer would be careful until the lock-up is over.
Will Kraft (NASDAQ:KRFT) Get Crafty? Stocks mentioned: Hillshire Brands (NYSE:HSH), Pinnacle Foods (NYSE:PF), Clorox (NYSE:CLX), Dr. Pepper Snapple (NYSE:DPS), J.M. Smucker (NYSE:SJM), Kimberly-Clark (NYSE:KMB)
Acquisition fever is hitting the supermarket aisles, as food companies are taking each other over. Hillshire Brands (HSH) is up 60% because of competing takeover bids. Kraft Foods (KRFT) is not usually thought of as a takeover target, but it is a way to play the consolidation in the supermarket. Kraft is a "serial spin-off artist." The company has 30 brands, many of them are household names. The stock is up 11% year to date and yields 3.5%. Cramer could imagine Pinnacle Foods (PF) (even though Hillshire wants to buy Pinnacle) or Clorox (CLX) buying Kraft's salad dressing business, perhaps for around $1.95 billion. Kraft's coffee business (Maxwell House, Gevalia) could be bought by J.M. Smucker (SJM); "with a name like Smuckers, they have to overpay," said Cramer for around $6 billion. Kraft's Claussen pickles could be bought for $1.95 billion. Kraft's iconic Oscar Mayer brand could be taken over for $21 billion. Beverages and snacks segment (Capri Sun, Old Time Lemonade etc.) could be bought by Dr. Pepper Snapple (DPS) for $10 billion. The Remainders segment (Stove Top Stuffing, A1 Steak Sauce etc.) could be bought for $3 billion. If it sells off all of these divisions, Kraft could be a lean, mean dairy machine worth $25 billion. Adding these together, the stock could be worth $96 per share with a market cap of $70 billion for a 60% premium. "I would not put it past Kraft to do this," said Cramer.
Cramer took some calls:
Kimberly-Clark (KMB) is doing a spin-off. Cramer would own both stocks.
CEO Interview: Leo Denault, Entergy (NYSE:ETR)
In a market where utility stocks have been on fire, one utility stands out. Entergy (ETR) in the south is a generation, transmission and distribution utility, and in the north, it is a power generator. The stock has soared 24% year to date and yields 4.2%. The company has seen rising power prices and had a bullish analyst day. Entergy is benefiting from low natural gas prices and commodity price differentials. "Our rates are 20% below the national average," said CEO Leo Denault. Entergy has significant exposure to nuclear energy and natural gas and uses very little coal. Nuclear plants might be controversial, but they are low cost, stable and produce no emissions. "We are bullish on natural gas, but we are not wildly bullish," said Denault, who believes natural gas prices are going higher. "This is a utility with steady growth, and there are not many of those," said Cramer.
No Joy in Shorting Joy Global (NYSE:JOY). Other stocks mentioned: Brown Forman (NYSE:BF.A), (NYSE:BF.B), Caterpillar (NYSE:CAT), FireEye (NASDAQ:FEYE), Zillow (NASDAQ:Z).
"Memo to short sellers: how about some originality?" asked Cramer. "How can 20% of Joy Global (JOY) be sold short?" The short sellers didn't count on natural gas price increases, which are good for coal and that so many analysts already have hold and sell ratings on this stock. "Could you really be devoid of imagination?" Cramer asked Joy Global shorts. Joy Global shot up 10% in just 2 days. The shorts got buried by Joy, and this action is "emblematic" of many shorts, which are "thesis-based" shorts. The short stories for Clorox, Kimberly Clark and Brown Forman (BF.A), (BF.B) are outdated. Shorting of Caterpillar (CAT) is "ridiculous." Hot cloud play short positions like FireEye (FEYE) and Zillow (Z) are long in the tooth. What are good shorts? Companies that are in secular decline with accounting problems or those with poor fundamentals are worth betting against, but trying to game trends on the short side is not a good idea.
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