Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday October 11.
Kulicke & Soffa (NASDAQ:KLIC), Deere (NYSE:DE), Gymboree (NASDAQ:GYMB), JC Penney (NYSE:JCP), J. Crew (JCG), Boeing (NYSE:BA)
The market has been quite forgiving lately; stocks that get taken down become buying opportunities as bulls rush in. In spite of reporting disappointing news about orders, Kulicke & Soffa (KLIC) brought a lot of buyers to the semiconductor space to buy on weakness. In spite of downgrades, Deere (DE) has risen 7 straight points from $68. Gymboree (GYMB), up 22% on news that Bain Capital is buying the outfit, saw downgrades just last week and reported disappointing same store sales. JC Penney (JCP) hit a bottom at $19 after it said revenues may be disappointing. While J.Crew (JCG) took down numbers in August, it has been on a tear since and is up $5. Cramer sees a consistent pattern with Boeing (BA) which gets hit with every negative article about the Dreamliner delay and then rises shortly after.
Cramer thinks, under the current environment, certain stocks never have to say they are sorry; "The market doesn't want to react to the terrible things the companies are saying... if it's bad, the big buyers come in."
While Cramer wouldn't game earnings, he thinks it is a good strategy to make money from the biotech conference season when companies get together and discuss their latest research on the most important drugs. Cramer is on the lookout for companies that make orphan drugs, or treatments for very rare diseases. Such drugs often receive heavy subsidies, are expensive and have substantial patent protection. Genzyme (GENZ) is the king of orphan drugs, but Cramer thinks its upside is already capped.
Cramer calls BioMarin Pharmaceutical (BMRN) the "son of Genzyme." The company has two drugs, Aldurazyme and Naglazyme which treat a disease known as MPS which inhibits the body's ability to break down carbohydrates.
Another orphan drug company Cramer recommends is Alexion Pharmaceuticals (ALXN). In fact, he recommended it in August of 2008 at $47.20 and it has been up 43% with the S&P down 10%. Alexion has a single product, Soliris, which treats a very rare blood disease known as PNH, and the company is researching the drug for two other conditions. The company is expected to give data on these indications by mid-November. As it stands, Soliris is growing at a rate of 30%.
Chesapeake (CHK), the second largest natural gas producer fits the dictionary definition of a bottom, said Cramer, especially since the stock did not move after it announced it is selling a third of its Eagle shale holdings to China's CNOOC.
Currently natural gas is hated and stocks in the sector have been hated, but Cramer successfully called a bottom in the stock in August and thinks it has bottomed again. The company is diversifying beyond just natural gas and is increasing its oil holdings. CHK is also cheap. On the company's analyst day on Wednesday, Cramer expects CHK to discuss another deal concerning its Marcellus shale assets and would buy the stock before Wednesday. Meanwhile CHK is expanding its liquid exposure and is reducing drilling of natural gas.
CEO Dave Steiner, Waste Management (NYSE:WM)
Cramer revisited Waste Management (WM), a stock that has risen 11% since February compared to the S&P 500 up 5%. There have been concerns expressed that the company's volumes are going down, but with the economy improving and production and consumption increasing, WM's business should start picking up. The company provides shareholders with a 3.5% dividend which it has consistently raised.
While he acknowledged some "headwinds" from pricing, David Steiner says the company is making significant investments for the future. He added the company's ability to recycle can actually create more value. Cramer concluded that, in spite of the headwinds Steiner discussed, the stock is going higher.
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