Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday July 2.
5 Stocks That Pushed The Dow Higher: Caterpillar (NYSE:CAT), Disney (NYSE:DIS), Intel (NASDAQ:INTC), Merck (NYSE:MRK), Cisco (NASDAQ:CSCO). Other stocks discussed: Union Pacific (NYSE:UNP), Kansas City Southern (NYSE:KSU), ARM Holdings (NASDAQ:ARMH).
The Dow Jones inched toward the 17,000 milestone, and Cramer thinks the bull market can keep running. Cramer discussed 5 stocks responsible for the Dow's run, and he believes they can keep climbing.
1. Caterpillar (CAT) is up 33% since Dow was at 16,000, and has not returned to the levels it peaked at in 2011. Cramer thinks it could earn $7 per share by next year and trades at a multiple of just 15. The company will benefit from strength in oil, construction and mining.
2. Disney (DIS) is not cheap, but it deserves to trade at a premium, given its incredible cable and film businesses. Its theme parks are also strong.
3. Intel (INTC) has rallied from the mid-20s to just below $31. It has a 2.79% yield and has a strong balance sheet. It reported solid earnings and has improved management.
4. Merck (MRK) was dominant, but fell on hard times, and it sells at a discount. It has spun off its consumer products division and has an animal health division that could be taken over.
5. Cisco (CSCO) reported a serious upside surprise with significant visibility. It has a large number of orders from stellar clients.
Cramer took some calls:
Drugstore Cowboys: Rite-Aid (NYSE:RAD), Walgreen (WAG), CVS Caremark (NYSE:CVS). Other stocks mentioned: Mannkind (NASDAQ:MNKD), MGM Resorts (NYSE:MGM), Wynn Resorts (NASDAQ:WYNN)
Pharmacy stocks are solid investments for the long term. Rite Aid (RAD) has rallied 42% year to date, but has dropped in the last month. Walgreen (WAG) has moved 27% since the beginning of the year. CVS Caremark (CVS) has risen 7%. Cramer likes all three of these stocks, but he analyzed each one to see which is a buy. WAG is Cramer's least favorite. He thinks the easy money has been made in WAG and is "priced for protection" with analysts and activists pressuring a restructuring. It is a well-run company Cramer has been bullish on, but he is "not so excited" at this level.
CVS has lagged the group, and Cramer thinks it will hang in there. Management has "genius" data mining strategies, and has its own clinics. CVS management is expanding internationally, and Cramer thinks CVS could go from $76 to $90 eventually.
Rite Aid has successfully executed a comeback, and has gained 130% since Cramer got behind it last year. However, it is still a bargain, given its recent pullback. Cramer thinks the earnings downgrade was just a "hiccup" related to a one-time issue. It reported in-line results and its remodeling of stores is delivering terrific results. Rite Aid is Cramer's top pick for the pharmacy space.
Cramer took some calls:
Mannkind (MNKD) is very controversial. If it announces a good partner, it is going higher, if it announces a bad partner, it goes lower; Cramer doesn't want to opine on the stock.
CEO Interview: Harold Hamm, Continental Resources (NYSE:CLR). Other stocks mentioned: Pioneer Natural Resources (NYSE:PXD), Enterprise Products Partners (NYSE:EPD)
The commerce department gave Pioneer Natural Resources (PXD) and Enterprise Products Partners (EPD) permission to export condensate, or crude oil put through a very basic distillation process. For many years, the export of crude was banned, and the Commerce Department's move is good news for oil companies. More companies are likely to apply for permission to export condensate. Continental Resources CEO Harold Hamm thinks permission could be granted by early next year, and the company is asking to be allowed to export light sweet crude oil. Cramer thinks approval will be good for CLR.
Following the announcement that CEO Jamie Dimon (JPM) has curable throat cancer, Cramer would not sell the stock. There have been many companies that remained successful after their CEOs announced illness. Cramer doesn't think a bank, which is in a volatile sector, would risk creating an overly optimistic prognosis. Cramer wished Dimon a speedy recovery and said that those committed to holding JPM should not dump the stock.
CEO Interview: Marti Mucci, Paychex (NASDAQ:PAYX)
Ahead of the non-farm payroll report for June, Cramer looked at the earnings report for Paychex (PAYX). Earnings were just in-line and guidance was conservative. CEO Marti Mucci said margins are actually increasing rather than decreasing, and he expects to see operating income and net income growth. The company is able to increase in IT spending while seeing strong gross margins. The company will benefit from an increase in interest rates. Cramer thinks PAYX has a strong story, and thinks the street gave it an unfairly bad rap.
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