Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday July 17.
The Dow declined 161 points on the news of the plane crash of Malaysian Airlines in the Ukraine. On President Obama's declaration of tighter sanctions against Russia, the market experienced uncertainty. Cramer would not declare a buying opportunity, not only because he considered such a call insensitive, but also because we don't yet know the cause of the crash, so there is not yet clarity about what to buy on the news. Also, there is a lack of certainty about where this event will lead. The conflict in the Middle East adds to the uncertainty. Cramer would wait for more information before declaring a buyable pullback.
Cramer took some calls:
Yelp (YELP) is a company with a great franchise that is very expensive. If it comes down, another company might want to buy it, but it lacks profits.
Cliffs Natural Resources (CLF) is an iron ore company, and that commodity is not doing well. Cramer prefers Vale, because the outcome of the Brazilian election might help the stock.
On a day of uncertainty, many people fled to the safety of bonds. Despite the strong economic news, the Fed might be behind the curve by keeping interest rates down. Low rates push money into equities. Some stocks are doing well because of activist investors; Microsoft (MSFT) is an example. A housing start number was anemic, yet PPG Industries (PPG), a paint supplier, did well. The macro patterns aren't holding up. Autos are showing incredible sales, yet AutoNation (AN) dropped 8% on earnings, mainly because it is spending a lot on its business. Yum Brands (YUM) was crushed, in spite of the strength of its brands in China. The market seems contradictory lately and that is discouraging investors. Cramer would ignore the noise and stick with high-quality stocks.
Cramer took some calls:
Tesla (TSLA) is a cult stock and defies traditional valuation. Cramer can't think of a reason to buy it at this level.
Retail has been challenged lately. Private equity firms are worth following, because many of them are skilled at turning around retailers. Private equity groups have a track record of buying retail brands and revamping them. Cramer thinks DSW (DSW) could turn itself around without a leveraged buyout, but with private equity help could make the turnaround more easily. Chico's FAS (CHS) is another example of a buy on the possibility of a leveraged buyout.
CEO Interview: Nicholas Pinchuk, Snap-On (NYSE:SNA)
Snap-On (SNA) has been marching steadily higher, 7%, since Cramer's interview with the CEO in April, 32.5% with dividends since last year and has given a 90% return since Cramer got behind it 2 years ago. The company reported a 12 cent earnings beat with revenues that rose 8.2%. The stock jumped 4% following the quarter. The company deals a variety of proprietary tools for cars. As cars become more complicated, more innovation is required for tools, and there will be a greater demand for SNA's products.
CEO Interview: Chuck Bunch, PPG Industries
PPG Industries has returned over 400% since Cramer recommended it five years ago. In spite of worries coming out of Europe, sales in the region continue to be strong for PPG. Chuck Bunch was also optimistic about sales in Mexico following its acquisition of Comex. The company's coatings business has evolved beyond paint to have many industrial uses. Cramer is bullish on PPG.
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