Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday July 22.
Earnings Madhouse: Herbalife (NYSE:HLF), Apple (NASDAQ:AAPL), IBM (NYSE:IBM), General Electric (NYSE:GE). Other stocks mentioned: Alliance Data Systems (NYSE:ADS), O'Reilly Automotive (NASDAQ:ORLY), Snap-on (NYSE:SNA)
Earnings-heavy days can be full of noise, and earnings season is a "madhouse." It is hard to find the clarity to think before making a judgment. Cramer suggests avoiding the battlegrounds. Herbalife (HLF) is one of the worst hot spots. The stock fell 11% when Bill Ackman declared he would destroy the company, while others say this is the same saber rattling from Ackman.
Apple (AAPL) reported earnings, and it has a new phone as well as a deal with IBM (IBM). This was a "transition" quarter, even though there were some skeptics concerning the guidance, which wasn't as aggressive as many wanted. "Stop trading Apple. Own it for the long term," said Cramer.
General Electric (GE) reported on Friday, and management sounded sanguine. However, the revenues were light and many of the company's segments are weak. GE is doing a large acquisition of a French company. One analyst discussed about how messy and complicated this deal is going to be. Cramer reiterated his cautionary advice not to trade based on earnings, and to listen to the conference call before buying or selling.
Cramer took some calls:
Alliance Data Systems (ADS): "I think we are fine," said Cramer. He would look at 2015 numbers and "stay long."
McDonald's (MCD) and Chipotle Mexican Grill (CMG) are statements about what customers want to buy and what they want to avoid. MCD's numbers were "abysmal," and a main reason may be the repudiation by the consumer of unhealthy food, even at low prices. MCD's poor numbers were not confined to the U.S. CMG's same store sales rose 17% and the stock rallied 12%. CMG is the polar opposite of MCD; CMG is natural, organic and its prices reflect the high quality. CMG avoids promotional gimmicks and doesn't need them, since CMG's locations are packed. CMG is attracting the younger crowd, and it is a teen hangout place. Coca-Cola (NYSE:KO) is also seeing flat numbers, perhaps for the same reason; the rejection of unhealthy products. Both KO and MCD have strong balance sheets and could bring out value, but CMG is likely to continue to outperform both companies, although Cramer is reluctant to recommend a stock that has risen so much.
Cramer took some calls:
Millennial Media (MM) is in disarray. Cramer would avoid it.
Whole Foods (WFM) probably won't have a good quarter, but Cramer would not sell it, because the stock is too low.
B&G Foods (BGS): BGS did not report a good quarter. Cramer is "very worried" about BGS.
CEO Interview: Patrick Doyle, Domino's Pizza (NYSE:DPZ)
Domino's Pizza (DPZ) is a high-quality company with top-notch management. This stock has risen consistently throughout the years, but reported a rather weak first quarter. The stock hasn't traveled since until its recent quarter, when it roared on a 2 cent earnings beat, a domestic same store sales rise of 5.4% and international same store sales gain of 7.7%.
The company is benefiting from its mobile ordering options. Raw cost inflation is a concern, but since most of its stores are franchises, the company is somewhat insulated from rising costs. The stock has risen 715% since Cramer recommended it 4 years ago. "We've got the global momentum," said CEO Patrick Doyle. "The food, the service and the technology are drivers." The company launched its iPad app and its online voice ordering service. With this technology, the voice orders show up on the screen so customers can make corrections and avoid errors. Doyle noted that raw costs are declining. Cramer said even though the stock is up, "it has rested, it is ready and it is taking off."
Cramer consulted the technical analysis of Dan Fitzpatrick concerning 3 stocks that have performed well recently: Kinder Morgan (KMP), Morgan Stanley (MS) and Honeywell (HON). KMP peaked this spring and was trending lower, but the pattern reversed when it made higher lows and showed a bullish crossover pattern. Honeywell has been trading sideways, but has a high base it can jump off of. Selling has been at low volumes, which shows that investors are sticking with the stock. If HON goes about $100, it should rise much higher. Morgan Stanley's chart is showing consolidation, but seems poised to rise above its 200 day moving average. Cramer thinks all three charts look strong.
CEO Interview: Michael Roth, Interpublic Group (NYSE:IPG)
Interpublic Group (IPG) is the fourth-largest advertising agency, and its CEO, Michael Roth, said that spending on digital advertising is surpassing the amount invested in TV commercials, but television is still important. Social media is the main focus for IPG. Cramer asked about a possible merger, and Roth responded that he intends to create value for shareholders and that IPG doesn't need a takeover deal to keep performing.
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