Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday August 4.
Cramer discussed with technical analyst Bob Lang the latter's favorite stocks based on charts. Bob Lang, Cramer's colleague at The Street.com and founder of explosiveoptions.net looked at charts of Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Google (GOOG), (GOOGL). Lang called this group FANG, an acronym of the four stocks recommended by Lang 18 months ago, which are up collectively 90%. Facebook's daily chart moved up following earnings and then corrected. FB looks like it is ready to move to its old highs in the mid-70s. The weekly chart of FB has been showing strength since July 2013, and it is currently showing a flag pattern and a bullish crossover in the MACD.
Amazon has been more troublesome. The daily chart is showing a reversal, and AMZN looks like it will make a comeback. Netflix is trying to come back after its earnings, and once it crosses the 50-day moving average, it has upside. Netflix's weekly chart looks particularly strong. Google's weekly chart seems like it is making a double top, but the last time it showed this pattern, the stock took off to the upside. Lang would wait on Google, which is retesting a key level. If it doesn't break the 50-week moving average, the stock will be okay. Cramer agrees with Bob Lang's analysis, but he prefers Amazon to Netflix.
Russia Is Responsible For Market Declines: Royal Dutch Shell (NYSE:RDS.A), BP (NYSE:BP). Other stocks mentioned: Cheesecake Factory (NASDAQ:CAKE), Newell Rubbermaid (NYSE:NWL), Discover Financial (NYSE:DFS), Synchrony (NYSE:SYF), El Pollo Loco (NASDAQ:LOCO)
After the major declines in averages last week, Cramer discussed the proximate causes of their performance. The Fed meeting was unremarkable and barely budged the market. Issues and Portugal were resolved, and even the Argentine default didn't affect the wider market beyond banks. Cramer thinks Russia is the proximate cause of the current decline. Royal Dutch Shell (RDS.A) reported a great quarter, but management said the Russian issue is a "game changer." BP (BP) has partnerships with major Russian oils, and other industries could be affected. Vladimir Putin is unrepentant, and it isn't off-base to think he could shut off natural gas from Europe.
Many people are afraid to fly internationally because of the downing of the Malaysian airplane, and this may be a cause for the decline of airline stocks. If the euro suffers in comparison to the dollar, many companies that depend on a low dollar will see headwinds. Even if Russia is not in the headlines every day, the fear still lingers and affects stocks.
Cramer took some calls:
The Cheesecake Factory (CAKE) is well-run, but it is not part of the healthy eating trend. "I think it is fine."
El Pollo Loco (LOCO): "I said it would go higher, it did. Now let's walk away."
Newell Rubbermaid (NWL) had the best consumer products number. It is at a 52-week high, but if it comes down, Cramer's charitable trust might buy the stock.
Best S&P 500 Charts: Amerisource Bergen (NYSE:ABC), Cardinal Health (NYSE:CAH), McKesson (NYSE:MCK), Baxter International (NYSE:BAX), Edwards Lifesciences (NYSE:EW), Amgen (NASDAQ:AMGN), Gilead (NASDAQ:GILD), Regeneron (NASDAQ:REGN), Walgreen (WAG), CVS Caremark (NYSE:CVS), Apple (NASDAQ:AAPL), Hewlett-Packard (NYSE:HPQ), Apache (NYSE:APA), Enterprise Products Partners (NYSE:EPD), Starbucks (NASDAQ:SBUX), Under Armour (NYSE:UA), Home Depot (NYSE:HD), PPG Industries (NYSE:PPG), LyondellBasell Industries (NYSE:LYB), American Tower (NYSE:AMT), Brown-Forman (NYSE:BF.A), Snap-On (NYSE:SNA)
Cramer discussed which S&P 500 charts looked the best. Many winners are in the healthcare sector, which makes sense, given the global economic headwinds, and that healthcare is a defensive sector. Amerisource Bergen (ABC), Cardinal Health (CAH) and McKesson (MCK) have good charts. Cardinal Health was down, but that often happens after its earnings, because management tends to give conservative guidance. Baxter (BAX) is breaking up and Edwards Lifesciences (EW) has a new heart device that is a game changer. Amgen (AMGN) reported great earnings, Gilead (GILD) is cheap and Regeneron (REGN) has great new products. Charts of drugstores look great, including CVS Caremark (CVS) and Walgreen (WAG).
In the oil patch, Apache (APA) has restructuring potential. Enterprise Products Partners (EPD) is the best pipeline MLP. National Oilwell Varco (NYSE:NOV) reported a good quarter, but many regarded it as a miss.
Retail is poor sector, but Starbucks (SBUX), Under Armour (UA) and Home Depot (HD) have good charts. Cramer likes SBUX and UA, but isn't sure about HD. Chemicals are raw cost beneficiaries and are doing well. PPG Industries (PPG) and LyondellBasell (LYB) both have solid charts, reported strong quarters, rallied and fell.
American Tower (AMT) was a victim of a stupid short selling raid gone wrong. Snap-On (SNA) is a stock Cramer likes and has a decent chart, and Brown-Forman (BF.A) gave a rare decline. "The rest of the charts are sickening," said Cramer, who thinks most of these stocks with good charts are strong companies.
CEO Interview: Sandy Cutler, Eaton (NYSE:ETN)
Eaton (ETN) is a diversified industrial and is a stock Cramer owns for his charitable trust. Management pre-announced, and earnings were disappointing because of the electric business. It announced it was not spinning off its vehicle division. The stock received 3 downgrades in one day. Has Eaton further space to fall or is this a bottom for the stock? CEO Sandy Cutler said that he never indicated he would spin off the vehicle business, and market chatter raised false expectations about this possibility; "I'm disappointed about that reaction...we made it clear (that the deal wouldn't happen) many times."
Cutler said revenues were in-line, earnings estimates were beaten by one cent, the company is settling litigation and is still working on integrating the Cooper industries acquisition, which is the largest deal in Eaton's history, and was the reason that the electric division was weak temporarily. However, Cramer criticized Cutler for guiding down on Friday after hours, when the announcement was least likely to be noticed, and that the hydraulic business and bookings were also weak. Cramer criticized the company's quarters as being "hard to read," and this makes it hard to value the company. Cutler said his aim by the timing of the announcement was not to avoid transparency. He acknowledged that some of the data are opaque, but insisted that this quarter was less disappointing in terms of bookings than the previous four. Cramer thanked Cutler for coming on the show and said he hopes the company regains its credibility
Actavis (ACT) has moved from $80 to $216 in 18 months, and is going to report earnings on Tuesday. It is a stock that should be on the radar screen, because it was recommended by Leon Cooperman, who is "one of the best stock pickers in the era." Actavis is a generic drugmaker, and usually Cramer avoids these because of the lack of patent protection. Then again, making generics is much less risky, and there is no aspect of "FDA Roulette." This company has become a "monster consolidator." It is now the 3rd largest generic drugmaker in the world.
Cramer thinks this is an excellent long-term story and would use any decline as a buying opportunity. It gets much of its revenues with specialty generic drugs that have high barriers to entry. The stock trades at a multiple of 13, its growth rate is 19%, and Actavis is an unappreciated stock. Cramer thinks Actavis has only just begun with its acquisitions, thanks to its strong balance sheet. Actavis might practice tax inversion and be located in Ireland with a new deal. Cooperman thinks the estimates are too low, and predicts it could trade up to 39% higher. Cramer would read the conference call following earnings and wait for a decline to buy Actavis.
Cramer took some calls:
Celldex (CLDX): This stock was a trade and now it is over. "I don't want to be in Celldex."
Regeneron (REGN) is a stock to hold onto.
Biomarin (BMRN) is good and reported a strong quarter. "I would not give up on Biomarin."
Get Cramer's Picks by email - it's free and takes only a few seconds to sign up.