Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday December 17.
CEO Interview: Sean Boyd, Agnico Eagle Mines (NYSE:AEM)
Agnico Eagle mines experienced a "vicious mauling" because of an allegedly disappointing production plan. The stock was hammered 11 points down, even though it raised its dividend. AEM is still up 36% since Cramer first recommended the stock in February 24. The dividend raise was 256% for a total 0.9%. CEO Sean Boyd said the 5 year report the company gave was filled with positive details, such as healthy margins, continued growth in net free cash flow, and production and exploration increases. However, analysts were concerned with rising costs, which can be absorbed with increased demand, especially in China. Boyd sees gold going to $2,000 and is going forward on a "relentless move" up; "We are going to see increased earnings and dividends," said Boyd.
Is brick and mortar retail dead? After Best Buy's (BBY) terrible quarter, these rumors are flying. However, Cramer urged viewers not to believe this tale of retail woe. Best Buy's problem is it sells commoditized products in an area where there is a lot of competition in pricing. Stanley Black and Decker is in the do-it-yourself space, which doesn't have much competition. In fact, Cramer thinks the merger between master manager Stanley and great brand producer, Black and Decker was practically anti-competitive.
The company delivered a spectacular earnings beat in October, and should see continued success as more homeowners make improvements to increase their property values. The company is expanding overseas and has a healthy cash flow for additional acquisitions. The cost savings generated from the merger of Black and Decker and Stanley is estimated to be around $400 million or higher. The company is creating proprietary products that are unique and in demand, such as cordless lithium ion battery-powered power tools. SWK's security and industrial sectors are performing well. Cramer is bullish on SWK, which trades at a multiple of 13, should generate $6 per share next year and trades at a discount to its peers.
Cramer was on the lookout for orphans; speculative junior growth stocks that have yet to be adopted by analysts. His pick on Friday was InterDigital (IDCC), a mobile internet play that licenses technology and collects royalties on 50% of 3G phone shipments and is licensed by four out of five handset makers. If a company violates patent agreements, IDCC sues and usually wins, as in the case with Nokia (NOK) which is in litigation with the company now. IDCC licenses technology on 20% of 4G phones and is looking for a bigger piece of the pie. While the stock is just a point off its 52 week high, its case with Nokia will soon be settled, almost certainly in Nokia's favor. While there is a large short position on IDCC, these shorts are likely to get squeezed as the company wins more contracts. Trading at a multiple of 13 with an 18% growth rate, IDCC is a worthy speculative stock.
Game Plan: Darden (NYSE:DRI), Jabil (NYSE:JBL), Cisco (NASDAQ:CSCO), Adobe (NASDAQ:ADBE), Paychex (NASDAQ:PAYX), Finish Line (NASDAQ:FINL), Nike (NYSE:NKE), Walgreen (WAG), Bed Bath & Beyond (NASDAQ:BBBY), Oracle (NASDAQ:ORCL), Accenture (NYSE:ACN)
While Friday seemed like a boring day for the markets, Cramer thinks the action is terrific. Why? Stocks were moving up on good news; Oracle (ORCL) was up 4.6% and Accenture (ACN) was up 7.7% following earnings.
Cramer pointed out the crucial earnings reports in the coming week. On Monday, Darden (DRI) reports. Cramer sees the company as a barometer of casual dining and consumer confidence, which he thinks is strong. Jabil Circuit (JBL) is a measure of the health of the tech sector. While results could be damaged by weakness in Cisco (CSCO), a main client of Jabil, Cramer predicts the stock will deliver an earnings beat and will run up following earnings. Adobe (ADBE) which performed badly last quarter, is expected to show some improvement. Cramer expects takeover rumors if it beats numbers. Paychecks should indicate a growth in employment.
On Tuesday, both Finish Line (FINL) and Nike (NKE) report. The last quarter saw a disappointing performance in Finish Line, despite the fact much of its merchandise is Nike, but Cramer thinks Finish Line's inventory problem (in this case, not enough) has been solved. He still thinks Nike is the best way to play the global bull market in shoes.
On Wednesday, Cramer would pay attention to Walgreen's (WAG) report. He thinks Bed Bath & Beyond (BBBY) will prove pessimists wrong, even after the Best Buy earnings blowup last week.
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