Stocks discussed on in-depth session of Jim Cramer's Mad Money TV Program, Friday February 18
11 Earnings to Watch Next Week: Macy's (M), VF Corp (VFC), Wal-Mart (WMT), Hewlett Packard (HPQ), Chesapeake Energy (CHK), Saks (SKS), TJX (TJX), Deckers (DECK), Salesforce (CRM), J.C. Penney (JCP), Home Depot (HD) with Dell (DELL), Timberland (TBL)
Macy's (M): Cramer is a believer in the company's "My Macy's" program that focuses on regional tastes and trends. The company reported better than expected same store sales for January, and Cramer expects a good number.
VF Corp (VFC): The company managed to maintain robust margins in spite of higher cotton prices and its outdoor brands are now comprising 50% of sales.
Wal-Mart (WMT): The retail giant is suffering from low expectations and a slew of downgrades. Is Wal-Mart going to change its tune and make its stores a bit more fun?
Chesapeake Energy (CHK): This stock has been performing well since its joint venture with the Chinese, and it has been selling assets. Cramer expects this stock to double from its base of $30.
Saks (SKS): Cramer prefers Macy's to Saks, but the latter is still a great tell on high-end retail and luxury goods.
TJX (TJX): This is one of Cramer's favorite low-end plays and it keeps firing off strong results, including stellar same store sales for January. TJX has gigantic cash flow and it is a tremendous merchandiser which might be its own worst enemy, since comparisons will be tough, the stock has run up and expectations are high.
Salesforce.com (CRM): Although this stock has a lot of upside, Cramer warned it is a high flyer and a wild trade and it might sell-off on anything less than a huge beat. However, a sell-off in CRM is a buying opportunity.
Home Depot (HD): Cramer generally feels Home Depot calls are informative. He expects management to say good things about the state of housing.
JC Penney (JCP): Cramer would be careful with JCP, which has shot up to $37 from its January level of $29. He also wants to hear management comment on alleged "Google queue jumping" as reported in the New York Times.
Cramer urged viewers to "stop, look and listen" in the coming week, since just absorbing information about which companies are performing well might be the best way to make money.
As central banks around the world are buying gold, investors should start or increase their positions in the yellow metal through buying gold coins, GoldShares ETF (GLD) or quality gold stocks. Miners have not been performing up to par lately, after a disappointing quarter from Agnico-Eagle Mines (AEM) and Eldorado (EGO), although the latter's stock price did not suffer. Barrick (ABX), on the other hand, reported a terrific quarter.
Cramer apologized to viewers for not pushing Goldcorp (GG) aggressively enough. The stock is up over 1,000% since 2001 and is increasing its reserves while keeping costs low. Goldcorp plans to increase gold production by 7% this year and silver by 21%. Its balance sheet is rock solid and its mines are located in relatively safe spots in North and South America and Mexico.
When asked how the company keeps costs low while expanding production, Chuck Jeannes explained GoldCorp's strategy of adding only very high quality ounces and not overspending. The company looks forward to producing gold at only $285 an ounce, a price that is dramatically lower than the industry average. The company has opened a new mine in Argentina and sees it as an opportunity to grow for many years. Goldcorp is one of the world's largest producers of silver. Jeannes is not concerned about security at GoldCorp's mines and says there has not yet been an incident in Mexico, where it has beefed up security.
Cramer now picks GoldCorp as the best gold stock.
Cramer was stumped during lightning round when a caller asked him about an $8 satellite phone company, Iridium (IRDM). This company and its much larger competitor, British company Inmarsat, share a business with a $1.3 billion market growing at a rate of 10% per year. While this rate might not seem outstanding, the barriers to entry are high, since it requires a $2.3 billion commitment to launch a new satellite. The company provides satellite phones to airplanes and ships and is working on extending its reach to provide internet access as well.
Iridium's satellites are low orbit, and are easier to manipulate and repair compared to Inmarsat's satellites which are located higher up. Iridium was spun off by Motorola (MSI) in the 90s and was struggling for a long time before making a comeback and trebling market share in just 8 years. The company expects a 20% growth in subscribers this year and is looking to expand into Russia, China and India. The company offers a smart phone and a cheaper "dumber" phone to give its customers different options in capability and price.
One drawback is Iridium has to spend $2.1 billion over the next few years launching new satellites that will provide much needed replacements. Although 95% of it is financed, such launches can face problems, but a successful result will mean twice the number of subscribers. Iridium is 35% cheaper than its chief competitor, and Cramer expects this company to continue to take share and take names.
What's in a name? If Silicon Graphics (SGI) went by any other name, would it smell sweeter? Given that this company is levered to some of the highest growth areas in tech but is still an "orphan stock" covered by only three analyst, the answer seems to be "yes." After another Silicon Graphics went bankrupt in 2009, SGI is being punished by The Street because of its name, but is loved by customers.
The company has a high margin, high performance computing division which makes up 34% of its sales. Its flagship product, a super computer which has memory most others cannot even approach, gives it 50% gross margins, and SGI also repairs these super computers. The company also provides space and power efficient servers for data centers. This is a lower margin commodity business, but demand is incredibly strong, because the services provide the backbone for cloud computing. Amazon (AMZN) and the military are major clients of Silicon Graphics in this space. Finally, SGI's storage business is on fire, and is the area of the company that can be thought of as a tech value play that is not a value trap, because it has real growth.
The company's quarter was ignored, in spite of its fantastic 26 cent earnings beat, its 23% increase in revenues and the 180 basis point increase in growth margin. Cramer thinks SGI is a $30 stock masquerading as a $14 stock, and would get into SGI before TheStreet wakes up and takes notice.
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