Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday April 13.
Alcoa (NYSE:AA), Boeing (NYSE:BA), JPMorgan (NYSE:JPM), American Express (NYSE:AXP), Hewlett-Packard (NYSE:HPQ), EMC (NYSE:EMC)
It is said often on TheStreet that Alcoa's (AA) earnings set the tone for the market. However, the reaction to the company's report did not reflect the story the company actually told. The press was ready to paint Alcoa's quarter as "disappointing," but when looking over the conference call, Cramer discovered its earnings were actually better than expected; "The big guys got Alcoa dead wrong."
Cramer has followed Alcoa for many years and has often been frustrated with its management. Now that it has a CEO with vision and has made steps toward a comeback, the stock is talked down. Alcoa is lowering costs, taking market share and is going to develop the lowest cost smelters on Earth. There were some negatives, such as the cash flow number and minor currency issues, but Cramer thinks these liabilities don't cancel out the good news of Alcoa's China business alone. Why is Cramer's view so divergent from TheStreet's? "Because I am a big nerd who actually follows the stuff and does the homework."
Cramer thinks Alcoa should be bought, "The lazy consensus triumphed over the facts. Do you own homework. Three or four months from now, everyone who sold Alcoa yesterday will feel like dopes."
Cramer took some calls:
Boeing (BA) is a stock that should be bought because of a major aerospace cycle, especially since the stock has dropped.
Cramer wouldn't extrapolate from JPMorgan's (JPM) success to credit cards, since the latter are vulnerable to government intervention, but he might consider buying American Express (AXP) because the stock is cheap.
Everyone is talking about social networking stocks as the next dot.com bubble. Cramer thinks this might not be a bad thing, since tech investors who got into hot stocks quick and sold gains made money. The main trick with betting on these stocks is discipline. He would look to China, where the internet is growing faster than in the U.S. He looked at some gains on the first day of trading of recent sizzling Chinese tech IPOs:
QIHOO (QIHU) up 135%.
DangDang (DANG) up 86%
Youku (YOKU) up 161%
Not all Chinese tech stocks are quick trades: Baidu (BIDU) is a stock Cramer would recommend as a long-term investment. Another trade Cramer likes is Sina (SINA) which generates revenues from online display advertising, but owns the Chinese version of Twitter, Weibo, which has 100 million viewers and is growing rapidly. Weibo has 500 applications and is adding more, and has 90% market share in the Chinese mini-blog space. While it will be 18 months before Sina can monetize Weibo, when this happens, Sina will see huge gains. The stock is up 8% in one day alone and 200% for the year, but Cramer thinks it will go higher, and believes the $150 target for Sina is too low. He would use deep in the money options for September at $100 which sell for $27. Be careful when buying Sina; "It is one of the wildest most inscrutable traders I've ever seen."
Cramer took some calls:
Google (GOOG) had better shoot out the lights on its upcoming quarter, said Cramer. People are cautious about the new CEO, and if Cramer likes the quarter, he might get behind it.
CEO Interview: Chip Johnson, Carrizo Oil & Gas (NASDAQ:CRZO)
Carrizo (CRZO) is yet another story of a natural gas company that is gaining more exposure to oil. The company currently generates 80% of its revenues from natural gas, but expects to decrease its natural gas exposure to 71% by 2012. Chip Johnson says he aspires to make the company more "oily" and is keeping costs low to take advantage of the high price of oil. Johnson said TheStreet misunderstood the company's previous quarter because there was confusion about hedging gains and analysts thought CRZO was vague about production guidance. However, the company later saw a 40% increase in production. Natural gas assets are being bought by the Japanese, the Indians and Koreans. Johnson said he values the company at $78 a share, while the stock currently trades at $72.
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