Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday May 6.
10 Essential Earnings Reports for the Coming Week: Clean Energy Fuels (CLNE), MarkWest Energy (MWE), Enterprise Products Partners (EPD) Fossil (FOSL), Disney (DIS), Macy's (M), Nordstrom (JWN), Cisco (CSCO), Sina (SINA), Kohl's (KSS). Other stocks mentioned: Phillips Van Heusen (PVH), Renren (RENN), Weight Watchers (WTW)
The irrational moves in the market are the result of hedge funds selling their positions after buying on the margins. This was the chief reason stocks that should have performed well on the falling price of oil were sold off. Cramer suggested viewers not be intimidated by further sell-offs and would use down days to look for good stocks at bargain prices. He discussed important earnings for the coming week:
Clean Energy Fuels (CLNE) will indicate whether people are adopting natural gas trucks or if the trucks will require government subsidies to be profitable.
MarkWest Energy Partners (MWE) like other MLPs, is being hit because of worries that the tax code will be changed. Cramer thinks the tax policy will be unchanged and would buy good MLPs.
Enterprises Product Partners (EPD), like MarkWest, is an MLP that has been unfairly punished; it may be a buy on weakness.
Fossil (FOSL) fell 6% the last time it reported, and it turned out to be a great buying opportunity, because the company was investing in order to grow. The stock has come roaring back up 25% since the previous quarter. Cramer would buy the stock on weakness.
Disney's (DIS) conference call is worth listening to, with special attention to information about its theme parks, ABC and ESPN.
Macy's (M) blew away retail sales for the previous month and Cramer wants to know how they accomplished this. He thinks Macy's is a good read on Philips Van Heusen (PVH) which may be a buy on its recent decline in stock price.
Cisco (CSCO) had better report a decent quarter, or CEO John Chambers is going to be the next inductee on Mad Money's CEO Wall of Shame. The company has missed its last two quarters, and Cramer doesn't know how the company will deliver, given competition from high and low ends squeezing Cisco.
Sina (SINA) has been a roller coaster which was "supposed" to do well on the Renren (RENN) IPO, but Sina got slammed. Cramer says the Chinese stock market is riddled with accounting problems and not enough oversight.
Kohl's (KSS) guided up but the stock went down on a weak month. Cramer thinks KSS is one of the cheapest major retailers.
Nordstrom (JWN) is a read on how the consumer is handling gas prices.
The Michigan Consumer Sentiment Survey will probably be headed higher with gas prices headed lower.
Cramer took some calls:
Weight Watchers (WTW) had a good quarter, but the stock went down because shareholders took profits. Cramer would buy this stock on the cheap.
CEO Interview: Mark Ppa EOG Resources (EOG)
The pullback in oil is creating buying opportunities in the oil sector. Now that fears of demand destruction from overly inflated oil prices are off the table, Cramer would consider buying high growth oil names. EOG Resources (EOG) is an exploration and production company that produces oil for as little as $30 a barrel. EOG is a former natural gas company that changed its stripes, and now 69% of its revenues are from oil rather than natural gas. It has assets in the Eagle Ford and Bakken shales. EOG reported a 14 cent earnings beat with a 38% revenue rise and a 14% increase in production. The company raised $1.3 billion in a secondary offering and is aiming to increase production by 53% in the next year.
CEO Mark Papa commented that the Eagle Ford shale is the biggest find in the last 40 years, and that EOG's role in the Eagle Ford is not sufficiently appreciated by The Street. Improved technology is mainly responsible for increasing oil production in these shales, and is providing access to oil from these shales that were previously difficult for drilling. Papa said the Eagle Ford oil is not even remotely valued in the company's stock price. The company has a 150% success rate with its drilling and has 150 wells in the Eagle Ford shale. While transportation is the main problem, EOG expects a pipeline to be built within the year and until then, is transporting the oil by rail to refineries, especially to Louisiana, where the oil fetches a higher price. Having assets in the Bakken and in Eagle Ford is a nice "one-two punch" for the company, Pappa said.
Cramer thinks EOG is worth much more than $28 billion and would buy EOG.
CEO Interview: Tom Ward, Sandridge Energy (SD)
Sandridge Energy (SD) is yet another energy company that has transformed itself from a natural gas to an oil play. Sandridge used to be 80% natural gas but in a few years, it will be 80% oil. Its rigs have a 152% rate of return and the company has sufficient reserves for ten years of drilling. Its quarter was difficult to understand, with a 2 cent loss compared to The Street's expectation of a 2 cent gain. However, revenues rose 48% and the stock is up 40% since March 2010 and 15% since Cramer last spoke to the CEO in February.
In spite of the 2 cent loss, CEO Mark Ward says the company is right on track with rising revenues and more growth on the oil side. The company is hedging oil and is keeping costs down; Sandridge is able to make a profit by producing only 50-60 barrels of oil per day in some places. The company uses shallow, conventional drilling to keep its production costs low, and is planning to double its rig count in Oklahoma and Kansas by next year. "This stock at $10 is darn cheap," Cramer said.
Older companies often tend to stagnate with age, but some manage to reinvent themselves. DuPont (DD) is a 200-year old company that has become more forward-looking and is cashing in on global trends. In 1998, DuPont sold its oil and natural gas assets, its pharmaceutical business and got out of textile fibers. When Ellen Coleman took the helm in 2009, she further streamlined DuPont by reducing its 23 businesses to 13 businesses and six segments and removed an entire layer of its bloated management. DuPont focused on end markets that were working, and shifted its focus to global mega-trends like food production, energy conservation and safety. The changes are working; 30% of DuPont's sales are from new products and it is aggressively taking market share from seed companies like Monsanto (MON). The company reported a blowout quarter with a 16 cent earnings beat, an 18% rise in revenues and an aggressively positive forecast.
Cramer took a call:
United Technologies (UTX) is another great company that is a buy. UTX may raise its dividend soon.
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