Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday June 22.
CEO Interview: Alan Mulally, Ford (NYSE:F)
Ford (F) is a stock that has been disappointing lately, but management laid out an ambitious 5 year plan, including a 50% increase in sales worldwide with a third coming from emerging markets. Cramer, who had been bullish on Ford, admitted to some confusion when Ford's management said its first quarter would probably be its strongest quarter of the year, and the company foresaw weakness at the end of the year.
CEO Allan Mulally explained that seasonality is playing a role in the stock's slowness, along with the launch of new vehicles and rising commodity costs. However, the company reaffirmed its guidance; "We are still on plan." Cramer asked how Ford can be so confident about a bullish thesis a few years out when Fed Chairman Ben Bernanke seemed unable to predict when things will get better. Mulally pointed out an expected GDP rise to 2-3% in the U.S and 3-4% worldwide is a trend that cannot be stopped. He said the company plans to update guidance at regular intervals to give Wall Street a clear picture of the near term and the longer term situation.
Jabil Circuit (JBL) reported a strong quarter and shot up 3.2% following its earnings. Cramer was amazed that with the tech sector in the doldrums, Jabil could have performed so well, especially since Research In Motion (RIMM) which has been a laggard makes up 15% of Jabil's sales and Cisco (CSCO), also in the doldrums, is a major client. Timothy Main explained that diversification is the key, and the company has moved away from the volatile consumer electronics business into a host of industries, including diversified manufacturing services. Jabil has had consistent double digit revenue growth, and has seen a 32% gain since Cramer got behind it in July of 2010. Main says he has not seen a decline in orders and demand has been stable. While tech is slow in summer, Jabil expects a strong second half of the year and a bullish 2012. Investors who think Jabil is as risky as the rest of tech have a "perception overhang," because they do not yet understand how dramatically the company has diversified. Jabil is one of only 5 companies in the Fortune 500 since 1994 that has grown revenues 25% and consistently paid a dividend. "You are a classic Mad Money stock," Cramer told Main. "That is exactly what we are looking for." When tech snaps back in the fall, Cramer thinks Jabil is the first stock that will move up.
The market has been telling a Dickensian Tale of Two Feds. On Wednesday, Fed Chairman Ben Bernanke expressed uncertainty about when the economy would take a turn for the better. On the same day, FedEx (FDX) reported, and painted a more bullish picture. The stock rose $2 on major improvements: more market share, diminishing cost headwinds, a growing internet presence and a clean balance sheet in spite of $3.5 billion in capital expenditures. Cramer says he hopes more companies can trump the depressing macro picture and the S&P 500's verdict on the Federal Reserve's view of the economy by reporting strong earnings.
Cramer took some calls:
In an environment where inflation rises and the economy tanks, interest rates may not rise, but commodity inflation is still an issue, Cramer says the absolute best investment is SPDR Gold Trust ETF (GLD).
Cramer predicts the battle between Express Scripts (ESRX) and Walgreens (WAG) will cool off, since the companies need each other to make money.
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