Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday August 12.
16 Things to Watch in the Coming Week: Lowe's (NYSE:LOW), Sysco (NYSE:SYY), Perrigo (NASDAQ:PRGO), Saks (NYSE:SKS), TJX Companies (NYSE:TJX), Dell (NASDAQ:DELL), NetApp (NASDAQ:NTAP), Staples (NASDAQ:SPLS), Deckers (NASDAQ:DECK), Foot Locker (NYSE:FL), Gap (NYSE:GPS), Yingli Green Energy (NYSE:YGE), other stocks mentioned: Baidu (NASDAQ:BIDU), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG), Home Depot (NYSE:HD), Hewlett-Packard (NYSE:HPQ)
"We are in a new world where stocks play second fiddle" to the macro news, Cramer said. A plan, or a lack of a plan, from the central banks of Europe could make any news about the fundamentals of individual companies irrelevant, he warned. A short selling ban on troubled banks won't be enough, and with the current lack of leadership on both sides of the Atlantic, recession fears could continue to loom. "The only good news is that everyone is realizing how bad things are," even though he doesn't think the scenario is a repeat of 2008.
Cramer outlined what to look for in the coming week:
Sysco (SYY) is expected to express worry about consumer spending, even as gas prices should be coming down.
Perrigo (PRGO) has been hot: 'This is the best knock-off company known to man."
Saks (SKS) has been performing well; Cramer expects a strong quarter.
TJX Companies (TJX) is one of the most consistent retailers, and should report favorable results.
French and German leaders are expected to report on the European financial situation on Tuesday, and Cramer cautioned that, depending on what they say, earnings on Tuesday may be rendered meaningless.
The housing starts number will be reported. These need to be low to stop putting pressure on the domestic housing industry.
Industrial production numbers, which are expected to be a read on whether the U.S. is headed for a recession, are scheduled to come out.
NetApp (NTAP) is "ground zero for data centers" which have been among the greatest growth areas for tech. If data centers are ailing, there are very few places in tech left to hide.
Staples (SPLS) have tended to be downbeat of late; "The last few Staples calls, you've wanted to break out the hemlock."
Mortgage numbers will be reported. The numbers have been so low that it is tempting for homeowners to refinance.
Deckers (DECK) is a "darn hot stock." The shoe bull market is alive and kicking.
Foot Locker (FL) yields 3% and has been doing well.
Gap (GPS) may not be for connoisseurs, but it is a great "whine" company: "They do more whining than anyone else."
Yingli (YGE) is a Chinese solar company many people seem to like, but not Cramer. Solar is losing funding from government budgets, and Cramer reiterated his dislike for Chinese equities; "The only Chinese stock I like is Baidu (BIDU)."
Cramer took some calls:
A viewer asked what the next boom industry will be. Cramer replied that it will be some kind of fuel that powers everything and doesn't pollute. Beyond that, the lion's share of growth will come from Apple (AAPL).
Cramer told another viewer that he is emphasizing growth investing rather than value investing. In a time of low growth, investors need to look to hyper growth stocks like Apple, Amazon (AMZN) and Google (GOOG).
When a viewer asked Cramer about platinum, he replied that platinum is not gold, which is a currency and not a commodity.
Finally, Cramer said he doesn't really care whether dividends are issued on a monthly, quarterly or yearly basis, but that they should be reinvested for maximum gains.
Don't Buy and Hold: Caterpillar (NYSE:CAT)
The best way to get back to even on the markets is to dump the theory of "buy and hold." Many investors are told to buy good stocks and to leave them alone, ignoring the day-to-day fluctuations in price. "Price does matter," declared Cramer, who added that the best way to secure gains is to play the fluctuations to buy low and sell high. Caterpillar (CAT) might look great at $80, but at $100, an investor would have to think about it. If price matters when buying a sweater, it matters even more when buying stocks.
The "buy and hold" policy too often becomes a "buy and forget" laziness that causes investors to lose money. While he doesn't recommend homegamers act like frantic day traders, to make money, investors need to have at least a bit of day trading DNA.
Do Your Homework
While no investors can foresee unexpected macro news that can crush stocks mercilessly without warning, they should at least take care of the factors that they can control, and do careful research on stocks. Homework, one hour per week for every stock held, is imperative for managing a portfolio, and while the information is public, it is not "baked into" the stock price, because many investors and fund managers are "lazy" and ignore the data in favor of charts or selling or buying on headlines. It is not difficult to consult a company's quarterly conference call, it just requires time and discipline. Armed with information, an investor can afford to take the kind of risks that generate profits; uninformed investors cannot.
Cramer took some more calls:
When asked what he likes in a company, Cramer responded that he likes a stock few analysts are researching, a clean balance sheet and a company that has unlimited market opportunities.
Cramer doesn't mind Apple's huge cash position; "It is cheaper than the average stock has been for years."
Know Your IPO: LinkedIn (NYSE:LNKD)
IPOs can seem risky, but to ignore them is to ignore a great money-making opportunity. The number of IPOs in 2011 has increased 20% from the year before with the rise of social media names. These IPOs are talked about endlessly, but few give counsel on how to trade them. Recently, IPOs have been making 20%, 30% and even 100% gains on their first day of trading, only to plummet later. This isn't a matter of luck, but it is a matter of knowing the stock and knowing your broker. Many brokers are desperate to get investors who have been on the sidelines back into stocks. They will offer "sliver" deals, with just a few shares issued at a low price. This will guarantee a one day pop, but those who buy in the aftermarket lose out, since the IPOs usually tumble in the open market. For instance, LinkedIn (LNKD) jumped 100% on its first day of trading, but the pricing was artificial, because relatively few shares were offered.
The one way to avoid losing money on IPOs is to avoid buying them in the aftermarket and to know when to make an exit. Often, it is better to admit to losing an opportunity than trying to take a chance and buy an IPO that has already peaked.
Jim Cramer was up 31% in 2009. Click here now to sign up for Jim's Action Alerts PLUS and trade alongside him. Special discount for Seeking Alpha users.
Get Cramer's Picks by email - it's free and takes only a few seconds to sign up.