Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday December 20.
Pretty Girls, Ugly Charts: Baidu (NASDAQ:BIDU), Green Mountain Coffee Roasters (NASDAQ:GMCR), Deckers (NYSE:DECK), Lululemon (NASDAQ:LULU), Netflix (NASDAQ:NFLX), Chipotle Mexican Grill (NYSE:CMG), Estee Lauder (NYSE:EL), Hansen Natural (HANS), Priceline.com (NASDAQ:PCLN), Yum Brands (NYSE:YUM), Whole Foods (NASDAQ:WFM)
Technical analyst John Roche coined the phrase "Pretty Girls Index" for high-flying momentum stocks that have been well-loved, until now. These stocks include: Baidu (BIDU), Green Mountain Coffee Roasters (GMCR), Deckers (DECK), Lululemon (LULU), Netflix (NFLX), Chipotle Mexican Grill (CMG), Estee Lauder (EL), Hansen Natural (HANS), Priceline.com (PCLN), Yum Brands (YUM) and Whole Foods (WFM). In July, the Pretty Girls Index started to see a downtrend, and in spite of strong action on Tuesday, he thinks they are headed lower. The index has been making lower highs and lower lows and stocks are below both their 50 day and 200 day moving averages. Roche thinks the index is headed to a 20% decline from where it was on Tuesday.
However, not all pretty girls are created equal. Cramer likes some of the stocks in the index, like YUM, which has promising upside. He agrees with Roche that the three ugliest stocks in the pretty girl index are Salesforce.com, Baidu and Priceline.com. CRM is well below its 200 day moving average and could fall to $80, down 23% from where it was on Tuesday. Baidu is stuck beneath its ceiling, the 200 day moving average, and could decline 32% to $80. Priceline.com, which has until now been a successful stock, could see a 27% decline. While Cramer would not necessarily avoid all of the stocks in the index, CRM, Baidu and PCLN aren't so pretty anymore.
Navistar International (NYSE:NAV), Boeing (NYSE:BA), Honeywell (NYSE:HON), Apple (NASDAQ:AAPL), Novellus (NASDAQ:NVLS), Oracle (NYSE:ORCL), New York Stock Exchange (NYSE:NYX), GM (NYSE:GM)
The stock market took a vacation from European misery, and the Dow soared 337 points. With Europe taken off the table, even for a day, it became clear that there are some hopeful signs in the domestic economy. Navistar reported a fantastic quarter and showed strength in the auto sector, particularly trucks, as old fleets need to be replaced. Oil rose $3, and with it, oil and gas stocks. Autos also saw an upside, but Cramer would use caution about buying the sector, which is heavily levered to Europe. Aerospace plays like Boeing (BA), Honeywell (HON) and Precision Castparts (NYSE:PCP) are long term buys on the aerospace cycle. While Cramer is concerned about tech as a sector with heavy European exposure, JPMorgan's upgrade of the semiconductor space as well as Novellus' (NVLS) performance shows value in the industry. Apple (AAPL) might have a catalyst on a resolution to its battle with the Android and some see Oracle (ORCL) as a buy on its recent dip following earnings, but Cramer would not stay for very long in tech trades. Predictions of strong GDP numbers for the fourth quarter may bode well for industrials. However, all of the good domestic news may be trumped by more bad news in Europe, and there hasn't been a reprieve of more than a few days from this ongoing problem.
Cramer took some calls:
New York Stock Exchange (NYX) is structurally challenged and faces too much competition.
GM (GM) has a lot of cash, but doesn't have a catalyst and is too levered to Europe.
CEO Interview: Marty Mucci, Paychex (NASDAQ:PAYX)
Cramer urged viewers not to dump solid dividend stocks on rallies like the one that occurred on Tuesday. He would stick with stocks like Paychex (PAYX), the country's second largest payroll services provider with a yield of 4.2%. There seems to be an improvement in hiring, with jobless numbers positive for two weeks in a row and strong employment numbers for November. A full 70% of PAYX's revenue comes from payroll services, mostly from small and medium-sized businesses which see the most immediate impact from an employment turnaround. The company beat earnings by a penny, reported in-line revenues, with checks per client rising 1.5%. Marty Mucci says the client base is solid, but PAYX needs to see an improvement in new starts. The company's 401(k) plans are seeing increased demand, and its Human Resources Outsourcing segment is growing. While certain states like Florida and Nevada are seeing a return in hiring, Mucci was cautious and says the employment recovery isn't yet consistent and strong. However, the signs look hopeful, and there have been 8 consecutive quarters showing a decline in the number of PAYX clients going out of business.
Cramer is bullish on PAYX.
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