Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday January 9.
Wells Fargo (WFC), US Bancorp (USB), Apple (AAPL), Texas Instruments (TXN), Cypress Semiconductor (CY), Broadcom (BRCM), Qualcomm (QCOM), Cirrus Logic (CRUS), Jabil Circuit (JBL), Avnet (AVT), Kinder Morgan Partners (KMP), Energy Transfer Partners (ETP), Google (GOOG)
The two groups that have been the worst laggards, banks and tech, are now the leaders and are moving the averages. While most of these stocks may report lackluster numbers, with the exception of Apple (AAPL), US Bancorp (USB) and Wells Fargo (WFC), poor numbers won't matter, because expectations are so low. Tech has seen some upgrades, particularly the semiconductors, and Cramer thinks Texas Instruments (TXN), Cypress Semiconductor (CY), Broadcom (BRCM) and Qualcomm (QCOM) will continue to perform well. Cirrus Logic (CRUS) ran on Monday and should continue to see more upside. Jabil Circuit (JBL) might move upward, and Avnet (AVT) the "supermarket of tech" reported low inventories which means strength for the sector in the next quarter, even if this quarter is not so hot. Apple was up more than 5 points on Monday, and although its last quarter was a disappointment, its iPhone 4S has been a huge upside surprise, Google's (GOOG) Android is losing market share to Apple, and Apple's iPad 3 is likely to be a revolutionary product. Strong performance for tech means a strong S&P 500, because the sector comprises 17.5% of the index. Financials make up 12.4% of the S&P 500, and has been a millstone around the neck of the averages. A turn in housing could move the banks upward, and the strongest financials are Wells Fargo and U.S. Bancorp.
Cramer took some calls:
Key Energy Services (KEG)
Oil is one of the few commodities that stayed strong during the recent economic volatility, and the bears are waiting for it to plummet, since they can't believe oil can stay above $100. With geopolitical chaos and the ramping up of drilling in the U.S., the future looks bright for the energy sector. Key Energy Services (KEY) has a well maintenance and a frac water disposal business that should perform well as drilling increases. Most wells being drilled in the U.S. are horizontal wells, which produce more oil but require more maintenance, and KEG provides this service. The company also disposes of frac water, an essential part of gas drilling. Currently 20% of the business is international, but Cramer expects this to grow 40-50% over the next year. The company is 5 points of its 52 week high, trades at a multiple of 9.7 with a 12% growth rate. Cramer thinks KEG is a $20 and change stock masquerading as a $15 and change stock.
Could housing finally be bottoming? There have been false bottoms for the troubled sector in the past, but with pending home sales at their highest in 19 months and great news from KB Home (KBH), with a 61% rise in its backlog year over year, housing could be back. Strong employment numbers could help housing, but the way to play the trend is not through housing stocks, most of which are up too much. Cramer would play a housing comeback with Weyerhaeuser (WY) a leading lumber company with a 3.2% dividend. The company has restructured, sold off non-performing assets, cut costs and turned itself into a REIT. Demand for lumber and wood pulp is strong, and WY is getting many orders from China. Cramer would buy WY before housing turns.
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