Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday January 12.
With housing seeming to be making a turn, given bullish earnings from Lennar (LEN) and the increase in housing starts, it is time to look for pin action plays on housing. Homebuilders have risen dramatically and are too expensive to buy, so Cramer would prefer to buy stocks connected with construction and renovation. Stanley Black & Decker (SWK) is "the tool king" with 40% market share for most brands of tools. The company gets 50% of its revenue from do-it-yourself and remodeling and 26% of its sales from security and locks. The company has pricing power and 46% of its sales are from overseas. The stock trades at a multiple of 12 with an 18% growth rate and a 2.3% yield. "SWK is a raging buy," said Cramer.
Cramer took some calls:
Plum Creek Timber (PCL) has a 4.3% yield, which is safe. Cramer is bullish on PCL.
Tractor Supply (NASDAQ:TSCO), Williams Sonoma (NYSE:WSM), Dick's Sporting Goods (NYSE:DKS), Tiffany (NYSE:TIF), Bank of America (NYSE:BAC), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), US Bancorp (NYSE:USB), Sears Holdings (NASDAQ:SHLD), General Electric (NYSE:GE), CME Group (NASDAQ:CME), Lululemon (NASDAQ:LULU), Tibco (NASDAQ:TIBX), Broadcom (BRCM)
Execution matters; what individual companies say actually matters again. Stocks seem to have broken the trend of trading like commodities, going up and down as a group, as stocks respond to good or bad news of their respective companies. Retail stocks Dick's Sporting Goods (DKS), Tractor Supply (TSCO) and Lululemon (LULU) saw upsides in their stocks based on positive data. TSCO rose 10% on better than expected results. The Street has been worried about sporting goods, and DKS delivered a 12.5% upside surprise. LULU rose 18 points, and confounded the critics who were worried about inventories. On the other hand, Williams Sonoma (WSM) dropped 12.2% on disappointing holiday sales, even after raising its dividend by 29%. Tiffany (TIF) also had a lackluster December. Cramer doesn't trust the buying in Bank of America (BAC) and Citigroup (C) and prefers better banks like US Bancorp (USB) and Wells Fargo (WFC). While investors are buying poor performers in tech, Cramer would stick by quality names that haven't risen yet, like Broadcom (BRCM) or Tibco (TIBX).
Cramer took some calls:
Sears Holdings (SHLD) needs a good catalyst to bring the stock up, and Cramer doesn't see one. Perhaps a quarter or two of strong numbers will create an upside, but short-term, it is likely to be stagnant.
Dupont is a diversified company that makes high performance materials, chemicals and genetically modified seeds. It has fallen 12% in the last 6 months, partly because of the slowness in autos and the housing sector, for which it makes coatings. In December, the company pre-announced to the downside. However, there seems to be an improvement in DD's end markets and it yields 3.4%. Its only serious competitor in the genetically-modified seeds space, Monsanto (MON), reported an earnings blowout, and this could be good news for Dupont. Autos production is supposed to be larger than previously expected in 2012, and the low price of natural gas means cheaper raw costs for Dupont. The company reiterated its bullish long-term forecasts and it is currently cheap, with a multiple of 11 and a 12% growth rate.
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