Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday January 20.
17 Things To Watch This Week: Haliburton (NYSE:HAL), Texas Instruments (NYSE:TXN), Dupont (NYSE:DD), Kimberly Clark (NYSE:KMB), McDonald's (NYSE:MCD), Apple (NASDAQ:AAPL), Conoco-Phillips (NYSE:COP), Abbott Labs (NYSE:ABT), Boeing (NYSE:BA), Occidental Petroleum (OXP), Caterpillar (NYSE:CAT), Nucor (NYSE:NUE), 3M (NYSE:MMM), Starbucks (NASDAQ:SBUX), Honeywell (NYSE:HON), Altria (NYSE:MO), Procter&Gamble (NYSE:PG) other stocks mentioned: American Express (NYSE:AXP), Canon (NYSE:CAJ), Schlumberger (NYSE:SLB)
Haliburton (HAL) has disappointed in the past, and Cramer thinks it will be in danger of disappointing again, because it is too levered to natural gas. In spite of Schlumberger's (SLB) strong quarter, the oil and gas sector might suffer if HAL fails to deliver.
Texas Instruments (TXN) has become a darling of the new cycle in semis, but the stock has moved too much ahead of the quarter. Cramer would beware of holding semi stocks into TXN's report.
Dupont (DD) may be headed for a fantastic 2012 since what was ailing Dupont - autos and housing - is now turning around.
Kimberly Clark (KMB) could sell off because it is high, but it has a strong dividend so is worth buying low.
McDonald's (MCD) has the same issue as KMB; it might drop after a steady rise but is a buy on a decline.
Apple (AAPL) has run up ahead of the quarter on its groundbreaking news about its move into the textbook space and its iPhone 4, but Cramer thinks the company will report a blowout quarter. Since its last earnings were disappointing, some analysts have conservative estimates. Cramer says he can't recall seeing a company perform as well as Apple has in the last 30 days, and he is confident that the stock will deliver.
Boeing (BA) is in year one of a seven year aerospace cycle and should talk about the buildout in planes.
Occidental Petroleum (NYSE:OXY) is one of the most aggressive and most shareholder friendly of any of the oils. Investors should pay attention to what OXY says about fracing in California.
Fed Chairman Ben Bernanke's Speech: Cramer thinks Bernanke will acknowledge the strength in the economy, and the result may be a rise in interest rates.
Caterpillar (CAT) should say its prospects in the U.S. are improving.
Nucor (NUE) is a great company, but management tends to be conservative in its statements. The company is seeing increased orders from autos and non-residential construction.
3M (MMM) is a disliked company but may start getting some love.
Starbucks (SBUX) may sell off; in that case, investors should buy.
Honeywell (HON) should deliver the same consistent positive numbers. Cramer would pick up the stock on any dip ahead of its earnings.
Altria (MO) should report good results.
Procter&Gamble (PG) will benefit from the falling price of natural gas.
Cramer took some calls:
American Express (AXP) had a great quarter but Cramer doubts it will boost its dividend. If it did, the stock would go to $55.
Canon (CAJ) is in an industry that is far too competitive; "I bet my iPhone will take better pictures than your Cannon."
Interview with Andrew Gould, former CEO and current Chairman of Schlumberger (SLB)
Cramer asked Chairman of Schlumberger (SLB), Andrew Gould: What is keeping oil and gas stocks low when drilling is revving up all over the world? The company reported a strong quarter and announced a 10% dividend boost. Gould discussed the fact that the huge gap between oil and natural gas prices exists only in the U.S, whereas the two fuels are much closer in price in other parts of the world. The U.S. accounts for only a third of Schlumberger's business, and the company is seeing an increase in drilling worldwide. SLB is developing a new form of fracing that will produce less frac water and will save on oil and gas. While fracing will always be necessary, with the new technology the amount of fracing required will be greatly diminish, reducing environmental risk. When asked about geopolitical problems, Gould responded that a crisis could cause a spike in the price of oil, and will not be good for the economy in general. Cramer would stay with Schlumberger.
The roaring American auto recovery has been a boon for automakers, but Cramer would not buy stock autos because they are too levered to Europe and they have already seen a run in their stock prices. Instead, Cramer would focus on pin-action names like Magna (MGA), which has risen 3% since Cramer's recommendation last week. In spite of Johnson Controls' (JCI) poor quarter, other auto parts makers might be good investments. American Axle & Manufacturing (AXL) is a maker of driveline and drivetrain systems that transfer power from the transmission to the wheel. This is a small company with a market cap of just $850 million and trades at $11. The company has a $1.1 billion backlog that should sustain its double-digit growth. Only 4% of this backlog is levered to Europe; this gives it an advantage over competitors, such as Lear (NYSE:LEA), which has heavy exposure to Europe.
Even though AXL's stock has run up 14% since the beginning of the year, it is down 23.7% year over year and off 63% from its 2007 high. AXL trades at a multiple of 5.6 with a 16% growth rate. One reason why AXL is a speculative stock is that 70% of its revenues last year came from GM (GM), and 81.6% of those revenues were from light trucks. While GM is performing well, AXL announced plans to diversify away from GM so that only 50% of its revenues will be generated from GM by 2014, down 20%. Around 90% of its current $1 billion backlog is from non-GM customers. The company is moving into emerging markets, particularly Asia, and reported a 6 cents earnings beat on stronger than expected revenues. Cramer would do homework on AXL, and buy ahead of its February earnings. He would buy more if the stock declines after earnings.
Cramer took a call:
Delphi Automotive (DLPH) is intriguing, but is "too hot" at its current levels. Cramer may take a look at it if it drops.
CEO Interview: Bryan Jordan, First Horizon (NYSE:FHN)
Banks seem to be coming back on strong earnings, mainly because expectations were so low. First Horizon (FHN) has the fundamentals to back up its 13% move since the beginning of the year, even though its quarter seemed lackluster at first glance with an earnings beat of 1 cent on revenues falling 7%. However, its non-performing loans dropped by 38% and its provisions for credit losses decline 71%. Bryan Jordan says he feels 2011 was a good year for the company, and FHN should continue to concentrate on core banking and capital markets. It is cutting costs and repositioning its mortgage business, which should see progress as housing recovers. "This will be the year when First Horizon goes up 20%," said Cramer.
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