Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday February 14.
The market was on a roller-coaster on Tuesday, starting down on some bad news about retail sales, copper prices, stalemate over Greece and the drop in the FXE (FXE) that measures the euro. However, stocks moved up again by the end of the day, particularly momentum stocks. Michael Kors (KORS) reported a gigantic earnings number and phenomenal 35% growth in Europe. Even though the stock is up 50% from its December levels, it moved 27% following earnings. Fossil (FOS) is another stock that seemed overvalued at first glance, but shorts were squeezed, and the stock surged 14%. Netflix (NFLX) was up $4.77, and Apple (AAPL) and Chipotle Mexican Grill (CMG) saw some gains. Not even gloomy macro news can stop stocks that are poised to move higher.
National Bank of Greece (NBG) seems like a decent speculative play at $3, but since this bank has to recapitalize, fix its balance sheet and will be devalued if Greece suffers more travail, it might not be worth the risk.
Often companies introduce a new product or concept that gets investors abuzz, only to find that the innovation was not enough to move the needle in the stock. However, Cramer thinks Lions Gate Entertainment (LGF) will see an upside from its films based on the best-selling book Hunger Games. While the highly popular Harry Potter series didn't impact the fortunes of Time Warner (TWX) dramatically, TWX is a multi-media conglomerate. Lions Gate is small, with a mere $1.5 billion market cap, so one successful film series will make a huge difference for the company. The Hunger Games book series will be made into four films, and the first movie alone is expected to make 87 cents a share for the company. LGF completed a successful merger with Summit Entertainment, and now has the rights to the successful Twilight film series. LGF's stock popped 7% in anticipation of Hunger Games, but Cramer thinks the stock has more room to run, and may be a $15 stock masquerading as an $11 stock. However, Cramer would wait for a pullback before buying.
Post (POST) is another example of why breaking up is often good to do. The company was spun off from Ralcorp (RAH), which bought it from Kraft (KFT) in 2008. Ralcorp's focus is on private label brands, and it mis-managed Post, letting its popular name brands lag behind. Since Post has been flying solo, it has surged 7%, and has a huge potential for margin expansion. Post is number 3 in the ready-to-eat cereal space and plans to grab market share by spending more on advertising. The stock trades at a multiple of 12 with an 8% growth rate and has limited analyst coverage. Cramer thinks Post will go higher.
Cramer took some calls:
Limited Brands (LTD) may seem like a mixture of different businesses, but the company seems to be doing alright as one unit, and doesn't need to spin off its segments.
Oasis (OAS) should not be bought as a speculative play purely on takeover rumors.
Could The Dow Reach 17,000?
An article in Barron's brought the bears out of the woodwork; the article posited that the Dow could reach 15,000 or even 17,000 in a few years. This doesn't seem so quixotic, because 15,000 is only 17% higher than the Dow's current level, which means a bit more than 8.5% growth for two years. Cramer thinks investors have been burned over the last 12 years and don't remember a bull market, so they tend to dismiss bullish news.
Looking at the chart for the S&P 500 from 1998 to the present, there seem to be hills and valleys and sideways action. However, there is a general uptrend that shows higher highs and higher lows. Cramer thinks that once the Dow breaks 15,000, there is nothing stopping it from reaching 17,000, although this is a very long-term scenario.
Both Amazon (AMZN) and Google (GOOG) delivered disappointing quarters with lackluster guidance, but neither stock has stayed down, and both are creeping up to where they were before their misses. Google is about to close its deal with Motorola Mobility (MMI), although it is unlikely this move will make the Android more competitive. Apple's launch of a smaller iPad might give Amazon's Kindle a run for its money. However, both companies are relatively strong. One reason for the move up is that growth funds are looking for new tech names, and are buying Amazon and Google.
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