Stocks discussed on the in-depth session of Jim Cramer's Mad Money Program, Tuesday, January 19.
Ready to stick a toe in a murky stock market pool?
Mad Money host Jim Cramer, in his Tuesday installment, had advice for investors who want to go against the selling crowd on Wall Street and dive into a few stocks. He did stress to viewers that looking at the charts this past holiday weekend "didn't help my mood." However, he added that investors could investigate strong dividend names as safe bets in a shaky market.
When studying dividend payers, look for stocks with a decent, sustainable (5%) yield. His suggestions:
AT&T (NYSE:T) - The telecom giant has a 5.6% yield and trades at 12x earnings. Some investors think AT&T delivers very little growth. But the company's recent acquisition of DirecTV could change that perception.
Verizon (NYSE:VZ) - The dividend yield is at 5% and the company trades at 11-times earnings. The company gains a lot of attention for its wireless network and shows a lot of promise with its FiOS platform. Cramer praised the company's management.
Ford (NYSE:F) and General Motors (NYSE:GM) - Both automotive giants have 5% dividend yields. Ford has strong U.S. sales, despite lacking business in Europe and exposure to a crumbling Latin American economy. Meanwhile, GM raised guidance considerably, is boosting its quarterly dividend and has a stock buyback plan in place.
Tupperware (NYSE:TUP) - The company reported strong earnings and the 5.6% yield seems safe.
Ventas (NYSE:VTR) - The stock has a 5.25% yield and the company is run by a "bankable CEO."
EPR Properties (NYSE:EPR) and Cedar Fair (NYSE:FUN) - EPR has a 7% yield with a monthly dividend. The company is paying down debt with a share sale and has new theme park developments. Cedar Fair has a 6.4% yield. Along with EPR, this amusement park operator can benefit from consumers taking advantage of lower gas prices.
Caterpillar (NYSE:CAT) - The company earns enough to pay its 5% yield. Exposure to China is a concern. But investors can "confidently" buy into weakness.
Where should investors not park their money? While there are a lot of 5% yielders in the oil patch, "we are going to avoid every single one," Cramer said.
"We can't stop the bear from growling," the Mad Money host said. "But we can preserve capital while waiting for the selloff to conclude."
Looking for some ideas on the market's direction?
Cramer featured charts and data from Carolyn Boroden of FibonacciQueen.com, a market technician using Fibonacci ratios who has made good calls on market direction in the past.
Last June, Boroden suggested that the market was reaching a peak, with the S&P 500 at around 2138. Cramer said the Fibonacci Queen "didn't know the market was going to get crushed," but did see the markets were reaching "important resistance levels."
As for looking ahead, Boroden's data suggests the market could see additional downside.
There are important levels that could be tested for the S&P 500 - 1847 and 1857 (which would represent a 2% decline from current S&P 500 levels), or 1838 (down 3%). "Those levels could be a floor," Cramer said.
Boroden's charts also show a possible healthy bounce, something Cramer said could happen this week.
But don't get carried away. Markets also could be in a world of pain.
If the S&P 500 breaks down below that 1838 floor support, the collapse could be similar to the dotcom collapse, or worse even than the 2008 financial crisis. "In other words, if we cannot hold that floor support, you cannot not rule out a massive correction."
"I'm not saying that can happen," Cramer stressed. Nonetheless, given what the charts are saying, investors should be cautious.
The Beer Can Oligopoly
There is no genuine monopoly. But a handful of companies flourish in a oligopoly environment, in which two players take command of the market they serve.
The beer market is headed in that direction.
The deal is "going to change the dynamics of the industry," Cramer said.
What's appealing about the deal, at least for those who think the U.S. economy is going into recession, "beer is about as economically insensitive as it gets," Cramer said. "When the economy is good, people drink. When the economy is bad, people drink."
"Nobody is going to stop buying beer just because the Fed decides to raise rates rapidly."
While Cramer likes the Bud/SABMiller deal, his pick in the beer oligopoly is Molson Coors. SABMiller had to divest its 58% stake in Molson Coors to appease regulators. TAP owns key brands, including in craft beer. And the SABMiller divestiture will help boost Molson Coors' earnings.
"Everybody wins, but Molson Coors wins the most," Cramer said.
The oligopoly doesn't end there.
Ball (NYSE:BLL) is acquiring Rexam (OTCPK:REXFF), a deal that will take the can manufacturing business (soda and beer) from three players to two giants (the other company being Crown Holdings (NYSE:CCK)).
These types of deals work out for investors who are "patient and wait for the consolidation to work out," the Mad Money host stressed.
Something From Nothing
Cramer also spent time with entrepreneur and Shark Tank panelist Daymond John. The founder of the Fubu hat enterprise spent time talking about his book "The Power of Broke," and offered advice to those starting their own business. He said for those without a lot of capital, "starting from zero is your great competitive advantage in business."
John also said entrepreneurs should pay close attention to what's happening in social media. When starting a business, "the best way to connect is on social media." He added, "We know less about ourselves than they know about us," an attribute those in business can use to their advantage.
Getting It Wrong
Sometimes you have to be patient with an investment. And sometimes the market gets it wrong.
Cramer pointed to earnings reported from Bank of America (NYSE:BAC) earlier in the day. The numbers were decent, but the stock got hammered. Investors are worried about the banking giant's exposure to energy and suggestions that the company is not cutting enough expenses. "I think the market is wrong and the stock will rally," Cramer suggested.
Dow Chemical (NYSE:DOW), which is in the process of merging with DuPont (NYSE:DD), a deal Cramer said pays investors "while you wait," also was clobbered. "Investors wrongly think the company is oil, and they're wrong," the Mad Money host said.
Delta Air Lines (NYSE:DAL) is expected to save "an astounding" $3 billion on fuel cost savings with the drop in oil, has a solid CEO in Richard Anderson, and sells for 7 times earnings. "It doesn't make sense it's not trading higher," Cramer said.
One stock that gets what it deserves (a lack of investor respect): Tiffany (NYSE:TIF). "We were told things getting much better but they are getting worse," Cramer said.
To end his show, Cramer said Delta and Bank of America should be trading higher.
Viewer Calls Taken by Cramer
Gold and silver - Cramer said investors should have about 10% of assets in gold. "It's an insurance policy."
Amgen (NASDAQ:AMGN) - "It's in great shape and an inexpensive stock."
Netflix (NASDAQ:NFLX) - Is it time to get in? Cramer said the stock is very hard to value. The stock reacted favorably to the latest earnings beat, "but there is a lot of risk."
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