Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday February 21.
Has Apple (AAPL) Reached Its Peak?
Apple (AAPL) determines the direction of the market like few other stocks. The stock took a dive last Wednesday of 29 points, and analysts were wondering if Apple's best days are behind it. Cramer noted that Apple can make dramatic moves, and has had four major corrections in 2.5 years, and the stock recovered to previous levels and higher each time. Its latest move was more parabolic than usual, which caused technicians to think there has been a buying climax. There might be some consolidation or sideways drift before Apple moves higher. Its 29 point dive last week may be a sign to some of a "bearish engulfing pattern" that rejects the rally higher, but Cramer says the charts don't tell the entire story. Apple has fantastic earnings power, potentially $55 a share for 2012, and when a stock with that kind of earnings power drops, it is time to buy. Regardless of what some technicians and analysts say, Cramer is a buyer of Apple.
Does Dow 13,000 Really Matter? Research in Motion (RIMM), Wynn Resorts (WYNN)
Monday was a roller coaster day, with the Dow reaching just above 13,000 and then closing below that benchmark figure. Cramer asked, "Does the Dow at 13,000 really matter?" While institutional investors tend to follow the S&P 500 more closely, the Dow still matters to retail investors and affects confidence in stocks, which have been volatile for the last 12 years. The Dow reaching above 13,000 says to investors not that the water is fine in the stock market, come on in, but that the water is better than it has been. Cramer's strategy, to deal with volatility in the indexes, is to buy high-dividend stocks and to reinvest dividends.
Cramer took some calls:
Wynn Resorts (WYNN) CEO Steven Wynn explained clearly on the conference call why the internal problem that led to a lawsuit is not detrimental to the stock.
Research in Motion (RIMM) is not worth buying. Cramer would buy Apple (AAPL) instead.
CEO Interview: Mark Papa, EOG Resources (EOG)
EOG Resources (EOG) is a stock Cramer has recommended frequently on Mad Money; it is up 42% since he got behind it in October and 22% since the CEO appeared on the show in November. While the company reported a strong quarter, analysts were not satisfied with the 5.5% production growth. Cramer explained that the company is making adjustments to become more oily than gassy. "Expectations were sky high...and we just hit very high, so they were disappointed," explained CEO Mark Papa. "We are comfortable with our game plan." EOG is reducing its exposure to natural gas because of sluggish prices, and its assets in the Eagle Ford shale are worth the value of the entire company. When asked if oil prices are at $106 because of tension in the Middle East or natural demand, Papa explained that demand is rising so steadily that, even without global problems, oil would still be over $100. The company produces oil cheaply to create impressive profit margins and to take advantage of the high price of oil.
"EOG has been a winner, and it is going higher," said Cramer.
CEO Interview: David Steiner, Waste Management (WM)
Waste Management (WM) is a high quality stock that has yet to enjoy a major move so far this year, and has inched up just 7%. The company delivered a 2 cent earnings beat on higher than expected revenues, but gave conservative guidance because of hurdles in the first part of 2012 with natural gas prices. However, the second half of 2012 holds few major challenges, and Cramer thinks WM might be headed for an upside by the summer. CEO David Steiner discussed higher volumes and steady growth with a 4.4% dividend boost. The company has a fleet of trucks running on natural gas engines and is working on making lighter trucks that will be more fuel efficient. Cramer likes the fact that WM has a 4% yield that pays investors to wait for the stock price to rise.
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