Stocks discussed on the in-depth session of Jim Cramer's Mad Money Program, Friday, January 22.
Investors are probably tired of the ups and downs in the market.
Yet Jim Cramer, in his show Friday, said market observers can expect more of the same, especially next week, as key companies detail their latest quarterly results. Along with the earnings parade, Wall Street will keep an eye on oil (which on Friday saw its biggest rally since August, up more than 9% to $32.25 a barrel) and any additional headwinds from China.
There's also the Fed's next moves, which come mid-week.
Here's the game plan for next week:
Halliburton (NYSE:HAL) reports, and a lot of attention could be directed toward the stock after Schlumberger (NYSE:SLB) surprised Wall Street. Cramer suggested McDonald's (NYSE:MCD) could "blow away numbers." Kimberly-Clark (NYSE:KMB) also reports.
Apple (NASDAQ:AAPL) delivers what's expected to be the most anticipated earnings report this season. "It's a football being kicked around by both bulls and bears," Cramer said. The company won an upgrade Friday, and that helped the stock soar 5.3% during trading. Cramer said investors should "own Apple - don't trade it," and buy after the report. Two key consumer-focused companies - Johnson & Johnson (NYSE:JNJ) and Procter & Gamble (NYSE:PG) - also report, as well as struggling commodities player Freeport-McMoRan (NYSE:FCX).
This could be the day everyone closely watches. The Fed releases its latest statement. Will Janet Yellen and co. "acknowledge the new-found weakness in the economy and get off the lock-step plan to raise rates?" Cramer suggested if the Fed keeps tightening, "we could lose gains" achieved during the week. Facebook (NASDAQ:FB) and Norfolk Southern (NYSE:NSC) also report. Cramer said he expects Boeing (NYSE:BA) to put on a "pretty good air show" for its report, while United Technologies (NYSE:UTX) could be on the verge of a breakout.
Caterpillar (NYSE:CAT) and Bristol-Myers Squibb (NYSE:BMY) release earnings. Cramer said Bristol-Myers Squibb "hasn't let us down for years," while Caterpillar "hasn't had anything good to say for years." And, "I think this time it won't be any different." Under Armour presents its quarter - is it possible this stock has "found a bottom?" Amazon (NASDAQ:AMZN) details its three months, including its numbers from the critical holiday season.
American Airlines (NASDAQ:AAL) delivers results Friday. Cramer said he wonders if the strong dollar is impacting the airline giant more so than getting a boost from lower oil prices. However, he said the stock is cheap. Chevon (NYSE:CVX) (Cramer said "it's all about the dividend" for the energy company) reports, along with General Electric (NYSE:GE) ("is the best yet to come?") and Honeywell (NYSE:HON). Markets also will be watching for MasterCard's (NYSE:MA) results. Cramer said the company "is simply on fire and will shine." Newell Rubbermaid (NYSE:NWL) also is under the earnings spotlight.
Taking on the Market
Cramer offered a deeper dive into the workings of the current market, suggesting that in the current atmosphere, "it's the fundamentals vs. the market."
Essentially, the fundamentals are in conflict with the price of individual stocks and the entire market.
Why the disparity?
A few reasons.
First, there's the dollar's impact on the bottom line. Cramer said companies can no longer use the dollar to blame for crippling earnings. "No one is buying it anymore," he said.
The second item to keep in mind is oil. While the key commodity has rallied strongly for two days, "We can't start cheering that oil is higher and a new trend is working." Cramer said oil fell too far in a short period of time because of Iran's entry into the marketplace.
"The issue is supply, not demand," he said.
The Mad Money host said while demand for oil and natural gas is up, the demand is not up enough to offset a large amount of supply. Also, oil companies keep pumping to keep operations going - they have to pay the bills and service debt.
Third, there's earnings.
Reiterating what others have stated, Cramer said earnings have been sub-optimal. Companies keep disappointing investors.
Then there's the Fed. "Unless the Fed decides to stall its multiple rate hikes this year, the rally will be hard to hold," Cramer said.
And because of that, all Wall Street eyes will be on the Fed meeting Wednesday.
Tough Times for Auto Sales
The vehicle sales sector could be heading for tough times. In fact, Cramer said the auto industry may have reached a peak. He cited two vehicle retailers - AutoNation (NYSE:AN) and CarMax (NYSE:KMX) - as two examples of the turmoil ahead for the sector.
AutoNation is the nation's largest automobile retailer. CarMax is the biggest used car sales company. The two stocks were "for ages market darlings," but for the past several months shares in each company have seen precipitous declines. AutoNation is down 32% from highs last July, while CarMax has fallen 38% from highs achieved last April.
Car sales have grown steadily since the 2008 market collapse, from 10.4 million in 2009 to 17.4 million in 2015. Helping those sales were ultra-low interest rates - consumers received attractive financing for vehicle purchases. That may come to an end if the Fed continues to tighten.
Cramer stressed that his view into the two companies is not a call to sell their shares. Rather, the weakness these two companies are witnessing likely reflects a peak in the larger auto sales market.
Avon's Turnaround Plan
Avon's (NYSE:AVP) stock has been pummeled this year. Now trading around $2.59, near its 52-week low of $2.21, the stock is way off its 52-week high of $9.46. What will it take to turn around the cosmetics company?
CEO Sheri McCoy visited Cramer to outline the company's ongoing transformation.
Recently, Avon formed a strategic partnership with Cerberus in which its North American business will be put into a privately-held entity, separate from the global business. Cerberus will invest in the company, which McCoy said will be reinvested into the North American business and help pay down debt.
At the same time, there will be a renewed focus and resources dedicated to the international business. McCoy said the international business saw 3% growth in 2015.
Avon's moves with Cerberus are expected to close in the spring.
No Respect For Starbucks
Starbucks (NASDAQ:SBUX) reported a strong fiscal first quarter, with 15% EPS growth, global comparable store sales jumping 8% and higher traffic at stores. Yet, the stock was punished.
Cramer asked, "When will Starbucks and its amazing management team be given the benefit of the doubt?"
Two unexpected negatives surfaced for the company last quarter. First, European sales were soft due to the Paris tragedy. Second, the company saw slower than expected growth in China.
Cramer spoke with Starbucks CEO Howard Schultz earlier in the day about the company's prospects. First, Schultz described China "as a long-term story" for the company. And business in Europe appears to be picking up.
Given the lack of respect Starbucks gets from the Street, investors should take another look at the company. "Its a gift (for investors) every time the stock goes down," Cramer said.
Viewer Calls Taken By Cramer:
Microsoft (NASDAQ:MSFT): The tech giant reports next week. Cramer said he thinks the quarter will be excellent for the company.
Gilead (NASDAQ:GILD): Too cheap to sell.
TG Therapeutics (NASDAQ:TGTX): Cramer called this a speculative stock. But if the company hits "it out of the park you could make some money."
Hertz (NYSE:HTZ): Not a sell at around $9.
Get Cramer's Picks by email - it's free and takes only a few seconds to sign up.