Verizon Is Interested In Yahoo - Cramer's Mad Money (2/5/16)

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Includes: AAPL, DATA, DIS, F, K, KO, LNKD, PEP, RH, TAP, TAP.A, TWTR, UA, VZ, YELP, YHOO, Z
by: SA Editor Mohit Manghnani

Summary

Game plan for the week.

U.S. fundamentals are still good - Ford CEO.

How Under Armour stays ahead of the game.

Stocks discussed on the in-depth session of Jim Cramer's Mad Money Program, Friday, February 5.

"Calm down and think before you act on both sides - both sellers and buyers," said Cramer. This sell-off is creating bargains and at the same time crushing investors, but this too shall pass. This sell-off is hitting stocks hard and a bottom is not yet in sight. Some stocks like LinkedIn (NYSE:LNKD) and Tableau Software (NYSE:DATA) were almost cut in half. We are in a rolling bear market where groups of stocks are beginning to be revalued.

Investors are still taking time to sync the fact that the world is slowing. With that, he discussed the game plan for the week.

Monday

Yelp (NYSE:YELP), which reports on Monday, is a good company but it doesn't have enough momentum. The stock is expensive and is in no-man's land like LinkedIn.

Tuesday

Coca-Cola (NYSE:KO) reports on Tuesday and Cramer thinks it is a steady business with 3.1% yield. The stock is not expensive since safety comes at a premium.

Disney (NYSE:DIS), which is in a bear market right now, will report earnings on Tuesday as well. It is not just about ESPN, and once investors realize this, the company will be way different in the next 5 years.

Wednesday

Twitter (NYSE:TWTR) reports on Wednesday. "How do you value a social, mobile, cloud play that is slowing? Unless Twitter re-accelerates or puts itself up for sale, I don't know how it can go higher," said Cramer.

Thursday

Another group of safe stocks like Coca-Cola report on Thursday. They are Kellogg (NYSE:K), Pepsi (NYSE:PEP) and Molson Coors (NYSE:TAP) (NYSE:TAP.A). They offer consistent growth in an inconsistent world.

Another internet play, Zillow (NASDAQ:Z), reports on Thursday and it is tough to value it. "Right now there is no price anyone seems to want to own these tech stocks," said Cramer. These high-growth tech companies are solid and profitable and the selling will have to end someday.

Until the selling is done, they are falling knives and unless you're a butcher block, stay away from the kitchen.

CEO interview - Ford (NYSE:F)

Car sales have reached record levels but the stocks of automakers have been hammered. This is because investors fear that the auto industry is peaking in the US. One of the oldest in this business, Ford reported a strong quarter, but their stock is down 18% for the year. The stock is trading at 5 times earnings and 5.2% yield. Cramer spoke with CEO Mark Fields to hear about the future of the auto industry.

"When you look at the data, we do think we are undervalued. We think people are underestimating the health of the U.S. industry. We had a record financial performance last year," said Fields. He said that the company is focused on growth, expanding margins and rewarding the shareholders.

Commenting on the specifics, he said that China is doing the best sales ever, South America is an issue, but in that commodity based economy, it will eventually come together. In the US, jobs and wages are up, interest rates and gasoline prices are low.

Fields' view on the Fed is that as long as they raise the rates gradually, there should be no harmful effects. He thinks that fundamentals in the US are good.

Commenting on autonomous vehicles, Fields thinks that there will be more efficient use of the miles traveled and the car park, which will benefit the auto industry as a whole, although it may take a bite out of the sales.

CEO interview - Under Armour (NYSE:UA)

Under Armour, the innovative apparel company reported a strong quarter but its stock got crushed with rest of the market. "I think you need to view this decline as an opportunity to buy a high-quality stock into weakness," said Cramer. The company has found innovative ways to stand out while retail stocks were being crushed and it has gained attention for sponsorship of athletes. Cramer spoke to Chairman and CEO Kevin Plank to find out what lies ahead for the company.

"Under Armour has been on an incredible run, and when you put that against the number of athletes we have versus the performance, it's got to be one of the most bannering years in sports marketing ever," said Plank.

Commenting on the inventory and warm weather, he said that no matter what, the company still has to produce. They sell a lot of t-shirts and shoes, growing apparel at 20% for 6 years. It has a lot to do with athletic sponsorship and the company keeps focusing on controlling the controllable.

The company's ecosystem is strong with 160M users in the community and all the data about activity, exercise, steps etc. is helping the company to get better.

CEO interview - Verizon (NYSE:VZ)

In the current unsteady environment, steady companies like Verizon that have consistent growth and a juicy 4.4% dividend become an important part of the portfolio. Cramer interviewed CEO Lowell McAdam to hear how their stock is being seen as a bond market equivalent.

McAdam mentioned that the company's strategy is to break into 3 tiers: have great connectivity, owning platforms to drive traffic to its network, and owning content that supports its ecosystem.

Commenting on their interest for Yahoo (NASDAQ:YHOO), he said that based on Yahoo's recent quarter, it is apparent that CEO Marissa Mayer is looking to cut headcount, cut expenses and looking for strategic alternatives like selling assets. At the right price, putting some of Yahoo's assets with AOL could work well for Verizon.

After the AOL acquisition, Verizon always wanted to keep AOL separate from the core company. "We put this in an incubator almost and we have been feeding the information from our money subscribers into the AOL engine," said McAdam.

There is still a lot to be added to AOL to make Verizon special.

Viewer calls taken by Cramer

Apple (NASDAQ:AAPL): Tim Cook has created more wealth than more people can dream of. It has held up better than other tech stocks. Own it, don't trade it.

Restoration Hardware (NYSE:RH): It is a high-multiple stock but not as expensive as it used to be.

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