Stocks discussed on the in-depth session of Jim Cramer's Mad Money Program, Tuesday, April 19.
Stocks are not hitting a bottom. In Cramer's opinion, they are in a trough. Being in a trough indicates that the numbers for a company have bottomed which is the reason it is rallying. "Troughs give you sustained moves. We have had number cut after number cut after number cut from all of these bedraggled banking, mineral, mining and machinery companies. Now the raising numbers begins, so don't be too quick to sell," said Cramer.
This was clear from Goldman Sachs' (NYSE:GS) earnings which reported poor numbers and a drop in profit. The stock went down in pre-market trading only to close up 2.3%. "A stock that rallies after that putrid quarter is a stock that says, look at me, the worst is over, get on board because we're ready to roll up river," said Cramer. There were similar patterns in other banking stocks like Morgan Stanley (NYSE:MS) and Bank of America (NYSE:BAC).
Even after looking at the earnings and listening to the conference call, Cramer thinks the stock was in a trough. "Or if you want to put it another way, Goldman Sachs has been down so long it looks like up to me," he added.
It was not just the banks. The mineral and mining stocks have become too cheap to ignore. Alcoa (NYSE:AA) though, reported lesser than expected earnings and has reached the same level it was before its earnings. Freeport-McMoRan (NYSE:FCX) has been staging a comeback and so have Chevron (NYSE:CVX) and Exxon (NYSE:XOM) even though the price of oil hasn't jumped that much. These are all signs of stocks in a trough. The Baltic freight index also shows positive signs for China.
All the money coming into such stocks is being rotated from safety stocks, consumer packaged goods and utilities, and high growth stocks like cyber-security plays. Cramer thinks the money is not done flowing into the trough, which means that stocks could rally more than Cramer thought a few months ago.
Since the market lows in February, most media stocks have rallied. Just last year, the market was worried about television and subscribers after Disney (NYSE:DIS) reported their earnings. The media group is up 13% in February. Cramer went to the charts with the help of technician Bob Lang to get a technical perspective on media stocks.
Disney had reported a weaker than expected forecast for ESPN in August 2015, which led to selling in the entire media cohort. The stock has traded sideways after the bottom in February, which has created a springboard base. The stock broke its critical level of $100 on Monday. The Chaikin money flow oscillator is positive which suggests that big money managers have started accumulating the stock. Cramer thinks CEO Bob Iger is a magician. "I like the Iger money flow and the Iger convergence divergence, so that makes me pretty positive on the company, not just the stock," said Cramer.
CBS Corp (NYSE:CBS) started rallying higher after the bottom in February. It rallied till March since when it has taken a break. The base building at higher levels is an indicator that the stock is ready to move up. Cramer said that the stock is cheap at current levels.
The stock of Time Warner (NYSE:TWX) and Comcast (NASDAQ:CMCSA) shows similar patterns as they rallied after the bottom in February. The RSI was strong for Time Warner and and the positive Chaikin money flow for Comcast. Lang thinks that all these stocks are ready to run and Cramer thinks that Disney is the best of them all considering fundamentals and technicals.
Consumer packaged food stocks
There has been a rally in consumer packaged food stocks which is not restricted to best of breed, but the laggards are also making a comeback. Cramer pointed out Kellogg (NYSE:K) and J.M. Smucker (NYSE:SJM) that have made a comeback. Apart from declining commodity costs and a weak dollar, there is another reason that the companies have positioned themselves to rise.
Kellogg has been under-performing for years. Its revenue growth declined from 2012 to 2014. Since then, the company has restructured itself to cut costs to offset the declines. New budgeting has led to rising margins. Apart from this, the company is also removing artificial ingredients and is expanding overseas. These two moves are helping the company position itself to grow moving forward.
J.M. Smucker had stalled for some time with limited offerings of peanut butter and jelly. The company entered into the pet market, which is very hot, by acquiring Meow Mix and Milkbone. The company's revenue went up by 7% as a result.
There are lot of positives for these 2 stocks but they have run up too much and look expensive. "Don't get me wrong, I believe they have more upside, I just think you should wait for more of a pullback before you start buying Kellogg or Smucker," he concluded.
Off the tape
Cramer went off the tape to review Blippar, which is the leading player within the augmented reality space. It helps the real world connect with the digital world. It's a visual search and augmented reality startup. Cramer interviewed CEO Ambarish Mitra to find out more.
The user just downloads the Blippar app and points their camera at an object. The app will then give information about it just like a search engine would. The company aims to become the Google of visual search.
Mitra explained that people are visual by nature, which means that everything cannot be described in a search engine. Blippar treats products as media and allows users to interact with them. He showed a demo of the app by pointing at an apple. The app recognized the apple and gave nutrition information, recipes and locations where to buy. The app can be pointed at different objects.
Mitra mentioned that the company makes money by making products interactive for companies.
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