Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday March 16.
15 Things To Watch This Week: Adobe (NASDAQ:ADBE), Tiffany (NYSE:TIF), Cintas (NASDAQ:CTAS), Oracle (NYSE:ORCL), Discover Financial Services (NYSE:DFS), General Mills (NYSE:GIS), Dollar General (NYSE:DG), FedEx (NYSE:FDX), Lululemon (NASDAQ:LULU), Accenture (NYSE:ACN), Nike (NYSE:NKE), Darden (NYSE:DRI), KBHomes (NYSE:KBH), Exact Target (EXTG) other stock mentioned: Kraft (KFT), Dollar Tree (NASDAQ:DLTR), Lowes (NYSE:LOW), Home Depot (NYSE:HD).
Adobe (ADBE) is introducing new software for web developers that could be one of the great software stories of 2012. Cramer likes the stock even though it has risen 20% since October.
Tiffany (TIF) didn't deliver last quarter and has been the only luxury purveyor that has disappointed in 2012. The company is levered to bonuses of brokers and investment bankers
Cintas (CTAS) could be at the beginning of a long cycle that brings the stock higher.
Oracle (ORCL) is a sell ahead of earnings. Last quarter's earnings were disappointing and Cramer expects more disappointment ahead.
General Mills (GIS) "has been acting like soggy cereal," after saying its margins are squeezed on commodity costs. Cramer likes GIS better when it yields 4%. He prefers Kraft (KFT) since it is successfully splitting itself up.
Discover Financial Services (DFS) is one of the cheapest credit card stocks with a multiple below its growth rate. DFS is the "odd man out" and may not be as good as its chief competitors, but is too cheap to ignore. The stock is up 24% for the year, so there might be profit taking but it could still be a buy.
FedEx (FDX) is a "lesson in economics." When the company says negative things about global growth, the stock will get hit at first but often springs back.
Lululemon (LULU) is facing high expectations with raised estimates, but Cramer is bullish on the company's aggressive expansion plan and new products. LULU seems to have tackled the inventory problems that were plaguing it last quarter.
Accenture (ACN) is good enough to be bought ahead of the quarter. Cramer would buy it after Oracle's conference call since ACN should report a "bang up quarter."
Nike (NKE) is having a good year with the Olympics and the World Cup. The stock trades on future orders, so investors should not be too preoccupied with earnings per share.
Darden (DRI) used to be an automatic "sell" whenever gasoline prices reached $4, but consumers are still eating out, even with higher prices at the pump. However, the stock will get hammered on the slightest worry about gasoline prices.
KB Homes (KBH) has been a leader, along with other homebuilders, and has risen 90% year to date. Since the stock has run up, it might get hit.
The February New Home Sales number is coming out and it might clash with KBH's statements. If housing is coming back then Cramer would play the trend with home suppliers like Home Depot (HD) or Lowe's (LOW).
ExactTarget (EXTG) is having its IPO. Cramer would get in on the deal and then get out.
With the Dow meandering down 20 points on Friday, breaking its 7 day winning streak, Cramer noted that what is bringing up stocks is not necessarily great events, but disasters not happening.
- The S&P downgrade of U.s debt was one of the darker moments of last year, but it was followed by a sustained run in bonds.
- Italian bonds dropped, but it turned out to be a great buying moment.
- The Fed extended a credit line to European banks to halt the dumping of Europe's debt. A buying spree followed.
- Greece went from a tragedy to a bailout.
- Higher gas prices in the U.S.did not halt consumer spending.
- Housing didn't collapse, but saw a gentle decline and might have a comeback in 2012.
- China didn't experience a hard landing. While there are still questions about China, it is still seeing a 7-8% expansion.
Cramer took some calls:
Ebay (EBAY) had a downgrade that was "stupid as wood," according to Cramer. Concerning eBay's future performance, Cramer said, "You ain't seen nothing yet."
Diageo (DEO) is a stock that Cramer likes, especially on a pullback.
Dole (DOLE) has seen a huge upside. Cramer apologized for not getting behind the stock and congratulated investors who have made money in Dole.
When two analysts say divergent things about a stock, the best thing to do is to look at the bullish and bearish arguments separately to weigh them. Urban Outfitters (URBN) has risen 3,500% in the last decade, but has lost its way because of a decline in same store sales, perceived fashion misses, higher costs, legal troubles and the resignation of its CEO. Morgan Stanley reiterated an "overweight" rating on URBN while Citigroup maintained its "sell" rating. Who is right?
Morgan Stanley sees URBN having a genuine turnaround in the second half because of easier comparisons, fewer markdowns and higher gross margins. Its new pricing strategy, which shifts away from more expensive goods to lower priced items is a positive development. URBN has seen an improvement on the fashion side and has inventory levels under control. The company is increasing its square footage by 10% per year for 4 years. MS has a $31 price target on URBN, and thinks it will go to $40.
Citgroup thinks that a turnaround in URBN is unlikely after the recent resignation of its CEO and that estimates are too high. The company is ramping up spending on e-commerce but is likely to fail to make its numbers. URBN has had to markdown its products, and while the markdowns decreased slightly, Citigroup thinks this will become a perennial problem.
Cramer sided with Citigroup about URBN and thinks the stock is in "show me" mode.
Cramer took some calls:
Limited Brands (LTD) is consistently overvalued and should make money over time.
Costco (COST) is in a great situation and delivered a strong quarter.
JPMorgan (NYSE:JPM), Huntington Bancshares (NASDAQ:HBAN), Fifth Third Bancorp (NASDAQ:FITB), Keycorp (NYSE:KEY).
Financials got their groove back, beginning with JPMorgan's (JPM) 10% dividend hike and its buyback. Banks rose on the news that 15 of 19 banks passed the stress test. Cramer thinks Wells Fargo (NYSE:WFC) is a good investment, but would look to regional Midwest banks with exposure to the recovery in jobs and the industrial sector.
Huntington Bancshares (HBAN) reported a better than expected quarter with a great buyback. It is a speculative stock which is revamping its legacy credit and revamping its sales culture. Keycorp (KEY) was a challenged bank, but passed the stress test and has raised its dividend 66%. KEY is trading at a discount to book value. The bar is set so low that even a slight improvement will send it higher. Fifth Third (FITB) has not yet been allowed by the government to raise its dividend, but the potential of a higher yield is a good catalyst.
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