Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday April 20.
Conoco-Phillips (NYSE:COP), Netflix (NASDAQ:NFLX), Texas Instruments (NASDAQ:TXN), Apple (NASDAQ:AAPL), 3M (NYSE:MMM), AT&T (NYSE:T), Panera Bread (NASDAQ:PNRA), Boeing (NYSE:BA), Caterpillar (NYSE:CAT), Wyndham Worldwide (NYSE:WYN), Cliffs Natural Resources (NYSE:CLF), Celgene (NASDAQ:CELG), Amazon (NASDAQ:AMZN), Exxon (NYSE:XOM), Deckers (NYSE:DECK), Zynga (NASDAQ:ZNGA), International Paper (NYSE:IP), Procter & Gamble (NYSE:PG), VFCorp (NYSE:VFC).
Other stocks mentioned: Nokia (NYSE:NOK), Verizon (NYSE:VZ), Colgate-Palmolive (NYSE:CL), Alcoa (NYSE:AA).
The coming week marks the height of earnings season. Cramer emphasized the importance of doing research on stocks before buying and selling based on headlines about earnings.
Conoco-Phillips (COP) is splitting itself up and bringing out value, but Cramer would buy the oil part and not the refining part of the business.
Netflix (NFLX) is an earnings call everyone is talking about, but the company no longer has a competitive advantage, and with a multiple of 25, it is too expensive.
Texas Instruments (TXN) supplies to both Apple (AAPL) and Nokia (NOK). Analysts will try to divide the Nokia part from the Apple part, and give predictions on Apple's earnings on the following day based on what TXN says.
Apple (AAPL) is going to be the main focus on Tuesday, particularly after its devastating recent declines. Apple will discuss how sales of the iPhone and iPad are holding up and supply constraints. Apple needs to beat the highest estimates of $11.80 earnings per share and $41 billion revenue. However, Cramer emphasizes that short-term performance is not so important for Apple, since it is an investment and not a trade.
3M (MMM) is a company that some think has lost its way, but 3M sees continuing strength in Asia and new products. If 3M gets hit, it might be worth buying, since it has been boosting its dividend every year for 54 consecutive years.
Panera Bread (PNRA) has decent numbers, but Cramer is concerned about the turnover in management, and he can't be as bullish as he once was about the stock.
Boeing (BA) should be benefiting from the fact that aerospace is red hot, but the stock has lagged. Are there Dreamliner problems? If there is even a whisper about slippage in 787 sales, the stock will get hurt. If all is well, BA could see $76 in the near future.
Caterpillar (CAT) is benefiting from the boom in construction, but China is weaker. The situation for Caterpillar is not as robust as Cramer would like.
Wyndham Worldwide (WYN) is a sleeper stock that keeps blowing away numbers. It should get a lift after it reports.
Cliffs Natural Resources (CLF) recently boosted its dividend, but the bears are all over it because of its involvement with coal. Cramer thinks CLF might be a good trade going into earnings if it declines going into the quarter.
Celgene (CELG) tends to decline after it reports earnings, but the company has a terrific pipeline. Cramer would buy Celgene if it is sold off.
Exxon (XOM) is the biggest but not the best. However, Exxon is a good "tell" on the state of the oil and gas industry. If management says natural gas demand is declining, investors can expect a further drop in natural gas prices.
Amazon (AMZN) is overspending, and it will be hard for the company to blow away the numbers; "I fear a shortfall," said Cramer
Deckers (DECK) may have peaked along with demand of Uggs. Deckers is a "show me" story.'
Zynga (ZNGA) is making acquisitions, but with no real earnings to show for them. Management will talk about downloads, but is anyone clicking on Zynga's ads?
International Paper (IP) should report that its Temple-Inland acquisition is being integrated well.
Procter & Gamble (PG) raised its dividend recently. Management should discuss the progress of its restructuring plans. Its top line is not so hot, but earnings have been decent and raw costs seem to be under control. However, PG is suffering from increased competition from Colgate (CL).
VFCorp (VFC) is benefiting from the upswing in apparel. However, management tends to make cautious comments, so if VFC declines after the quarter, Cramer would buy it.
Cramer took a call:
Alcoa (AA) is making a comeback because of aerospace and the strength of aluminum in many other industries. Cramer is bullish on Alcoa.
Anatomy of a Bogus Big Sell-Off: Stanley Black & Decker (NYSE:SWK)
Stanley Black & Decker (SWK) is an example of what can happen when investors sell first and do research later. Last Wednesday, the company reported what, at first blush, seemed to have been a disappointing quarter, with earnings 3 cents shy of estimates (even though 2 of those 3 cents were from seasonal tax issues) and in-line revenues. The company made the mistake of not having its conference call after it reported after hours on Wednesday, but waited until after the market opened on Thursday. Rumors about problems at SWK abounded, and the stock declined 5 points. However, after management explained its quarter, the results were not nearly as negative as first believed. The company delivered 12% revenue growth, 3% organic growth, higher operational margins, gross margins that were only in-line because of heavy inflational pressure, a 20% increase in free cash flow and guidance 10-15% higher than the previous year. The weak spots were due to seasonal expenses and integrating a new acquisition, which should make a profit for the company later in the year. Cramer thinks SWK will see continued strong performance due to the housing comeback, and the company may raise its dividend from its current 2.1%.
Another challenge facing SWK were the high expectations going into the quarter. The stock had run up 66% since last October. However, the stock is still cheap and trades at a multiple of just 11 compared to its historic level of 14. Cramer would buy SWK.
CEO Interview: David Cody, Honeywell (NYSE:HON)
Few companies are doing more than Honeywell to come up with economically feasible ways to conserve energy. Half of Honeywell's projects involve energy efficiency and provide greener, money-saving solutions. The company reported a 5 cent earnings beat on a 7.3% increase in revenues. The stock rose 2.4% following the quarter, and the stock has risen 40% (including reinvested dividends) since Cramer got behind it in September.
Even though there are uncertainties in the global economy, CEO David Cody says "I feel confident about our ability to outperform," especially since aerospace is a strong segment for the company, and it is in a multi-year bull market. Honeywell is also seeing success in its performance materials business. The 10% decline in European auto sales caused a 1% decline in Honeywell's turbo engines business, but Cody says that the innovations Honeywell is making should offset this loss. Smaller orders from the defense industry are causing concern, but Cody says he foresaw this issue and made preparations. While China has been perceived as slow, Honeywell saw a 20% increase in sales from China on the strength of aerospace and oil and gas.
Honeywell is developing a thermostat that can be connected to the internet and monitor when inhabitants are at home or away. It can reduce heating and cooling costs by 30% without affecting customers' comfort. Honeywell has made a green jet fuel out of weeds that can power planes, a turbocharger for cars that saves energy by 30% and a 3-D weather radar system for planes. Cramer is bullish on Honeywell.
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