Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday May 11.
15 Things To Watch In The Coming Week: Groupon (GRPN), Facebook (FB), Dick's Sporting Goods (DKS), Saks (SKS), Home Depot (HD), TJX (TJX), JCPenney (JCP), Deere (DE), Target (TGT), Jack In The Box (JACK), Red Robin Gourmet Burgers (RRGB), Dollar Tree (DLTR), Ross Stores (ROST), Gap (GPS), Salesforce.com (CRM). Other stocks mentioned: Nordstrom (JWN), Apple (AAPL), Macy's (M), Priceline (PCLN), Arena (ARNA).
Groupon (GRPN) reports and is a "poster boy for what we fear most about internet IPOs." This was an IPO that bounced on massive hype, and had loads of revenue, but the stock has been cut in half. The Facebook (FB) IPO on Friday is the event of the week and Groupon might provide a cautionary tale for the larger internet IPO event.
Dick's Sporting Goods (DKS) is seeing strong sales, but the bar is set very high ahead of the quarter.
Home Depot (HD) should talk about tailwinds for housing, if anyone cares to listen.
TJX (TJX) is a strong stock, but might get hit on earnings.
J.C. Penney (JCP) might have set its sights too high, in spite of its masterful CEO Ron Johnson, architect of the Apple (AAPL) Stores. Numbers will probably be taken down, along with the stock, especially since Macy's (M) has indicated that it is taking market share from JCP.
Deere (DE) is a great company, but has not been a great stock. Even when grain prices were soaring, DE had a tendency to disappoint with its conservative commentary on its earnings. Now that grain prices are getting hit, the commentary is expected to be even more gloomy.
Target (TGT) has delivered all year, and momentum has returned to this stock. Cramer regrets having written the stock off last year; it has more room to move up.
Dollar Tree (DLTR), Ross Stores (ROST), Gap (GPS) are all solid retailers reporting on Thursday. If their stocks get hit on disappointing earnings from retailers earlier in the week, they will be worth buying ahead of earnings.
Salesforce.com (CRM) is a controversial stock and a battleground. While its valuation is rich, the stock has been crushed, and it might be a buy for those willing to take the risk.
The Facebook IPO is the event that will set the tone for the week, even though it is not until Friday. Cramer would get in on the IPO, but would not buy it in the aftermarket.
Cramer took some calls:
Priceline.com (PCLN) was more conservative than expected on its conference call. Investors may be willing to mark time before it bottoms 50 points down. For investors who don't want to take the pain, it's a good idea to start trimming.
Arena (ARNA) was a lottery ticket that paid off, and Cramer thinks it has more room to run. It is a buy on any decline.
Cramer analyzed the split-up of Conoco-Phillips (COP) into an exploration and production business and a refining business, Phillips 66 (PSX). He compared the break-up to that of Marathon (MRO), which made investors 30% from the time the spinoff was announced until its completion, but since then, MRO has declined 19% and its spinoff, Marathon Petroleum (MPC), has declined 4.5%. Once the break-up has happened, the trade will be over and investors have to analyze the two businesses separately. COP has a dividend of 4.8%, which provides more yield protection than most oils, but COP is not growing fast, with a rate of just 3.5%. COP has sold most of its valuable assets and can't spin off more without loss. With a multiple of 8, it trades at a premium to Chevron (CVX), with a multiple of 7.6 and Marathon, at 6. Cramer thinks Chevron is a better buy than COP, even though its yield is at just 3.5%, because CVX is growing faster. For more aggressive growth, Cramer would buy EOG Resources (EOG). For safety, Cramer suggests an MLP like Kinder Morgan Partners (KMP), which is 10 points off its high.
Phillips 66 gets half of its value from refining and the other half from chemicals. Cramer doesn't like refining stocks because refining is a low margin, low growth business. PSX trades at a multiple of 7, higher than Valero (VLO) at 5, and Valero is a better stock.
Given the huge popularity of energy drinks, Monster Beverage (MNST) may be a buy, but there are some risks. The stock has jumped 9% on its strong quarter and is taking market share. Energy drinks are the fastest growing category in the non-alcoholic beverage sector, with 20% growth. This is a two horse race between MNST, with 30% market share and Red Bull, which has 40% market share, but it is not possible to buy shares of Red Bull. MNST gets 19% of its sales outside of the U.S, and is growing internationally. The company has a clean balance sheet and plenty of cash. The company's margins have expanded 3%, and it is not riddled with problems of rising raw costs. However, MNST is a bit pricey, with a multiple of 29 and a 17% growth rate. In addition, its management is an unknown quantity and Cramer isn't sure whether MNST has succeeded through good fortune or superior execution. For those who want to invest in Monster, Cramer would buy deep in the money calls to reduce risk.
Mad Mail: Demandware (DWRE), Exact Target (ET), Sara Lee (SLE), Hershey (HSY), McCormick (MKC), Kimberly-Clark (KMB), Medtronic (MDT), Inergy (NRGY), Energy Transfer Partners (ETP), Conn's (CONN), Carrizo Oil & Gas (CRZO), Windstream (WIN), Verizon (VZ), Abbott Laboratories (ABT), Bristol Myers (BMY).
Sara Lee (SLE) is splitting up and is offering a special dividend. It is worth doing homework about the spinoff, but Cramer agrees with those who want to buy SLE.
Medtronic (MDT) is dead money.
Inergy (NRGY) spinning off its propane business was a good move, but Cramer prefers Energy Transfer Partners (ETP).
Conn's (CONN) may be in its early phase of retail growth, but Cramer thinks the risk reward for CONN is 3 up and 5 down. He would not buy it.
Carrizo Oil & Gas (CRZO) is a hold for those who own it, but Cramer would not be a buyer.
JPMorgan's (JPM) fiasco shows how risky it is to own any international banks; few people knew how mired JPM was in foreign debt. Cramer doesn't blame CEO Jamie Dimon entirely, but thinks those responsible for the mess should be fired and Dimon should surrender his bonus for the year. Cramer thinks this event is a "huge indictment" for the financial industry, and the government regulators are right to be tough on the sector. Right now, financials with foreign exposure are too hard to understand; "I don't want to own JPMorgan," said Cramer.
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