Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday June 15.
The Supreme Court will rule on healthcare legislation. While some investors have been buying healthcare stocks ahead of this meeting, in the event that healthcare legislation is struck down, Cramer would buy retailers that would be hurt the most by the laws, like Wal-Mart (WMT), Target (TGT) and Home Depot (HD). The defeat of this legislation means these companies won't have to pay more for healthcare benefits.
The Federal Reserve will meet for two days to find solutions for the domestic economy. Since interest rates are already as low as they can be, Cramer doesn't think there is much more Ben Bernanke can do to stimulate the economy. Investors who want to get out of certain stocks should consider selling ahead of the meeting, which might cause of disappointment.
Fed-Ex (FDX) reports. This company tends to take stocks up or down as a result of its earnings; Cramer doesn't expect to hear anything really good from FDX this time around.
Jabil Circuit (JBL) is a contract manufacturer for companies across various sectors, but the company tends to get lumped together with tech. If JBL reports poorly, the tech sector will see a decline.
Bed, Bath & Beyond (BBY) might not report a great quarter, since there is chatter that BBY is losing out to e-commerce. Cramer still thinks BBY is a great company, and would buy on a decline after earnings.
Red Hat (RHT) trades wildly post-earnings. Cramer recommends that investors buy deep in the money calls prior to the quarter and sell after.
CarMax (KMX) reports on Thursday. Increasing auto sales have been good for general auto plays like KMX, but the automakers themselves are down over European woes.
Oracle (ORCL) has been treading water. The quarter might be stronger than expected, but Cramer doesn't usually like to buy tech in the summer. Those who want to speculate on earnings might consider buying ORCL ahead of the quarter.
Darden (DRI) has had a gigantic run and expectations are high ahead of earnings. Cramer would be careful about DRI.
Cramer took some questions:
Disney (DIS) is the ideal stock to buy to teach a child about investing in stocks.
Coach (COH) and Michael Kors (KORS) are two contenders in the high-end handbag wars, and both could be winners, depending on the time-frame. Kors recently beat earnings estimates by 5 cents and reported same store sales that increased an astounding 36.1%. The stock came public just six months ago, and 52% of shares are held by insiders. The lock-up period for Kors expires June 20th, and some fear a sell-off due to profit taking. Therefore, it is not worth buying Kors ahead of the lock-up expiration, but the stock may be a buy on any decline caused by the selling. Kors is growing dramatically, and is expected to double its store count. While the 36.1% same store sales doesn't seem likely to stay so high, the company expects 20% same-store sales growth next year.
Coach's same store sales increased 6.7% domestically, and were up double digits in China. While this rate is lower than Kors, Coach is an established company that is a solid, if conservative, investment in the space. While Cramer thinks Coach might be too dependent on China, which may be slowing, the company has high margins, new categories, competent management and is shareholder friendly; Coach recently increased its dividend by 33%. Coach sells for a multiple of 13 and has a 16% growth rate, while Kors has a multiple of 28 with a 28% growth rate. Coach is a good stock for the risk averse, but for growth investors, Kors is a buy after the lock-up period expires, especially if there is a secondary offering.
Analysts are disagreeing about what to do with Under Armour (UA); Morgan Stanley removed the stock from its "Best Ideas" list, but the very next day, Bank of America and Merrill Lynch added UA to its "U.S. One List." UA is up 47% so far this year, and is flirting with its 52 week high. Both Morgan Stanley and Bank of America think UA is a good stock, but Morgan Stanley thinks the stock has gotten too rich and that the catalysts are priced in. UA has a multiple of 44 compared to its 20% growth rate, and it is the kind of growth stock that needs to perform flawlessly or it could face a sell-off. Lululemon (LULU) serves as a cautionary tale. The company reported a solid beat, but was conservative on guidance. As a result, LULU, another sportswear stock selling at a rich multiple, dropped 12% in a month.
Under Armour's products are flying off the shelves; it is incorporating high-tech with sportswear, with its heat-resistant clothing and state of the art athletic shoes. However, Cramer sides with Morgan Stanley; he would unload some UA or find a lower entry point to get into the stock, even though it has a great long-term story.
Cramer took some questions:
Nordic American Tanker (NAT) is part of a troubled sector, and its day rates have been going down. Cramer would avoid shipping, and would buy an MLP instead for yield.
Nokia (NOK), Research in Motion (RIMM)
Rumors have been flying about potential takeovers of Nokia (NOK) or Research In Motion (RIMM). Cramer doubts this will happen, since the fundamentals of both companies are deteriorating, and they both have Apple as a competitor. Management is probably too proud to consider a takeover, in any case, and Cramer posited; "If investors don't want to buy stock in a company, why would another company want to buy the entire business?
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