Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday July 13.
11 Earnings to Watch This Week: Citigroup (C), Coca-Cola (KO), Johnson&Johnson (JNJ), Intel (INTC), Bank of America (BAC), U.S. Bancorp (USB), Honeywell (HON), Yum Brands (YUM), Verizon (VZ), Google (GOOG), General Electric (GE). Other stocks mentioned: Procter & Gamble (PG), Yahoo (YHOO).
The Dow rallied 204 points on rumors of a Chinese stimulus and rate cut. What happens with China on Sunday will set the tone for the market for the coming week. Cramer discussed earnings reports:
Citigroup (C) has significant international exposure, and Cramer doesn't think investors like it as much as domestic banks.
Coca-Cola (KO) will be the stock to watch to get a sense of how domestic companies are faring with the strength of the dollar and with the rise of corn prices. If KO gets hit on these two issues, there might be a reason to worry about similar stocks that will report.
Intel (INTC) has been facing a drop-off in demand, and it will be a "tough quarter" for the company. However, if the stock doesn't decline, it might be time to buy tech stocks.
Johnson & Johnson (JNJ) has a new CEO and might surprise to the upside an any hint of good news.
Bank of America (BAC) is trying to do things right, and will likely report that it has seen some success.
U.S. Bancorp (USB) is a bank that can "do no wrong," and will likely report that it hasn't done wrong.
Honeywell (HON) is expected to set the record straight about aerospace, which Cramer thinks is a strong sector.
Yum! Brands (YUM) has a "monster Chinese footprint." Given slowing in China and rising chicken prices, Cramer would sell YUM going into the quarter if there is a Chinese rate cut or stimulus announced on Sunday.
Verizon (VZ) has seen terrific growth, and investors might be pleasantly surprised.
Google (GOOG) has a huge European business. The stock has gotten cheap, but investors need to hear more good news before buying.
General Electric (GE) needs to say that it is raising its dividend and that its financial segment is performing well before it can be said to be a buy. In addition, GE's management needs to say that its alternative energy segment is not a drag on earnings.
Cramer took some calls:
Procter & Gamble (PG) will be improved by the departure of CEO Bob McDonald. Cramer thinks the Board might finally be waking up.
Yahoo (YHOO) is another stock that will be improved by a new CEO.
Cramer discussed Health Care Services (HCSG) as a speculative play on the aging U.S. population. This under-the-radar stock is covered by only 4 analysts, none of them from major brokerage houses. HCSG takes care of outsourcing of laundry, housekeeping and food services from long-term care facilities. Currently, 15% of such facilities outsource housekeeping and laundry, and only 5% outsource food; this means that the market is under-penetrated. HCSG, which yields 3%, reported in-line earnings, but revenues increased by 26%. Its food service business, which comprises 26% of earnings, grew by 50%, and its laundry business saw 15% growth. The company has a customer retention rate of 95%, which provides significant earnings visibility. HCSG has a diverse client base, a clean balance sheet and no direct exposure to Medicare or Medicaid, since it provides services to facilities but is not a healthcare provider. The one concern about this stock is its high multiple of 26 compared to its 18% growth rate. However, Cramer would buy the stock on any decline.
Cramer took a call:
Spectrum Pharamceuticals (SPPI) is a good oncology speculative play. Cramer would buy half of a position now and wait to buy the rest on weakness.
CEO Interview: Timothy Conver, AeroVironment (AVAV)
AeorVironment (AVAV) is a stock that has gotten hit on speculation about government military cuts. AVAV has fallen 20% so far this year, even though the company beat earnings by 9 cents and raised guidance. Its 2013 backlog has 63% visibility. The company makes unmanned Drone helicopters. CEO Timothy Conver believes the government is unlikely to cut back significantly in the number of Drones, since the helicopters save lives on the ground. AVAV has also developed a specialty missile called a "Switchblade." Cramer says he feels more hopeful about AVAV's story after talking with the CEO.
When JPMorgan (JPM) and CEO Jamie Dimon were embroiled in a scandal, "a winner became a loser," said Cramer. However, the time has come when JPM may be a "buy" again. The company reported an exceptional June, it is clearing up its financial mess, and it seems evident that Jamie Dimon was given misleading information from some people in the company, who have since been dismissed. Cramer thinks JPM is now cheap compared to its fundamentals.
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