Cramer's Mad Money - When Merkel Is Away, The Stock Market Plays (7/26/12)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday July 26.

When Merkel Is Away...Siemens (SI), Banco Santander (NYSE:SAN), Dunkin' Brands (NASDAQ:DNKN), Barrick Gold (NYSE:ABX), SPDR Gold Trust (NYSEARCA:GLD)

With the Dow up again on Thursday, Cramer said the movement of stocks demonstrates that investors should save their bearishness for similar days when stocks climb high enough to get out of their least favorite holdings. It didn't look like it was going to be a good day, with disappointing earnings from European companies, Siemens (SI) and Banco Santander (SAN). The upsurge in stocks on Thursday was called "The Draghi Rally," after Mario Draghi, the European equivalent of Ben Bernanke, who indicated that the European economy should be rescued by any means necessary. Since German Chancellor Angela Merkel is on vacation, she doesn't have the chance to temper the enthusiasm with cautious statements, and therefore, throw cold water on stocks, Cramer commented.

Cramer took some calls:

Siemens has been beaten down 40% from its 52 week high, and even though it has an attractive 4.2% yield, Cramer would not buy the stock because it is priced in euros.

Dunkin' Brands (DNKN) reported a not-so-fantastic quarter; the company reported in-line results, but bears are worried about insider selling. Starbucks (NASDAQ:SBUX) reported lukewarm earnings. This means the coffee group is down, but Cramer doesn't think it is out.

Barrick Gold (ABX) is down 15%, despite the move up in the price of gold. Cramer prefers SPDR GoldTrust (GLD) to the gold miners. He thinks ABX will bounce, and would sell it into the bounce.

CEO Interview: Michael Ward, CSX (NYSE:CSX)

According to CSX (CSX), things look better for the railroad space and the domestic economy than they may appear at first glance. CSX reported a 2 cent earnings beat, and carloads were up 14%. While coal has been cited as a problem for the company, coal for export rose 42%. Transport of autos jumped 27%, and CEO Michael Ward said that 80% of its end markets are stable. Natural gas is one of the vulnerable areas, and Michael Ward doesn't see an immediate reversal in the fortunes of the fuel. Agriculture is also expected to be a challenge, given the severe drought. Cramer thinks CSX is an inexpensive stock.

Sprint (NYSE:S) vs. Zynga (NASDAQ:ZNGA), Facebook (NASDAQ:FB)

Sprint (S) has been a poor stock that is getting better, and Zynga (ZNGA) is a loved stock that is getting worse. The only thing these two companies have in common is that the analysts seem to be wrong about them. Sprint was a stock people had given up on, and there was even some chatter about possible bankruptcy ahead. Few stocks that drop to the $2 region see their way back up so soon, but Sprint is up to around $4 after its low of $2. Analysts who were bearish on the stock are likely to upgrade.

Zynga (ZNGA) was beloved by analysts, but the stock has "blown up in people's faces." This stock was once at $15 and now sits at $3. Poor performance from Facebook (FB) does not bode well for the future of Zynga. Cramer expects some downgrades.

CEO Interview: Joe Almeida, Covidien (COV)

Covidien (COV) is a medical equipment company that is spinning off its pharma business, so that 81% of its sales will be generated from its medical technology alone. This is the area of focus for Covidien, which is the strongest performer in this space. The stock is up 4.6% following a one cent earnings beat and in-line revenues. The company offset weakness in Europe with outstanding growth in emerging markets. The company makes a lot of acquisitions, but organic growth was up 5%, along with 8% growth in medical devices. Research and Development spending was increased 15%, and COV has opened R&D centers in China and India. Cramer likes the fact that COV is breaking itself to unlock value, its strong performance, its stellar offering of medical solutions, and he thinks it might increase its dividend. Cramer would buy COV on a pullback.


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