Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday October 12.
15 Things To Watch In The Week Ahead: Citigroup (NYSE:C), Coca-Cola (NYSE:KO), Goldman Sachs (NYSE:GS), Johnson & Johnson (NYSE:JNJ), IBM (NYSE:IBM), Bank of America (NYSE:BAC), Pepsico (NYSE:PEP), Union Pacific (NYSE:UNP), Chipotle Mexican Grill (NYSE:CMG), Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), General Electric (NYSE:GE), Schlumberger (NYSE:SLB), Honeywell (NYSE:HON). Other stocks mentioned: Wells Fargo (NYSE:WFC), JPMorgan (NYSE:JPM), Peabody (NYSE:BTU), Priceline (NASDAQ:PCLN), Travelzoo (NASDAQ:TZOO)
Citigroup (C) is in a sector no one is crazy about, but Cramer thinks most of the banks are making a lot of money and are cheap stocks. However, Citigroup is not his favorite, since it has significant international exposure. He would not buy it ahead of its Monday earnings report, but would buy Wells Fargo (WFC), because of its robust mortgage business and would hold JPMorgan (JPM).
Coca-Cola (KO) shot the lights out during its last earnings report, and might do even better on Tuesday, since the dollar is lower. KO is very well-run and is seeing strength in Asia.
Goldman Sachs (GS) may be hampered by the government, and has challenges facing it. Cramer admits that, ahead of its earnings report, he has never been so uncertain about whether Goldman Sachs can turn it around. One major question is if its sale of corporate bonds can make up for a dearth of IPOs and mergers.
Johnson & Johnson (JNJ) should discuss the impending split-up into pharma and consumer goods segments in its conference call. Cramer likes the break-up.
IBM (IBM) is taking market share and is buying back stock. The company is executing, in spite of slowness in Europe.
Presidential Debate: There was a perception that Romney "won" the last round of debates, and coal stocks moved up following the debate. For those who believe that Obama will strike back, Peabody (BTU) is a good short on Monday morning.
Bank of America (BAC) reports. The company is cleaning up its balance sheet, has fewer foreclosures and is putting its ugly past behind it.
Pepsico (PEP) reported terrific earnings last time around, and is being propelled by international growth. Management should address the issue of healthy eating.
Union Pacific (UNP) - this company's report is a great gauge of the coal industry, fracking and freight. The company has multiple contracts, and Cramer would recommend getting into the stock if it gets hit.
Chipotle Mexican Grill (CMG) reports. The stock has been a battleground, and there is disagreement about whether it can reach or surpass the crucial 8% same store sales growth number. Cramer would approach CMG with caution, since there are many shorts betting against the stock.
Google (GOOG) is taking market share and should deliver a strong quarter. Cramer would play GOOG ahead of the quarter with deep in the money calls.
Microsoft (MSFT) reports. Many on The Street are recommending selling MSFT ahead of its new product cycle, Windows 8. Cramer thinks the bearishness on MSFT might be exaggerated, but any good news from MSFT will certainly pale in comparison with Google.
General Electric (GE) may announce a dividend boost on its conference call. Cramer says GE management is the most bullish he has heard them in ten years.
Honeywell (HON) is one of the few major industrials that has guided above The Street during this troubled period for the sector. Cramer would buy HON in the $50s if it gets hit.
Schlumberger (SLB) reports on Friday morning, and is an excellent indication of where the price of oil is going.
Cramer took some calls:
Isis Pharmaceuticals (ISIS), Aegerion Pharmaceuticals (NASDAQ:AEGR)
Cramer's new speculation pick for biotech is Isis Pharmaceuticals (ISIS), which has an impressive 25 drugs in its pipeline and an innovative approach to treating disease through creating products that transform body chemistry. Its newest drug is designed to treat dangerously high cholesterol, a condition known as hypercholesterolemia. This rare condition affects 3,000 people in the U.S, and involves cholesterol levels elevated to up to 1,000; even children are at risk of heart attacks with such a condition. Isis' drug can reduce cholesterol by 25-47%. Aegerion PHarmaceuticals (AEGR) has an FDA meeting on Tuesday to discuss a similar drug to treat the same condition. Preliminary trials show that AEGR's drug might be more effective, so why is Cramer recommending ISIS rather than AEGR? The latter is a small company without a significant pipeline and faces greater risk than its larger rival, Isis. Cramer would pick up 50% of a position in Isis on Monday (he cautioned investors to use limit orders) and 50% if it gets hit over a potentially successful FDA meeting for AEGR on Tuesday. Even if Isis doesn't decline, it pays to get at least half a position in Isis.
Cramer continued his series on winning momentum stocks money managers may want to buy toward the end of the year. Gilead (GILD) and Alexion (ALXN) have risen 66% and 56% year to date, respectively, and both are great biotech speculative plays. Alexion specializes in orphan drugs, treatments designed for rare diseases. These drugs have the advantage of tax incentives from the government and marketing exclusivity, as well as the fact that those who suffer from these rare, severe conditions are willing to pay a large amount for the treatments. Alexion has the only treatment for a rare blood disease called PNH and is developing an orphan drug for a severe and rare kidney disease. Cramer predicts that the value of both could be close to $5.6 billion in a few years, up from the current $1 billion. The stock has risen 231% since Cramer began discussing it two years ago, and he thinks the stock will continue rallying until the end of the year.
Gilead (GILD) has a treatment for HIV which has been successful, and it is likely to see even more profit from its drug for Hepatitis C. Most other treatments for the condition have only a 50/50 success rate, but Gilead has seen much better results for its drug, which, if approved, could generate $5 billion in revenue by 2016. The advantage of these biotechs is that they are not dependent on the global economy; if people need these treatments, they buy them. Cramer would pick up either stock on any weakness.
Cramer took a call:
Luxotica (LUX) is a stock whose story has been told, and it is too late to buy it.
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