Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday October 23.
Dupont (NYSE:DD), Apple (NASDAQ:AAPL), 3M (NYSE:MMM), Google (NASDAQ:GOOG), Coach (NYSE:COH), Facebook (NASDAQ:FB), Harley Davidson (NYSE:HOG), Panera (NASDAQ:PNRA), Monster Beverage (NASDAQ:MNST), Western Digital (NYSE:WDC), Supervalu (NYSE:SVU)
The averages were crushed on Tuesday, with the Dow sinking 243 points. Dupont's (DD) results were devastating; The Street was expecting earnings of 47 cents per share, and DD delivered only 32 cents. Cramer said that when a company knows it is going to miss by at least 5%, it has a duty to pre-announce, but DD's performance came as a complete shock; "Dupont CEO Ellen Kullman is no longer the teflon boss." The stock fell 9%.
3M (MMM) also disappointed, but not as spectacularly as Dupont. Cramer would consider buying some 3M on the decline. Apple (AAPL) shed 20 points on information that its new device is not selling as well as expected. However, Cramer reminded viewers that Apple is an investment and not a trade and would hold on. The terrible pin action in tech, with the news about Apple, caused the Nasdaq to tumble.
However, there were some bright spots in the down day. Google (GOOG), which began falling last week, closed up $1.50. News from Facebook (FB) that it is going to be able to monetize mobile ads might make Google rise higher. Coach (COH) reported a solid number, and the stock rose 7%. Whirlpool (NYSE:WHR), which has been a serial disappointer, gave a standout number. Harley Davidson's (HOG) results show that discretionary spending is strong, and Panera (PNRA) reported a solid number. Cramer's conclusion is that a lot is going wrong in the market, but there are many bright spots.
Cramer took some calls:
Monster Beverage (MNST) is a momentum stock, and like all momentum stocks, any hint of bad news will send the stock down. On surfacing FDA concerns about its products, Monster is a stock that should be sold.
Western Digital (WDC) is too levered to the ailing PC industry to be worth buying.
Supervalu (SVU) is a stock to sell. Cramer urged investors not to believe the story about the tender offer; "You are playing with fire ... you are lucky it is not lower."
CEO Interview: Chuck Bunch, PPG Industries (NYSE:PPG)
After Dupont's disappointment, investors may be tempted to stay away from chemical companies, but not all of these companies are doing poorly. PPG Industries (PPG), which makes coatings and chemicals for industrial uses, delivered a 5 cent earnings beat on revenues that were flat because of currency issues. Sales in Europe were down 4%, but this was not as large a decline as that of the previous quarter. Cramer thinks PPG may be providing investors with an entry point, which is rare, because PPG doesn't decline often.
CEO Chuck Bunch discussed the company's plans to spin off its commodity chemical business into Georgia Gulf, and he is confident about the future of both companies as separate entities. Bunch added that the proprietary nature of PPG's business gives it the advantage of more stability, less vulnerability to economic cycles and price differences, innovation and differentiation. The proprietary chemical business allows it to develop a closer relationship with clients and to make earnings more consistent. While Europe continues to be weak, the company has seen 20% growth in the U.S. this year so far, thanks in good part to the auto boom. While titanium dioxide was Dupont's Achilles' heel, since it is responsible for 60% of its revenues, unlike Dupont, PPG is a buyer, not a seller, of the chemical, and should benefit from stabilizing prices in the commodity.
"PPG totally delivered," said Cramer. "Not all chemical companies had a tough quarter."
Gold was taken down along with stocks, and it might seem that the yellow metal has finished its rise. However, Cramer discussed the technical analysis of Mark Sebastian, who thinks that gold is going to go higher, given a pattern he has observed. Few realize that just as the market has a "fear index" or the VIX volatility index to measure anxiety over stocks, gold has its own volatility index, the GVZ. When the VIX declines, the S&P 500 usually rallies and vice versa. Sebastian has noted the same correspondence between the GLD and the GVZ; a dip in the GVZ has predicted a rally in GLD 5 out of 6 times. Last week, the GVZ hit a five year low. Therefore, according to Sebastian's theory, GLD is going to go much higher. The macro situation also supports the idea that gold will rally; as long as governments are going to print money, that is good news for gold.
Cramer took some calls:
iShares Gold Trust ETF (IAU) is a great way to play gold. Even though Cramer talks about the GLD more often, IAU is also good.
Agnico Eagle Mines (AEM) seems to be breaking out, but Cramer still prefers GLD to the miners; "GLD is so right here."
CEO Interview: Dr. Stanley Crooke, Isis Pharmaceuticals (ISIS)
Cramer got behind Isis Pharmaceuticals (ISIS) ahead of the expected FDA approval of its drug, Kynamro, which treats dangerously high cholesterol. While a competitor has a similar drug, Cramer thought Isis was the stronger play because it has 25 drugs in its pipeline. However, the study showed that there may be an elevated cancer risk with ISIS and issues with possible liver problems. While the drug was ultimately approved with these caveats, ISIS' stock fell 26% after these safety concerns were raised, and now some investors are accusing management of withholding negative data.
Isis CEO, Dr. Stanley Crooke, explained that the study showed no increased cancer risk in human beings and the small findings that did surface were "blown out of proportion." While there are some concerns about the liver, the competing drugs showed far more risk in this area. Dr. Crooke pointed out the Kynamro has been studied extensively and is favored by lipid experts. "It wasn't a question of facts," said Dr. Crooke, "It was a question of interpretation of data."
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