Cramer's Mad Money - The Most Important Earnings Report This Week (12/11/09)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday December 11.

Game Plan for the Coming Week: Best Buy (NYSE:BBY), Adobe (NASDAQ:ADBE), Boeing (NYSE:BA), Precision Castparts (NYSE:PCP), Honeywell (NYSE:HON), Joy Global (JOYG), Bucyrus International (NASDAQ:BUCY), Paychex (NASDAQ:PAYX), Discover Financial Services (NYSE:DFS), General Mills (NYSE:GIS), Darden Restaurants (NYSE:DRI), Oracle (NYSE:ORCL), Nike (NYSE:NKE), Research in Motion (RIMM), Palm (PALM), Sun Microsystems (JAVA), Nokia (NYSE:NOK), Apple (NASDAQ:AAPL)

Cramer began his game plan by urging investors to tune in to the most important earnings conference call of the coming week: Best Buy (BBY). His theory is that the success or failure of this holiday season depends on gadgets, and Best Buy should confirm or refute that theory. The number to look out for is 45 cents per share, which is the estimate given by Best Buy's top analyst. The stock hasn't risen prior to earnings, so those who want to buy the stock might pick some up Monday.

Adobe (ADBE) reports after hours on Tuesday, and Cramer expects to hear good news and predicts an upgrade. Boeing (BA) is expected finally to release its Dreamliner, and in addition to Boeing, Cramer recommends Honeywell (HON) and Precision Castparts (PCP).

Joy Global is up 105% year-over-year, and Cramer expects the company to confirm Bucyrus' (BUCY) positive statements about the coal business. Joy Global is likely going to discuss strong demand for coal in China when it reports on Wednesday. Cramer would also pay attention to the Paychex (PAYX) call on Wednesday as an indication of how the unemployment situation is shaping up. The stock yields 3.1%, is up 14%, and has more upside in store, according to Cramer, as the economy recovers. On the Fed announcement Wednesday, Cramer does not expect an interest rate hike, but would look for hints when the rate will be raised in the future. He expects the press to make negative remarks about Bernanke regardless of what the Fed Chairman says.

Cramer would listen to Discover Financial Services' (DFS) earnings Thursday to find out more about bad-debt allowances, and if credit card debt charge-offs are peaking. General Mills (GIS) will only rise if it beats its $1.44 estimates when it reports on Thursday. Cramer doesn't expect a huge lift in the stock, in any case. After the bell on Thursday, Darden (DRI) is expected to surprise The Street with strong same-store sales, and Cramer thinks investors can wait until the release of a new product to buy Nike (NKE), which will rise and fall based on the strength of its future orders.

Cramer wasn't pleased with Oracle's (ORCL) acquisition of Sun Microsystems (JAVA), but thinks its report after hours on Thursday will give vital information on the tech sector. Also worthy of note is Palm (PALM), which may make an attractive takeover target for Nokia (NOK), and Research in Motion (RIMM) which is so heavily shorted Cramer would be bullish. Negative news from either company will provide a chance to buy Apple (OTC:APPL).

AT&T (NYSE:T), Apple (AAPL), American Tower (NYSE:AMT), Crown Castle International (NYSE:CCI), SBA Communications (NASDAQ:SBAC), Ceragon Networks (NASDAQ:CRNT), Harris Stratex Networks (HSTX), DragonWave (NASDAQ:DRWI), Clearwire (CLWR)

Cramer revisited the topic of cellular tower stocks as a play on bandwidth bottleneck and blockage on cellular networks. The problem has gotten so severe that AT&T (T) has created incentives to encourage Apple's (AAPL) iPhone users to reduce their usage.

A better solution is to make use of cellular towers. American Tower (AMT) has climbed 15% and Crown Castle (CCI) has jumped 24% since Cramer's September recommendation. He suggests looking for a speculative name such as SBA Communications (SBAC), which is up 29% since Cramer discussed the stock in September, although the company missed its earnings estimates and has issues with the depreciation of its towers. SBA's picture looks slightly better when taking EBITDA into account; profits were about the middle range of of guidance and increased 27% in the past year. SBA's management has also initiated a share repurchase plan.

Speculative tower plays with even more risk include microwave backhaul radio makers Ceragon Networks (CRNT) up 48% since September, and Harris Stratex Networks (HSTX), which has gained 4%. Microwave backhaul radios connect wireless towers with wireless networks, and since only 20% of U.S backhaul connections use microwave radios, both companies have ample opportunity to expand. Cramer would take some gains in Ceragon, and Cramer thinks Harris should benefit from stimulus spending.

The tower stock Cramer would not recommend is DragonWave (DRWI), which generates 77% of its sales from Clearwire (CLWR), a stock Cramer does not like.

Invest in America: Nucor (NYSE:NUE), Dan DiMicco

Although November's unemployment number included an unexpected drop from 10.2%-10%, if one includes the number of people who have given up looking for work, the real unemployment number is more like 17%. Dan DiMicco says problems in America are going to get worse unless Washington resets its priorities and works on dealing with the deficit and creating jobs. Many of these jobs can be created by developing alternative energy solutions and tackling the infrastructure problems. DiMicco says the President needs to "jump in with both feet" and spend $2.2 trillion dollars on infrastructure. Concerning the steel industry, DiMicco says rising prices are good news, but he isn't sure that increasing demand is sustainable, so he is cautious. He thinks that by the first quarter of 2010, he will be able to tell whether the demand is real or not.

Mad Mail: Fluor (NYSE:FLR), Fibria Celulose (NYSE:FBR)

When a viewer asked Cramer about Fluor, he replied; “First of all, you are dead right, Gary. Fluor’s being brought down. There’s a belief that infrastructure is way too related to oil, and that’s wrong … we’ve also seen some disappointments in the group. I think Fluor’s a buy right here, right now.” Concerning Fibria Celulose (FBR) he said, “Low-cost producer. Terrific company. I would buy, buy, buy that company.”


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