Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday April 16.
SandRidge Energy (NYSE:SD): The Fine Line Between Love And Hate
"Never underestimate the power of hate." It is possible to catch an incredible gain if a hated company brings in new management and turns itself around. SandRidge Energy (SD) is a speculative oil and gas company. Under CEO Tom Ward, SandRidge was "reviled" by most of Wall Street and was badly managed. Since SD replaced James Bennett as CEO for Ward in March, Bennett has been selling off non-core assets, getting the balance sheet in order and concentrating on drilling only in the most productive areas. SD has beaten the estimates and raised guidance for 3 consecutive quarters. "This is a whole new SandRidge," declared Cramer. It still has the fewest buy ratings of any company in the space. He predicts the analysts will eventually have to get behind the stock. Leon Cooperman of Omega Advisors is one of the few people to be bullish on SD, and Cramer would trust Cooperman. The company has potential to double its well count and has up to 20 years of drilling inventory. Cramer thinks the $6 stock could go to $10-$15. Bears are concerned the company won't have enough cash to fund operations, but Cramer thinks SD will be able to raise money with improved cash flows and selling non-core assets. Currently SD is a good speculative stock to buy.
Earnings Are Not So Tepid: Alcoa (NYSE:AA), JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C), Coca-Cola (NYSE:KO), Johnson & Johnson (NYSE:JNJ), Intel (NASDAQ:INTC), Yahoo (YHOO), Bank of America (NYSE:BAC), IBM (NYSE:IBM), Google (NASDAQ:GOOG), (NASDAQ:GOOGL), CSX (NASDAQ:CSX), Alibaba (ABABA). Other stocks mentioned: Harley Davidson (NYSE:HOG), Brink's (NYSE:BCO).
Cramer says he is tired of hearing commentators claim that earnings are tepid, when earnings season was kicked off by the best quarter Alcoa (AA) has reported in years. All of Alcoa's segments were strong, and if revenues seemed weak, it was only because the company had closed down unproductive factories. While JPMorgan (JPM) reported a dismal quarter, which might have been due to regulatory headaches, Wells Fargo's (WFC) number was fantastic, thanks to increased lending. Citigroup (C) took a day off from rallying, and once it gets its house in order, the stock could return to the 50s. Coca-Cola (KO) was not "supposed" to report a strong quarter, given the declining popularity in sodas, but these beverages are still selling in emerging markets. Johnson & Johnson (JNJ) reported strong results, in spite of a downgrade a day ahead of earnings. Intel (INTC) finally delivered after a series of disappointments and forecasted higher growth and healthy margins. Intel is a "classic buy." Yahoo (YHOO) is thought to be good mainly because of its 24% stake in Alibaba (ABABA); when the latter goes public, Yahoo could be headed toward the mid-40s, although Cramer thinks Yahoo has more going for it than Alibaba.
Bank of America (BAC) rallied ahead of earnings, so it is not surprising that it declined. CSX (CSX) is showing strength in 83% of its markets, coal is improving and volumes have been up by double digits. CSX, even though many considered its quarter to be disappointing, is a buy. IBM (IBM) and Google (GOOG), (GOOGL) are both trading down after earnings, but Cramer said it is worth looking at the conference calls before opining on the stocks.
Cramer took some calls:
Harley Davidson (HOG) is a good stock, but it is worth taking profits after its recent gain.
Brink's (BCO): "Don't buy" Brinks.
What is a value stock? Value stocks do well in spite of economic headwinds and reward shareholders. Managers of these companies use extra cash to enhance shareholder value, whether that is through increased dividends, buybacks or investing in the business. Coke invested in advertising in emerging market countries, which is where the growth is, at least for carbonated beverages. The company pays a healthy dividend, with a recent 9% increase. Coke has raised the dividend every year for 50 years and has a history of making strategic acquisitions and joint ventures. The company generated a significant amount of cash. Cramer is not so certain about the long-term growth prospects for carbonated beverages, but the company's management has the vision to adapt to changes.
Cramer took some calls:
Wendy's (WEN) is digesting an amazing move. Patience will be rewarded, and WEN is a hold.
Annaly Capital (NLY) is "opaque," and it is hard to know what they own. Cramer would look elsewhere for yield.
Himax (HIMX) lost a major order. It was a great run, it had a terrific move, but a while back, Cramer suggested taking profits. The stock is too low to sell here, but he would sell it on a lift.
The intraday reversal on Wednesday was one of the biggest seen in a long time. Cramer broke down the process:
12:38: The BTK, or the biotech index, had been in decline, but made a sudden pivot and rallied. There was no news that caused this.
1:01: The iShares 20+ Year Treasury Bond ETF (TLT) peaked.
1:02: The Nasdaq and the S&P 500 both bottomed simultaneously, and again, no major news preceded this move.
1:05: Twitter (TWTR) bottoms.
1:10 Daniel Graf Tweets that an executive is leaving Google to join Twitter's consumer product division.
Cramer concluded that Wednesday's action was "terribly artificial," was concerned with "shaking out the sellers," to create a reversal, and it is hard to know if the selling is actually done.
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