Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday May 23.
7 Things To Watch in the Week Ahead: AutoZone (NYSE:AZO), WorkDay (NYSE:WDAY), Michael Kors (NYSE:KORS), Toll Brothers (NYSE:TOL), Costco (NASDAQ:COST), Splunk (NASDAQ:SPLK), Ann (NYSE:ANN). Other stocks mentioned: Hewlett-Packard (NYSE:HPQ), Dollar Tree (NASDAQ:DLTR), GameStop (NYSE:GME), Best Buy (NYSE:BBY), The Fresh Market (NASDAQ:TFM), Salesforce.com (NYSE:CRM), Netflix (NASDAQ:NFLX)
"The bears caused the rally," said Cramer on Friday, with the Dow rising 63 points. The past week was "irrational," with buyers celebrating rising interest rates, when stocks have usually gone down with rising rates. Many stocks rose because there were so many bets against them; Hewlett-Packard (HPQ), Dollar Tree (DLTR), GameStop (GME), BestBuy (BBY) and The Fresh Market (TFM) saw gains because their results were not as bad as the street expected. Cramer expects the irrationality and volatility to continue, and he discussed the game plan for the week ahead.
AutoZone (AZO) has been a favorite Mad Money stock because of its consistent buyback. The stock tends to sell down on the day it reports. Cramer would use the weakness to do some buying; "This strategy has worked 80% of the time" for Autozone.
WorkDay (WDAY) is one of the most "spectacularly volatile" stocks, and is "Salesforce.com (CRM) on steroids." These stocks have been punished lately, and even if it reports a good quarter, the stock might get hit.
Michael Kors (KORS) may deliver the numbers and break out to an all-time high, because of the "almost cultish" bets against the stock. It may have some inventory issues, but this stock has become "the growth gold standard," and high-end names have been performing well. Cramer would buy KORS.
Toll Brothers (TOL) may have "the most important" quarterly report of the week. There is a "stealth recovery" in housing stocks, and these companies are benefiting from lower mortgage prices. The quarter might not be huge success, but analysts will want to hear that the spring selling season was just deferred because of the weather.
Costco (COST) will look good by comparison to other discount retailers.
Splunk (SPLK) is outrageously valued, but is likely to deliver spectacular numbers. One trading idea would be to pick up some Splunk before it reports after the close, but Cramer would use call options.
Ann (ANN): Women's retail has been a difficult space, but Ann is likely to benefit from warmer weather and may report decent numbers.
Cramer took a call:
Netflix (NFLX) is a momentum name, and Cramer would proceed only with caution.
Retail's Mixed Bag: Amazon (NASDAQ:AMZN), Williams-Sonoma (NYSE:WSM), Nordstrom (NYSE:JWN), Home Depot (NYSE:HD), PetSmart (NASDAQ:PETM), Dick's Sporting Goods (NYSE:DKS), Target (NYSE:TGT), Nike (NYSE:NKE)
Retail has been a troubled area, as companies look for ways to compete with Amazon (AMZN) and increase customer loyalty. There has been "unprecedented" pressure on retail, but Williams-Sonoma has seen explosive sales, with great stores and a sophisticated website. It has an evenly-divided number of sales from regular stores and the web.
Nordstrom's (JWN) management has spent a spectacular amount of money on ecommerce. Home Depot (HD) is king of "crowdsourced hardware," with its internet services. PetSmart (PETM) and Dick's Sporting Goods (DKS) have lost their way; "PetSmart has the worst website of any retailer I follow," said Cramer. Target (TGT), with a new CEO, might improve its website and technical issues.
Cramer took a call:
Nike (NKE): "I sweat this one every day," said Cramer about his charitable trust holding. "I'm not going to sanction buying it here at $75," but he would consider picking it up on an intraday swoon.
Danaher (DHR) is a potential breakup play. It has been a great long-term investment. The company has grown through smart acquisitions. It has given 7,587% return in the last 25 years. DHR is a $54 billion company, Cramer thinks it has gotten too big, and it would be a good strategy to break itself up to unlock value. Cramer envisions a four-way spinoff into Water, Industrial Technology, Life Sciences, Diagnostics and Dental, and Test and Measurement businesses. The spinoff could mean a 15% premium to where the stock is currently trading, but Cramer thinks this is a conservative estimate, and predicts the premium could be as high as 27%.
Cramer took some calls:
GT Advanced Technology (GTAT) has great technology, but it is a long-term rather than a short-term story.
Stanley Black & Decker (SWK) is one of Cramer's favorite charitable trust holdings, and can go higher.
CEO Interview: Dr. Stanley Crooke, Isis Pharmaceuticals (ISIS)
Isis Pharmaceuticals (ISIS) has been cut in half from its highs, but it rose recently on positive data. Unlike many other biotechs, Isis "trades on its pipeline, not pipe dreams," said Cramer. The technology uses RNA-based technology to treat rare conditions, and the company has 32 drugs. The stock is up 200% since Cramer spoke to the CEO Dr. Stanley Crooke in 2012, but it is now low enough to consider buying. The company received positive data on its anti-coagulant drug, and it has shown to be safe and effective. There are 6 drugs that Isis expects to get to the market by 2018. "We have a tremendously exciting pipeline," said Dr. Crooke. Cramer suggests taking a long-term position in Isis; "this is my kind of stock."
ViaSat (VSAT) provides satellite-based broadband services to airlines. Gogo (GOGO) has 80% market share, but Cramer thinks VSAT has better technology than Gogo, with faster download speeds. Both stocks have been hurt lately because of the announcement that AT&T (T) might get into the in-flight connectivity business. VSAT missed earnings by one penny and reported lighter-than anticipated revenues. It reduced its subscriber target. The stock fell from $58 to $53 in a single session and is down 20 points from its highs. Cramer thinks VSAT might be a bargain.
The CEO says the company is focused on increasing customer satisfaction and creating value for subscribers, rather than on the number of subscribers. AT&T (T) is a "formidable" company, said CEO Mark Dankberg, but he doesn't see it as a threat, because AT&T is likely to focus mainly in terrestrial services. "No one argues that VSAT doesn't have the better technology," said Cramer, "but there are a lot of moving parts. Do your homework."
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