Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday June 4.
In an inconsistent environment for retail, Skechers (SKX) has been "totally nailing it." the stock has doubled in the last year, and is up 39% year to date. A few years ago, the brand was tarnished when the FCC targeted the company for overly aggressive marketing about the health benefit of its shoes. The company sponsors the horse California Chrome, which could potentially be the first Triple Crown winner in 36 years, and also has Mark Cuban as a spokesman, as well Meb Keflezighi, the winner of the most recent Boston Marathon.
Cramer thinks SKX is a long-term, high-quality growth story, and its brand is considered to be the hottest shoe in the business. CEO Robert Greenberg says the company is seeing huge demand and is having to order more inventory. The company managed to effect a comeback because of its strong balance sheet and the popularity of its brands. COO and CFO, David Weinberg, predicts China could generate 50% sales in the upcoming years. With the diversity of its segments, Skechers can offset the volatile nature of the sneaker business. The company offers every variety of shoe except for high-fashion. "We are not promotional at all now," said Weinberg, and this has a positive impact on margins. Greenberg says he hopes competitor Nike (NKE) does well, because Nike paves the way, but customers don't want to pay Nike's high prices and many opt for Skechers' brands instead; "We are in the lifestyle side of the business rather than the performance side," Greenberg said, "but we are growing on the performance side."
"Disbelief is often the hallmark of a really powerful bull market like this one," said Cramer. The averages were up, but the skeptics don't believe the rally can continue without better job numbers. In reality, Cramer pointed out, there is often a negative correlation between job growth and stocks. The fewer people hired, the greater the profits. Paychex (PAYX) showed sluggish hiring, but many companies are beating the market by firing rather than hiring. Some are moving operations abroad to save on taxes, other companies are using technology more effectively to limit manpower. The key to Domino's Pizza's (DPZ) success is advanced use of technology so the company doesn't have to hire as many people to answer the phone. Human resource plays like Workday (WDAY) and Concur Technologies (CNQR) provide services that help clients streamline operations. Alcoa (AA) has doubled in the past year partly because of plant closings. Regulations are bad for smaller companies, but are fine for larger companies because they eliminate competition. "The stock market is a barometer of profits, not people," Cramer said.
Cramer took some calls:
LinkedIn (LNKD) "I have had to sour on LinkedIn," said Cramer. It is a great company, but is now a troubled stock.
CEO Interview: Emmanuel Chirico, Phillips-Van Heusen (NYSE:PVH)
Phillips-Van Heusen (PVH) is down 4% the year, but up 10% since Cramer spoke to CEO Emmanuel Chirico in April. It reported a 2 cent earnings miss and revenues that were lower than expected. PVH suffered from the severe winter weather, and an overly promotional environment and margin pressure. Chirico says the underlying business is strong, and considering the inclement weather, PVH emerged well. Challenges include clearing out some extra inventory and the necessity for promotions, but Chirico indicated that the second half of the year should be stronger; "This is a second-half story." There is slowness in Italy, and Chirico admitted that PVH is not counting on a big turn in Southern Europe. However, orders are up year-over-year in Spain and business is robust in Northern Europe. Sales in Asia are strong, and Chirico predicts a high single digit to low double digit growth in China.
The biotech sector has been battered in recent months, and Cramer consulted the technical analysis of Ed Ponsi to determine whether these stocks have further to fall or if they can rebound. He looked at the chart of the iShares Nasdaq Biotech ETF (IBB).
Between November and March, the sector was strong, but sold off in late February with a plethora of IPOs and secondary offerings. Biotechs fell 19% to dramatic lows in April and have been consolidating. Last week, biotechs broke above the 50-day moving average, and Celgene is showing a bullish crossover pattern.
Ponsi's analysis indicates that the sell-off in biotechs is a buying opportunity, even for Celgene (CELG), which has risen slightly. Cramer also likes Isis Pharmaceuticals (ISIS) and Regeneron (REGN).
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