Cramer's Mad Money - R.R. Donnelly Is Printing Profits (7/30/14)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday July 30.

CEO Interview: Tom Quinlan, R.R. Donnelly & Sons (NASDAQ:RRD)

R.R. Donnelly & Sons (RRD) is in a business that is considered less relevant these days, because it is levered to the print business. It yields 6.5%, but has disappointed the last 2 quarters. However, this time, the company beat earnings by 7 cents with a 12% gain in revenues. The stock rose 5%. It has market share in printing financial statements and is making acquisitions that are accretive. It has also been successful with outsourcing. The stock has given a 40% return since Cramer recommended it. CEO Tom Quinlan discussed the company's commitment to the traditional printing business, creating innovations within the industry in which it has substantial market share. Quinlan also reaffirmed that keeping the dividend high is a major priority.

The Market's Warring Factions: Twitter (NYSE:TWTR), U.S. Steel (NYSE:X). Other stocks discussed: AIG (NYSE:AIG), Five Below (NASDAQ:FIVE), American Railcar Industries (NASDAQ:ARII), Trinity (NYSE:TRN), Costco (NASDAQ:COST)

There are warring factions in the markets. Those who believe the economy is getting stronger want to buy cyclical goods. However, the strength of the dollar is hurting companies that sell in Europe. Interest rates soared on the strong GDP number, but higher interest rates cause people to fear stocks. Other investors tend to buy entire sectors based on positive data from individual companies on earnings. Twitter's (TWTR) unexpected strong results brought up social media stocks in tandem. Banks also rose on higher interest rates. U.S. Steel (X) reported good earnings, and industrials rallied. Companies with businesses in Russia are suffering from uncertainty and potential sanctions. When the dollar goes up, commodities go down, and many are leaving these stocks.

Cramer took some calls:

AIG (AIG): Insurance companies are hurting short term. It is a good idea to step back for a bit, but when interest rates go higher, insurance companies will come back. Cramer would hold AIG.

Five Below (FIVE) has had a good quarter, but nobody cared. Retail has gotten tough, and Cramer is staying away from the sector. The only big retailer Cramer is recommending is Costco (COST).

American Railcar Industries (ARII) went up on Trinity's (TRN) numbers, but Trinity went down. However, Cramer likes rails. At first he thought they had too many cars, but now he says "I like the group."

Buffalo Wild Wings (BWLD), Panera (NASDAQ:PNRA)

Why did Buffalo Wild Wings (BWLD), which reported an excellent quarter, decline 13% while Panera Bread (PNRA), which missed estimates, rise 3.5%? The rest of the story lies in the expectations. BWLD had already risen 45% so far this year, so investors were taking profits on a feeling the stock had peaked. Expectations for PNRA were low enough to consider it a buying opportunity, since it has declined 17% for the year. In addition, management said it will reduce its debt and cut costs.

CEO Thomas McInerney, Genworth Financial (NYSE:GNW)

Genworth Financial (GNW) is an insurer whose shares dropped following a disappointing earnings report. The loss was mainly in long-term care. Cost increases in healthcare are affecting the company, but CEO Thomas McInerney says that premium increases should offset this problem. The CEO mentioned that margins, the amount of future premiums expected, is at a strong $4 billion. While there are new regulations in the industry, McInerney is confident his company can easily comply with them.


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