Cramer's Mad Money - 2 Picks From Larry Robbins (8/5/14)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday August 5.

2 Picks from Larry Robbins: Flextronics (NASDAQ:FLEX) and Monsanto (NYSE:MON)

Larry Robbins recommended both Flextronics (FLEX) and Monsanto (MON), partly because of their generous buybacks. Flextronics is the second largest manufacturing services company in the world. Companies outsource their manufacturing to Flextronics, and the company has four divisions. Wearable electronics and integrated network solutions are strong segments. This company is a "total cash cow," which interests Robbins. Management plans to buy back 20% of its market cap, and until only recently, got hit by the 10% limit on buybacks in its native Singapore. The company managed to get an agreement with Singapore's government to allow it to buy back more stock, and the sky is the limit. Robbins predicts the stock could go 20% higher, and Cramer thinks this amount is conservative.

Monsanto (MON) may be "one of the most hated companies on earth" by those opposed to GMOs. Declining agricultural prices are a problem too. Robbins likes the company's buyback and its potential in emerging markets. As meat consumption rises, the demand for cheap feed and cheap seeds will rise. Estimates for the earnings seem to be too low, and it could be a breakup story with the spinoff of its chemicals business. Monsanto could be worth 17% more than it is now if it breaks up. The stock has been slammed because of falling agriculture prices and news that it is using debt to buy back stock. Cramer agrees with Robbins that Monsanto is a buy.

It's All About Russia: MasterCard (NYSE:MA), Chevron (NYSE:CVX), Exxon Mobil (NYSE:XOM), Disney (NYSE:DIS). Other stocks mentioned: Sturm, Ruger & Company (NYSE:RGR), InvenSense (NYSE:INVN)

People are finally starting to realize that stocks are being hit not because of the Fed or earnings, but because of fears that Russia will invade the Ukraine. It is time to stop ascribing "magical powers" to the Federal Reserve. Cramer doesn't think the Fed is nearly as much in control of interest rates as many think. Vladimir Putin's reaction to the sanctions is to prepare for a military attack, and the Western leaders don't seem to know how to deal with Putin. There is an automatic selling of oil stocks when the dollar is strong, so even though the current conflict may bring oil prices up, oil stocks are still sold off because of the high dollar. Those selling off Chevron (CVX) and Exxon Mobil (XOM) are not thinking very far off, but are selling just because the dollar is higher.

Airlines were strong the first part of the year, but the downing of the Malaysian airplane might have changed the direction of this sector. Now there are concerns about air safety, but Cramer thinks this is not just because of Russia; the Ebola virus might also be causing unease about travel. Gold "should be" soaring on global tension, but Cramer says the jury is out on why it hasn't risen, but it could go higher.

MasterCard (MA) didn't go higher after a terrific quarter, partly because of its large business in Russia. The country has a history of expropriating funds from foreign companies. Plenty of positives, like Disney's (DIS) great quarter were ignored because of Russia. If stocks traded on earnings, stocks would have been up on Tuesday.

Cramer took some calls:

Sturm, Ruger & Company (RGR) has been controversial and in addition, it has been inconsistent. "I am away from the gun trade," said Cramer.

InvenSense (INVN) is alright as long as investors know this is speculative.

Are Coach (NYSE:COH), Whole Foods (NASDAQ:WFM), Panera Bread (NASDAQ:PNRA) and Target (NYSE:TGT) Bottoming? Other stocks mentioned: Costco (NASDAQ:COST), J.C. Penney (NYSE:JCP)

Coach (COH) has been able to make a bigger shift toward products for men than many expected. China is moving the needle for the company in a positive way. The North American same store sales were down 17%, which is a terrible number, but Cramer feels better about the stock and its prospects, including its 3.7% yield. Cramer thinks COH is headed up, but isn't sure whether it will rise in a straight line.

Whole Foods' (WFM) sales are decelerating, and it doesn't seem worthwhile to pay up for WFM when others are cheaper and are making stronger sales. Without real evidence that the company is turning around, Cramer would rather own Costco (COST). Panera Bread (PNRA) doesn't seem to want to go down anymore. When its CFO left unexpectedly, the stock didn't drop dramatically. Management is buying back stock, and it seems to be turning around. Target (TGT) is still being punished for its security breach, but management is fixing the company. The stock could rise, but Cramer isn't too excited about it, because basically, he's not thrilled with retail in general. One thing he can say about all four companies is they have strong balance sheets. It would be a mistake to short any of these. There is no guarantee their stock prices will rise, but it is reasonable to speculate on a bottom on any of the four after significant homework and patience in the investment.

Cramer took some calls:

J.C. Penney (JCP) is doing better than expected in an environment that has been tough for retail. It can be a hold, but Cramer wouldn't buy any more JCP.

Off The Charts With Tim Collins. Stock mentioned: SunCoke (NYSE:SXC)

Cramer spoke with technical analyst Tim Collins, founder of Collins thinks coal could be ready to rebound while long-term treasurys might fulfill bearish predictions. The chart of coal has been "abysmal," but coal is "beautiful" from a risk/reward standpoint. Collins sees $5 downside and $20 upside. Collins notes a bullish divergence and evidence that coal is bottoming. Collins thinks coal is the cheapest group in a expensive energy neighborhood. He looked at the chart of SunCoke Energy (SXC) and sees a breakout on momentum. It has shown a dip, but this dip may lead to a rally. "This is my favorite energy name to own period. I see $30 this year and $35 to $40 next year." Cramer says SunCoke has an advantage of exposure to steelmaking as well as energy; "That is one beautiful chart," said Cramer.

Treasurys have been an "easy trade" but there is a longer-term price resistance will a sharp pulldown going the opposite direction of price and causing a bearish divergence. Collins thinks these treasurys are "long in the tooth" and are not likely to rally. "I would not be a buyer of treasurys," Collins said.

CEO Interview: Steve Singh, Concur Technologies (NASDAQ:CNQR)

Concur Technologies (CNQR) is a high-flying cloud name that sold off with its cohort, but it has been working its way higher. The company provides services for the business traveler. It reported a stellar quarter with a 9 cent earnings beat and revenues that rose higher by 28%. Management gave great guidance, and bookings were strong. The stock has a rich valuation, but has given a 17% gain since Cramer last spoke to the CEO at the end of April.

CEO Steve Singh discussed how Concur is a market leader and has lucrative partnerships with major companies. Concur makes expense accounts easier and provides multiple options for the client. The expense report "literally files itself." Concur's partnership with Airbnb has been game-changing for the company's services. Cramer thinks Concur might be a buy on decline as long as investors understand that it is a volatile stock.


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