Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday December 16.
Red Hat (NYSE:RHT), CVS Caremark (NYSE:CVS), Walgreen (WAG), Carnival Corporation (NYSE:CCL), General Mills (NYSE:GIS), Jabil Circuit (NYSE:JBL), Nike (NYSE:NKE), Bed Bath and Beyond (NASDAQ:BBBY), Tibco Software (NASDAQ:TIBX), Paychex (NASDAQ:PAYX). Other stocks mentioned: Express Scripts (NASDAQ:ESRX), Alcoa (NYSE:AA), Adobe (NASDAQ:ADBE)
Cramer discussed things to watch in the coming week:
Red Hat (RHT) should have a great quarter on the momentum in cloud computing.
CVS Caremark (CVS) should talk about how it is taking business from Walgreen.
Carnival Corporation (CCL): a good measure of consumer confidence, especially in Europe. Listen for cancellations.
General Mills (GIS) recently raised its dividend and is benefiting from eased commodity prices.
Jabil Circuit (JBL) consistently beats estimates.
Nike (NKE): one of the most stalwart performers of 2011. It recently raised its dividend, and if it declines after its earnings, Cramer would buy it on a decline.
Paychex (PAYX) is expected to tell a good story, and recently raised its dividend.
Walgreen (WAG) may decline if it says its war with Express Scripts is raging on, but if there is a truce, the stock price might soar.
Bed Bath and Beyond (BBBY): Has been performing well and has the advantage of no European exposure.
TIBCO Software (TIBX) is a cloud play that should have a strong quarter.
Retail Sales Number from Italy: This may be the most important number of the week. Rating agencies may react to this number.
Cramer took some calls:
Alcoa (AA) is expected to have a very bad quarter. In fact, Cramer thinks it will be abysmal. Cramer would not sell it down here.
Adobe (ADBE) is doing well with its acquisition and says European business is strong. Cramer would buy the stock and predicts it is going to $35-36.
Paychex, Automatic Data Processing (NASDAQ:ADP)
The employment situation seems to be getting better; jobless claims were at their lowest levels since May of 2008, and two good weeks in a row of strong employment data might signal a trend. Unemployment is now at 8.6%, down from its high. Cramer compared Paychex to Automatic Data Processing (ADP), both deal with payroll processing and may benefit from the rise in employment. PAYX yields 4.3% compared to ADP's 3.1%, and while the latter has a record of consistently raising its dividend, it is hard to ignore that PAYX's yield is higher.
Paychex has more exposure to payroll services: 75% of its sales, compared to 40% of ADP's sales. PAYX is also more levered to small businesses, which should be driving the hiring trend more than huge corporations, which often apply the strategy of cutting jobs. PAYX is 100% domestic, while ADP is 13% levered to Europe. Paychex has the advantage of being a turnaround story and has a higher potential for upside, even though Cramer likes ADP and says its management is effective.
When it comes to ZAGG (ZAGG) and Skullcandy (SKUL), don't believe the hype. These two stocks are loved by their analysts who have only "buy" ratings on the stocks. However, Zagg's screen protectors and Skullcandy's headphones are highly commoditized, and anyone can imitate them. The two stocks have come down 50% from their highs, but neither is worth buying. Zagg's invisible shield produces 50% of its sales, and the two companies are overly dependent on consumer electronics retailers, a segment that is facing headwinds. Both have inventories that are too high, and SKUL saw a 450 point gross margins decline. While both stocks look cheap: ZAGG trading at a multiple of 12 and Skullcandy with a 10 multiple, both with 20% growth rates, Cramer would not believe the hype.
Cramer took some calls:
hhgregg (HGG) is a very good regional to national growth story, but is in a very hard industry, and Cramer would not buy.
Pandora (P) doesn't seem to have a sustained business model. Cramer is not bullish.
Mad Mail: Alliance Bernstein (NYSE:AB), Fusion-io (NYSE:FIO), YPF Sociedad Annima (NYSE:YPF), Annaly Mortgage (NYSE:NLY), Freeport McMoRan (NYSE:FCX), U.S. Steel (NYSE:X), Nucor (NYSE:NUE), Peabody (NYSE:BTU), Conoco-Phillips (NYSE:COP)
Fusion-io (FIO): this flash memory stock is a high-flyer, and investors who avoided it when Cramer suggested staying away on November 4 avoided a 34% decline. He would continue to stay away.
Peabody (BTU) along with other coal stocks is suffering, and Cramer admits he got the coal cycle wrong. Cramer would hold until the tax loss selling is finished, and might consider exiting coal stocks in January.
Jim Cramer was up 31% in 2009. Click here now to trade alongside him.
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