Cramer's Mad Money - Know Your Customer (1/11/12)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday January 11.

Know Your Customer: Lennar (NYSE:LEN), JJC (NYSEARCA:JJC), Freeport McMoRan (NYSE:FCX), Masco (NYSE:MAS), Lowe's (NYSE:LOW), Home Depot (NYSE:HD), BorgWarner (NYSE:BWA), Johnson Controls (NYSE:JCI), Magna International (NYSE:MGA), Verizon (NYSE:VZ), AT&T (NYSE:T), Juniper (NYSE:JNPR), CIENA (NASDAQ:CIEN), Dell (NASDAQ:DELL), Oracle (NYSE:ORCL), Hewlett-Packard (NYSE:HPQ), Urban Outfitters (NASDAQ:URBN), Supervalu (NYSE:SVU), Royal Dutch Shell (NYSE:RDS.A), Whole Foods (NASDAQ:WFM), Conoco-Phillips (NYSE:COP)

The strategy for picking stocks that has been working so far in 2012 is to look for areas of the market that are showing the most growth in customer demand. Lennar's (LEN) 20% growth in orders is an indication of a turnaround in housing, Masco (MAS) was a top performer and Lowe's (LOW) and Home Depot (HD) have been discussing a greater demand for their merchandise. Copper demand is growing, which is good news for JJC (JJC) and Freeport McMoRan (FCX). In addition to homes, autos are also seeing a buildout. While it was initially predicted that 9 million new cars would be produced in 2012, those estimates have jumped to as high as 14-15 million. BorgWarner (BWA), Johnson Controls (JCI) and Magna (MGA) are great ways to play this trend.

Sectors that might see a downturn are natural gas drilling, since prices for the fuel have been falling, and telecom might see some drop off in demand, which is not good for Verizon (VZ) and AT&T (T), and by extension, neither for Juniper (JNPR) and Ciena (CIEN). Other tech names like Dell (DELL), Oracle (ORCL) and Hewlett-Packard (HPQ) are likely to see more weakness ahead, but Tibco (NASDAQ:TIBX) is a bright spot in tech.

Cramer took some calls:

Urban Outfitters (URBN) is at its lowest level in three years and the main issue has been management and personnel problems. Cramer wouldn't own the stock because no one knows where it is headed.

Supervalu (SVU) reported poor earnings, and Cramer doesn't like the supermarket space, except for Whole Foods (WFM).

Royal Dutch Shell (RDS.A) yields 4.6%, and is not the best-run oil company, but its yield is safe. Conoco-Phillips (COP) doesn't have as high a yield, but is well-run.

CEO Interview: Vivek Ranadivé, TIBCO Software (TIBX). Other stock mentioned: IBM (NYSE:IBM), (NYSE:CRM)

Tech has been a poor performing sector so far in 2012, but TIBCO reported a strong quarter last fall, with its 14th consecutive earnings beat. This enterprise software play on the cloud has many clients in the financial and telco sectors, areas that are seeing weakness, but CEO Vivek Ranadive said he has not seen a dropoff in orders. In fact, it saw an upside in its orders from financial companies. While IBM (IBM) might seem to be giving TIBX a run for its money, "unlike IBM, our products work right out of the box," said Ranadive. From retail to biotech, TIBX is revolutionizing the way people do their jobs. Cramer thinks that, while TIBX is in a lagging cohort, it has more upside than its peer,

Fortune Brands Home & Security (NYSE:FBHS)

Housing seems to be bottoming with homebuilders reporting a spike in orders and an increase in backlog. However, these stocks have risen dramatically and are too expensive to buy. Cramer prefers renovation names like Fortune Brands Home & Security (FBHS), a stock that has risen 46% since it was spun off by Fortune Brands. The company has slashed costs and has more operating leverage. Its international segment is small, 17%, but growing, especially in China.


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