Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday February 10.
10 Earnings Reports To Watch This Week: Masco (NYSE:MAS), Michael Kors (NYSE:KORS), Zynga (NASDAQ:ZNGA), LinkedIn (LNKD), Groupon (NASDAQ:GRPN), Deere (NYSE:DE), Devon (NYSE:DVN), Goldcorp (NYSE:GG), General Motors (NYSE:GM), VFCorp (NYSE:VFC), Campbell's (NYSE:CPB), Heinz (HNZ), FXE (NYSEARCA:FXE), Wells Fargo (NYSE:WFC), Caterpillar (NYSE:CAT), Total (NYSE:TOT), Google (NASDAQ:GOOG).
What will matter in the coming week is the news from Greece, and stocks could see some heavy selling. With that caveat, Cramer discussed upcoming earnings.
Masco (MAS) - with housing on the mend and this stock a couple of dollars off its high, it might see a turn, but most likely in the latter half of the year. Cramer would prefer the stock at a lower price.
Michael Kors (KORS) is reporting its first quarter as a public company, but the valuation is low. It might be a buy on a sell-off.
Deere (DE) doesn't usually do well on its conference calls, but the stock usually rises after earnings.
Devon (DVN) is a good company brought down by its exposure to natural gas. Cramer wouldn't trade either Deere or Devon before hearing their earnings.
Goldcorp (GG) needs to bounce back from an uncertain 2011. Gold is hard to get out of the ground, which is one reason why miners are having difficulties and gold is staying expensive.
General Motors (GM) removed extra costs and resolved a labor crisis but everyone seems to still have a colossal loss in GM. If the Chinese are going to cut interest rates and GM reaches $22, it might be a buy.
VFCorp (VFC) has roared back, but may be a concern because of its exposure to Europe. Cramer would take profits ahead of the quarter and may revisit the stock at a lower price.
Campbells Soup (CPB) may suffer from the health food craze, now that anything in a can is considered unhealthy.
Heinz (HNZ) has currency, commodity and European risk. The stock is not cheap. It now yields 3.7%, and Cramer would like it to go to 4% before buying.
Bottom Line: Europe is still a cause for concern. Three stocks that Cramer would watch to gauge Europe:
- The FXE ETF, which measures the euro. If it stays above 130, it should signal a healthy situation.
- Caterpillar (CAT). It tends to trade with Europe and has had a huge run, so there might be profit-taking.
- Wells Fargo (WFC), which reflects the situation with financials and is the single best test of how we weather Europe. WFC is a buy if there is any European financial resolution by next week.
Cramer took some calls:
Total (TOT) is a good company with a 5.5% yield.
Google (GOOG) has become a "storied" company whose announcements don't mean as much as its earnings. Cramer would take some Google off the table if there is a selling opportunity.
The market might see more turbulence from Europe, but Cramer thinks the longer-term trend is up for stocks. However, it helps to look for themes that will work regardless of the state of the economy. Fortinet (FTNT) is a top player in the cyber-security space. The Senate is working on a cyber security bill that is expected to have broad bi-partisan support. Fortinet provides unified threat management and can quickly detect and eliminate complex threats. FTNT is a small $4 billion company that is a pure play in cyber security, with 17% market share. Of the top ten companies in the U.S, 8 use FTNT's technology. The stock has had a massive run-up, 208% since Cramer got behind it in 2009, and has a rich valuation at 43 times earnings with a 21% growth rate. Cramer doesn't usually recommend high-growth companies with such fat evaluations, but the market hasn't give investors a chance to buy the stock. The company reported a strong quarter with a 27% yoy growth in billings and a huge rise in deferred revenue. The company may be a great takeover target for Cisco (CSCO). Fortinet looks expensive, but Cramer would consider buying it on a pullback.
Between Tempur-Pedic International (TPX) and Select Comfort Corporation (SCSS) there is a battle of the mattresses, with SCSS the winner in the key metrics. SCSS recently reported a strong quarter, has only 5% market share, but has more room to grow, gets more sales from direct marketing, had higher comps at 31%, with average selling prices 13% higher than TPX's. SCSS' gross margins are at 62.9% compared to TPX's at 52%. While TPX has 30% market share, it could find itself over-extended; SCSS is building new stores that sell only its products. TPX might suffer from its exposure to Europe; two-thirds of its overseas sales come from the Continent. Both have similar PEG ratios: TPX 1.1 and SCSS 1.2, but SCSS deserves to trade at a premium.
Cramer took some calls:
Williams-Sonoma (WSM) is in the penalty box for missing the quarter.
Huntsman (HUN) has had a huge run-up. Investors should take profits.
Mad Mail: KIT Digital (OTC:KITD), C&J Energy Services (CJES), Optimer Pharmaceuticals (NASDAQ:OPTR), Masimo (NASDAQ:MASI), Ziopharm Oncology (NASDAQ:ZIOP), Guidewire Software (NYSE:GWRE), Nvidia (NASDAQ:NVDA), Nuance (NASDAQ:NUAN), Schlumberger (NYSE:SLB), Core Labs (NYSE:CLB), Apple (NASDAQ:AAPL)
KIT Digital (OTC:KITD) has run up 45% and it is time to ring the register.
C&J Energy Services (CJES) is down 45% since it came public last July and has suffered from low natural gas prices. Cramer would prefer buying Schlumberger (SLB) or Core Labs (CLB) in spite of their recent runs.
Optimer Pharmaceuticals (OPTR) is an interesting spec play on treating hospital infections. It could see upside.
Masimo (MASI) had a tough 2011; 2012 could be better, but strictly in the second half of the year. Cramer would wait to buy.
Ziopharm Oncology (ZIOP) is a small super speculative biotech with no drugs on the market, but with one treatment in Phase 3. Cramer would only buy with extreme caution.
Guidewire Software (GWRE) is an enterprise software stock that came public in January and jumped 32% the first day. Since then, it has risen a total of 69%. Cramer would ring the register.
Nvidia (NVDA) has been a battleground, but might be worth holding. The stock has done nothing, but it might go higher.
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