Stocks discussed on the in-depth session of Jim Cramer's Mad Money Program, Friday, February 19.
Volatility has come down in the markets which allows investors to focus on individual stocks. Retail earnings should be in the limelight due to better employment and spare change from lower gasoline. With that, Cramer discussed the game plan for the week.
Allergan (NYSE:AGN) is due to report earnings on Monday. The current environment makes it difficult to own pharma stocks, but Cramer will be watching Allergan closely to see if it can get out of the political issues.
Fitbit (NYSE:FIT) also reports on Monday. "I have to acknowledge that I have been on the wrong side of the trade in my affection for both the company and the stock," said Cramer. This stock is a play on health and wellness.
Home Depot (NYSE:HD), which reports earnings on Tuesday will have a better story as better employment and house building will drive people to its stores.
Lowe's (NYSE:LOW): Cramer is not bullish on Lowe's due to their confusing acquisition in Canada. Cramer advised sticking with Home Depot.
Salesforce (NYSE:CRM) will report after the close on Wednesday. Cramer likes that the stock has come down. It is an opportunity for investors.
Kohl's (NYSE:KSS): If this stock is hit after Macy's quarter, buy it ahead of the results.
Sears (NASDAQ:SHLD): Kohl's isn't that bad, Sears is. There could be more pain ahead.
Domino's (NYSE:DPZ): They will have a terrific story to tell. They have a bizarre history of reporting a good quarter and the stock going down and then rallying eventually. Keep that pattern in mind.
Palo Alto Networks (NYSE:PANW): This is the best of breed in its group. The stock is indeed expensive, but it's better to buy using in-the-money call options.
J.C. Penney (NYSE:JCP): If apparel is bad for everyone else, how could it be good for J.C. Penney? This business is hard and it should not be owned.
Foot Locker (NYSE:FL): Footwear is a good business right now. The stock can be bought ahead of the quarter.
"Next week we are all about earnings, most of them retail, and I think you have to pick your spots," said Cramer.
CEO interview - Briggs & Stratton (NYSE:BGG)
Briggs & Stratton is a maker of gasoline engines for outdoor power equipment. Their stock is up 25% of the year and it still trades at 13 times earnings and yields 2.9%. They reported a strong last quarter along with raised full-year guidance. Cramer interviewed CEO Todd Teske to find out more about the quarter.
Teske mentioned that strong earnings performance came from reduced costs and strategy on capacity over the last 2 years. "We have come out with more innovation than we have in a long time, and that has started to show up in the margins too. So it's really the execution of the strategy and a lot of hard work on the part of our team," he added.
The housing market being down has had an impact on their company. With the rebound in housing, they are growing. Briggs is also diversifying geographically for less dependence on domestic sales. They are 70:30 in domestic:overseas revenue.
The company has a pipeline of new products which will show the company's innovation. Their new engines are 66% quieter as compared to traditional ones. Teske remains optimistic but cautious about the future.
Lions Gate Entertainment (LGF) is not cheap
Lions Gate Entertainment is the movie and television company behind the very popular "The Hunger Games" and "Orange is the New Black." This stock was a high-growth stock since 2011 and was loved by the market. After climbing for years, the stock has finally given up and is down 40% in 2016.
What went wrong suddenly? "In a way, Lions Gate has become like a pharmaceutical company whose drugs are about to go off patent," said Cramer. The final "Hunger Games" under-performed significantly and they produced fewer episodes of "Orange is the New Black", but management said they expect a strong next quarter.
Two weeks ago, the company reported a big earnings miss and revenue miss of $100M on estimates of $770M. The stock fell 27% in a single session as investors got terrified with these numbers. The stock looks cheap at 14 times earnings but with declining revenue it is not. "Until Lions Gate can figure out a way to grow its revenues again, I think you need to stay away from this busted stock because it could have further to fall," concluded Cramer.
Cramer did his homework
Cramer did his homework on the stocks that he did not give his opinion on earlier.
Ardelyx (NASDAQ:ARDX) is a development stage biotech focused on gastro-intestinal drugs. They have a good pipeline of drugs in Phase 3 trials and some in Phase 2. They have enough cash for sustainability but it is a speculative stock. The stock can be bought back at $9 but one needs to be aware of the risks.
Novocure (NASDAQ:NVCR) has an innovative cancer treatment which is less invasive. They already have FDA approval. The stock is good and the sales are expected to grow. The current environment is not good for speculative biotechs though.
Amira Nature Foods (NYSE:ANFI) is a food company, but Cramer did not want to recommend this stock due to the accounting issues.
Lastly, Himax (NASDAQ:HIMX) Technologies is a Taiwanese chip maker which makes chips for a variety of devices. The stock trades at 20 times earnings, while Skyworks Solutions (NASDAQ:SWKS) trades at 10 times which is much better.
What CEOs tell you
Cramer mentioned that listening to CEO interviews is really important. They tell you how things are. For instance, Deere (NYSE:DE) sold off on Friday after a weak quarter and AGCO CEO Martin Richenhagen recently said in an interview that he expects weakness in sales. "There was no reason in heck why you should have thought things were going any better for Deere than AGCO. You just needed to listen," said Cramer.
The mall-based retailers have been complaining that consumers are buying things online. Competing with Amazon (NASDAQ:AMZN) is difficult for companies. "No wonder the Internet giant went up $9 today. You just can't compete against the darned thing unless you have very specialized merchandise, which few seem to do," said Cramer.
Finally, Verizon (NYSE:VZ) CEO Lowell McAdam mentioned that he is interested in buying Yahoo (YHOO) assets. It was not shocking to hear that Yahoo has formed a committee to consider offers from Verizon and others. "I think Yahoo goes higher, but again, let's not be surprised here," said Cramer.
Viewer calls taken by Cramer
Marathon Oil (NYSE:MRO): It seems cheap, but in the oil world, nothing is cheap. Cramer is not recommending fossil fuels.
Dow Chemical (DOW): If it comes down to $45, buy it.
Netflix (NASDAQ:NFLX): It's not an earnings story, but it's a cult stock which can be bought if you love their content.
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