Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday, January 13.
Earnings season has kicked off. "The playoffs are here and there is money to be made in the financials and the industrials and the oils," said Cramer. With that, he discussed his game plan for the week.
Markets are closed due to Martin Luther King Day.
Morgan Stanley is expected to report good numbers. Buy the stock on weakness. UnitedHealth will be the biggest beneficiary if Obamacare is repealed. If the stock goes down after earnings, buy it.
CSX's conference call will be good indicator of what the company predicts for coal under the Trump administration. "Trump promised beleaguered coal mining states they would have relief from his White House. I think that is a big reason why CSX's stock has been so hot," added Cramer.
Goldman Sachs and Citi have moved up already going into earnings and so they could cool off after the report.
Netflix is in a position where the expectations from it are low. It will either blow the expectations or get hit. "I love the company, I love the stock, but at this point I think you have to say you missed it, simply because so many analysts have already pushed Netflix up."
Key Corp has moved up going into earnings and there could be some consolidation. Union Pacific will trade in tandem with CSX, but because they have exposure to Mexico, Cramer suggested passing on the stock.
Cramer expects American Express to perform well and said that it is the cheapest stock in the Dow.
IBM is cheap and has fast growing businesses. The legacy business however is a bummer.
Schlumberger is Cramer's favorite company and he thinks that the management will be cautious about 2017 but investors will like what the company has to say.
General Electric needs to talk about the merger with Baker-Hughes (BHI).
Friday is also the inauguration day. " I don't know if anyone will care about anything else that day," said Cramer.
CEO interview - Federal Realty Trust (NYSE:FRT)
Federal Realty is the shopping center REIT that owns more than 100 properties in the country. As the interest rates rise, many investors are moving out of REITs for the bond yields. Cramer interviewed CEO Don Wood to hear what lies ahead.
Wood explained that the current environment is over-retailed and the USA has more stores per capita than any other nation. "What we are trying to do is not look at 2017. We are trying to look at 2020 and 2025 to make sure what our product is, is the most flexible and relevant for today's retailers, not yesterday's," he added.
App provider Splunk is one of the tenants of the company and Wood believes that they wouldn't have chosen the space unless it met their workforce needs going forward. He also added that Amazon is not the only way for retail and many niche players have got a winning strategy.
How to value bank stocks
"Bank stocks can now be valued not on net interest margins, or book values, or loan losses and Justice Department fines, but earnings. They are the cheapest stocks in the market," said Cramer. Banking is a great business where they take deposits and give loans at higher rates.
Likewise Bank of America (NYSE:BAC) has the lowest percentage of loan losses in the business. It has tremendous management and expense control.
Lastly, Wells Fargo (NYSE:WFC) still had 6% deposit growth even after the scandal. They have a huge national footprint and this growth was good considering the circumstances.
"Under Trump, I think there will be a recognition that the banks have too much capital and they need to be allowed to dividend more of it to their shareholders or make more home loans," said Cramer.
As bank stocks are being valued on earnings, they are some of the cheapest stocks in the market.
CEO interview - First Horizon National (NYSE:FHN)
First Horizon National reported earnings on Friday. Cramer interviewed CEO Bryan Jordan to hear about the pulse of banking.
Jordan said that there is a pickup in small business after the election and there is willingness to borrow. "We are seeing a tremendous amount of momentum and feel very, very good for the outlook of 2017 as we start the New Year," he added.
Jordan admitted that deregulation under Trump will benefit the company and many businesses they lend to. The decreased regulations will result in fewer complexities and lower compliance costs.
First Horizon adds $37M to its bottom-line for every 1% rise in interest rate.
Viewer calls taken by Cramer
L Brands (NYSE:LB): Cramer is not recommending retail stocks currently.
Comercia (NYSE:CMA): The stock has had a major run. Stay long.
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