Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday March 1.
We Don't Need No Education Stocks: Strayer (NASDAQ:STRA), DeVry (DV), ITT Corporation (NYSE:ITT), Apollo Group (NASDAQ:APOL), Corinthian (NASDAQ:COCO), Career Education (NASDAQ:CECO), American Public Education (NASDAQ:APEI), Pearson (NYSE:PSO), Monster Worldwide (NYSE:MWW), Staples (NASDAQ:SPLS), Costco (NASDAQ:COST)
Cramer followed a suggestion from Herb Greenberg to stay away from private education stocks. The whole sector, especially Strayer (STRA), DeVry (DV), ITT Corporation (ITT), Apollo Group (APOL), Corinthian (COCO), Career Education (CECO), American Public Education (APEI), has become one bad neighborhood, and it isn't worth buying any of them, especially when one of the stronger companies, Strayer, reported a disappointing quarter. The companies need to shift their business models entirely. Increasing employment is hurting enrollment, and these stocks are facing tough regulations, need to become more selective and less aggressive about attracting students to stay accredited. Negative headlines have also been hurting the stocks. All of them are "sells."
Cramer took some calls:
Pearson (PSO) is an amazing company doing so many things right.
Monster Worldwide (MWW) should be more than $8, and is worth holding to see if it can go higher, perhaps into the double digits.
2012 is not 2011. The stock market is wildly different from what it was a year ago. Stocks are not being punished as badly on negative news and react dramatically to good news. The Gap (GPS) delivered a huge number with a big turn in same store sales; the stock rallied dramatically even though it ran up ahead of the quarter. Liz Claiborne (LIZ) missed on both revenues and earnings, but the stock still went up; "This is forgiveness in action," said Cramer of LIZ. Finisar (FNSR) a non-favorite of Cramer's delivered one of the worst earnings reports of 2012 so far, and the stock didn't drop straight down, but saw some slight gains which investors could have cashed in on before it fell. Wynn Resorts (WYNN) delivered sub-par numbers, but that caused buying on weakness, and the stock lifted. Perrigo (PRGO) blew away the numbers and hit a 52 week high, even as its major competitor, Johnson & Johnson (JNJ) is revamping its image. The market is showing patterns of forgiveness and optimism which demonstrate that this is a kinder, gentler environment for stocks.
Joy Global (JOY) fell 5% after it reported a 2 cent earnings miss, but a 30% rise in revenues. Was the market too harsh on Joy Global? Cramer is concerned about the decline in coal and competition from Caterpillar (CAT). CEO Mike Sutherland admitted the domestic coal business is in long-term decline, but there is enough demand in China and India to more than make up for this loss; in the past year, there have been enough coal mines built in the two countries to represent 1/3 of the coal business in the U.S. The company made two acquisitions which should be accretive this year, but this process caused lower earnings than expected. Sutherland says these problems should be sorted out in the near future, and Joy Global will focus on emerging markets, where demand for coal is still substantial. Cramer would endorse buying Joy Global as a play on growth in China and India.
CEO Interview: Howard Lutnick, BGC Partners (NASDAQ:BGCP)
BGC Partners (BGCP) is an interdealer broker that offers a rich 9.7% dividend. It organizing trades with bigger banks and has built up a thriving real estate advising and brokerage business. Howard Lutnick discussed the fact that volume is what drives profits for BGCP; the outcome of the deals do not matter, but the amount of business is the key. Deficits, the printing of bonds, and even the instability in Europe helps BGCP; "We love chaos," said Lutnick. The CEO said he is confident the company can maintain the high dividend payout. Cramer is bullish on BGC Partners.
Financials might just be making a comeback, given JPMorgan's (JPM) upgrade and the fact that Bank of America (BAC) is raising fees, a bold move that demonstrates confidence. If these fees stick, "I can't even imagine how much money they can make," said Cramer. Loan growth is improving, which is good news for regional banks First Horizon (FHN) and Suntrust Banks (STI).
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