Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday, January 29.
Cramer cautioned investors to embrace upcoming volatility now that the crux of the earnings season is on. With so many stocks due to report earnings, there will be massive ups and downs, winners and losers. He also thinks this will be an opportunity for long-term investors to buy at lower levels.
The treasury yields are still at 2.7% and hence there is no competition for high quality equity stocks with dividends. For retirement savings, dodging equity doesn't seem to be an option. He added that there will be short-term pain in stocks. For instance, there is a lot of hype around slowing sales of iPhone X and the 'super cycle'. With such high expectations, Apple is likely to go down. This will only serve as an opportunity to buy the stock at lower levels.
Stocks like Netflix (NASDAQ:NFLX) and Amazon (NASDAQ:AMZN) are the only ones that seem immune to the hype around them. The cyclical stocks are also going higher as many companies are expanding. Cramer added that bank stocks are also worth buying on dips with JPMorgan (NYSE:JPM) being his favorite.
"The bottom line? I am urging you to be ready for more volatility. Understand that you can trade some of these big techs all you want. My take? You need to own stocks like Apple. Don't trade them, but keep in mind that you may need to take some short-term pain before you get some long-term gain," concluded Cramer.
The healthcare sector usually does not rally along with financials and industrials at the same time. The current rally in healthcare got Cramer curious and he went to the charts with the help of technician Marc Chaikin to get a direction on healthcare stocks.
The chart of SPDR Healthcare ETF (NYSEARCA:XLV) showed a strong breakout with the index up 10% in 2018. To get a direction of the rally, Chaikin checked the charts of individual healthcare stocks.
The stock of Centene (NYSE:CNC) has a good chart with support at the 50-day moving average. Chaikin thinks the stock is due to go up and he suggested buying the stock on any earnings induced weakness after it reports next week. Cardinal Health (NYSE:CAH) has a similar story and it has been gaining strength since last year. The Chaikin money flow oscillator has been positive for the company for the last two months.
Amgen (NASDAQ:AMGN), on the other hand, doesn't show a good chart despite hitting all-time highs. There is a pattern of the stock running up into earnings and declining after the report. This time as well, it has run up going into earnings. Chaikin was bearish on Amgen.
Chaikin thinks that not all stocks are strong in the sector but the strength in the healthcare group is likely to continue.
Whirlpool Corp (NYSE:WHR)
Whirlpool's stock has been disappointing for years, but it looks different this time. The company reported decent earnings but the stock went down on soft guidance. Cramer thinks that a value stock in the industrial sector comes rarely and Whirlpool could be that rare stock.
It went down when the Trump administration imposed a 20-50% tariff on imported goods. This will be bad for consumers looking to buy imported goods but may work well for Whirlpool.
The stock of Whirlpool trades at just 12 times earnings compared to 18-22 times for peers. The company can finally under-promise and over-deliver.
CEO interview - American Electric Power (NYSE:AEP)
With rising interest rates, utility stocks go down as they compete with bonds. American Electric Power has gone down by 10% from its high in 2017 but it still yields 3.65%. Cramer interviewed CEO Nick Akins to find out what lies ahead.
Akins said that though the company beat on earnings, the entire sector is down and AEP is trading with it. He added that the tax reform will lead to lower rates for consumers which will benefit the company with growth.
The residential and industrial business is expanding and retail is the only soft spot for them. Akins was also excited about the $4.%B wind farm installation in Oklahoma and it will be the largest and one of a kind.
Viewer calls taken by Cramer
Corning (NYSE:GLW): It's a great American company that has got a grip. It's a buy.
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