Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday, July 6.
The jobs report on Friday was good, but the trade war issue still looms large. "I’ve said many times that trade is a tough issue and we may need to accept some short-term pain if we’re going to ever get our trading partners to play fair. But for the moment, that short-term pain does hurt," said Cramer. With that, he discussed the game plan for the week.
China's PPI and CPI number will be out on Monday, and that will give a clue on how it is doing with the escalating trade war. "I suspect the Chinese aren’t nearly as confident as they sound because, as I keep stressing, China needs our economy more than we need theirs," said Cramer. He believes that China will give in considering their debt pressure.
Earnings: PepsiCo (NYSE:PEP)
Analyst meeting: Nordstrom (NYSE:JWN)
Cramer expects pain after the earnings for PepsiCo. "I expect the stock to trade lower, but this company has a lot of levers" that could help the soda and snack maker bring out value," he added.
Nordstrom could offer an explanation on the last quarter's weakness. "It’s hard to imagine them really screwing this meeting up as badly as they did the conference call," Cramer opined.
Analyst meeting: General Mills (NYSE:GIS)
The meeting will test its recent strength. Many of the company's businesses have slowed down, and it is in recovery mode. Its debt paydown and restructuring could bring out value.
The PPI data on Wednesday will also test the thesis of job growth and low inflation.
CPI numbers will be out on Thursday. "A hot PPI and a hot CPI? Well, let’s just say the Fed will be forced to keep tightening," said Cramer.
The bank stocks have been under pressure for three weeks now. If the long-term interest rates remain flat, then banks will not make much money. However, the dividends and buybacks are a good cushion.
General Electric (NYSE:GE)
Has GE found a bottom yet? The stock is down 60% from its 2016 highs and is out of the Dow. When former CEO Jeff Immelt left the company in 2017, the company had many issues, like buying oil assets near highs and selling NBC Universal and Synchronicity near the bottom. The company failed to calculate costs and life expectancy in its long-term care division. It had to take a big writedown.
All this and other bad calls led to cash flow issues, which led to the dividend being cut in half. "Maybe some of this was bad luck and bad timing, but a lot of it was just plain mismanagement," Cramer noted. There could be more cuts coming.
CEO John Flannery has been cutting costs and selling assets to rebalance the company's industrial portfolio. GE wants to sell off the healthcare business and its interest in Baker Hughes (NYSE:BHGE). The remaining company will be a pure play on aviation, power and renewable energy. "I have to say I like GE's stock here. I love the aviation business - we know that aerospace is one of the hottest industries around, with a multi-decade backlog of demand - and thinking long term, it’s definitely better to be in the renewable energy business than the fossil fuels business," said Cramer.
"At this point, I think the potential upside outweighs the potential downside. Start buying here, and then buy more if it goes to Tusa's [JPMorgan analyst Stephen Tusa] target. It's going to take a while, but Flannery's got a plan and it's a good one," he concluded.
"The biggest quandary in the oil market isn’t about what’s happening right now - skyrocketing prices with, actually, no lid in sight. It's what's going to happen versus what should be happening," said Cramer. Saudi could pump 1M barrels a day to stabilize prices, but apart from that, there will not be any help from Libya or Iran, which is under sanctions, or Venezuela, which is a failed state.
The world would need more oil by the end of the year, and investors should be ready. Cramer thinks it's time to invest in oil service stocks like Schlumberger (NYSE:SLB).
The stock of ConAgra went down on the Pinnacle Foods (NYSE:PF) acquisition. Cramer thinks the market made a snap judgement, as ConAgra has a good record of acquiring smaller brands and integrating them.
Acquiring Pinnacle Foods will make ConAgra the second-largest player in the frozen aisle. The long-term synergies that come with the acquisition show that the move was logical. However, the market does not like the fact that ConAgra borrowed $7.3 billion for the deal.
Cramer thinks the long-term synergies will outweigh the short-term debt costs. Considering the future growth potential, stocks of ConAgra trading at 15 times earnings are cheap.
Viewer calls taken by Cramer
Huntsman Corp. (NYSE:HUN): The trade war is killing the group. The company is doing well though.
AbbVie (NYSE:ABBV): It has a strong story, and it's a buy.
First Solar (NASDAQ:FSLR): This is a battleground stock.
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