Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday March 7.
An Antidote to Internet IPOs: IAC Interactive (IACI)
The way to play internet IPOs is to get in on the deal and to sell after the initial spike. Investors who stayed longer in these IPOs saw a 24% decline in Pandora (NYSE:P), a 25% fall in Yelp (NYSE:YELP) since Friday and disappointment in Groupon (NASDAQ:GRPN). An antidote to these IPOs is to find an internet stock that actually has earnings. IAC Interactive (IACI) has been around since 1986, but is still growing strong. It has risen 248% since 2009, rallied 49% year over year and is up 10% since the beginning of the year. It beat earnings by $0.15 on a 32% rise in revenues. The company runs 50 internet businesses, and has simplified its business model throughout the years by spinning off segments that aren't working and improving its core internet holdings.
Its top performer is Match.com, a pioneer website in the matchmaking space which has 1.7 million active users and generates 50% of the IACI's revenues. Match.com has a subscription-based business model that provides earnings visibility. IACI also has bought back stock aggressively. Cramer is bullish on IACI as an internet stock that is actually worth holding on to.
Cramer took a call:
- Yahoo (YHOO) may have new management, but the company is still quite challenged. Cramer needs to see a turnaround in revenues before he will recommend it.
A Case-By-Case Market
After the huge decline earlier in the week, the Dow closed up 78 points. Cramer wouldn't try to predict where the averages are going to go on any given day, or even the movement of sectors, but would look at stocks on a case-by-case basis. There was a wide divergence in the performance of stocks in individual sectors. Cypress Semiconductor (NASDAQ:CY) said it wasn't expecting so many orders, but Qualcomm (NASDAQ:QCOM) rose on news of a buyback, and Broadcom (BRCM) will reap the benefits from Amazon's (NASDAQ:AMZN) Kindle.
Oil rose on Wednesday, and this brought up Ensco (NYSE:ESV), but not Halliburton (NYSE:HAL). Apache (NYSE:APA) and Chevron (NYSE:CVX) rose, but Occidental Petroleum (NYSE:OXY), the most levered to rising oil prices, didn't see a bounce. Gold rebounded, but Goldcorp (NYSE:GG) and Barrick Gold (NYSE:ABX) barely budged. In retail, Lululemon (NASDAQ:LULU) rallied on an upgrade, but Deckers (NASDAQ:DECK) dropped. While drug stocks usually trade in step with each other, Allergan (NYSE:AGN) and Pfizer (NYSE:PFE) saw gains, but Johnson & Johnson (NYSE:JNJ) and Merck (NYSE:MRK) fell. Rails, which are a tell for the health of the domestic economy, didn't seem to agree, with an uptick in Union Pacific (NYSE:UNP) and a drop in Norfolk Southern (NYSE:NSC).
In the current environment, Cramer would consider each stock in a portfolio individually and take off the table any stock that isn't working. There could be a big decline ahead on the Middle East crisis or Europe, and there is still time to raise cash.
Cramer took some calls:
- Statoil (NYSE:STO) is growing its assets, which is a good move. While STO is not Cramer's favorite oil company, it is going from mediocre to much better.
- Cummins (NYSE:CMI) tends to trade with China, and if China doesn't cut rates, CMI might see a dead cat bounce.
Don't Trade Apple (NASDAQ:AAPL)
With the obsession over how to trade Apple, Cramer recommends not trading the stock at all, but owning it for the long-term. The company is expanding into the enterprise space and might make Hewlett Packard (NYSE:HPQ) irrelevant. The best way to play Apple has been to buy it ahead of a product release, and to sell after the initial excitement. However, this pattern was broken with the release of the iPhone 4, when there was initial disappointment, and the stock ran after investors realized how good the product is. Cramer would simply own Apple and not fuss over every point up or down. Unless there is a huge macro event that will bring down stocks across the board, investors aren't likely to find a major decline in Apple or an obvious buying opportunity.
Cramer took some calls:
- Qualcomm can go higher on the news of its buyback, but Broadcom is a better choice, because QCOM has gone up already
- Google (NASDAQ:GOOG) is not a derivative play off of Apple, but is more expensive than Apple, given Google's sluggish growth rate.
CEO Interview: Mike Stice, Chesapeake Midstream Partners (CHKM)
Chesapeake Midstream Partners (CHKM) offers a strong growth rate of 12% with a 5.4% dividend. While natural gas might seem like a high-risk commodity, given dramatic declines in price, CEO Mike Stice emphasized that CHKM is 100% fee based, and has no direct exposure to commodity prices. The MLP foresees a 10% annual boost of its dividend. Mike Stice spoke optimistically about the growth of the adoption of natural gas, with potential incentives from the government and the partnership between Chesapeake (NYSE:CHK) and GE (NYSE:GE) to make natural gas more accessible to consumers. CHKM benefits from exposure to CHK's rich assets while running a stable, fee-based business.
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