Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday, October 19.
The coming week is big on earnings and it could be tough for the companies tied to China or the Fed. "My watchword remains the same: if a company has any of its fortunes tied to China or the Fed, then its stock is going to be guilty until it is proven innocent, and even then, I wouldn't expect the jury to acquit," said Cramer. With that, he discussed the game plan for the week.
The consumer packaged goods stocks have become tough to own but Procter & Gamble (NYSE:PF) reported good numbers. Cramer is watching if Kimberly-Clark can report a good performance as well.
Hasbro's worst phase of Toys T Us's liquidation is behind them. "That's flooded the toy market with excess inventory, so I doubt the company will be able to trounce the numbers yet, but if they can't do it this quarter, you know what? They're going to do it next quarter," said Cramer. He likes the stock and called it a buy if it sells off.
3M could have the toughest quarter as it tells the health of the industrial sector. "Unless the company announces some significant changes to its worldwide portfolio, I figure it's going to guide down again thanks to the weakness in autos. It is a shame: 3M's stock is now down more than 60 points and it still hasn't been able to attract any substantial buyers," said Cramer. He is trimming his trust's position in the stock ahead of the earnings.
Verizon, on the other hand, is expected to report good numbers. It has strong domestic performance and yields well too.
United Technologies will rally once the Rockwell Collins (NYSE:COL) deal is closed. "It's mighty hard to trust the industrials because of China, and the Fed's not exactly making it easy, either. Since United Technologies has some housing exposure and some Chinese exposure, I'll pass," said Cramer. The same applies to industrial giant Caterpillar as well. It's linked to China and it could be a tough quarter.
McDonald's could report good numbers due to strength in the U.S. economy. Cramer is bullish.
Boeing's strength in aerospace will result in a good quarter and even the trade war with China cannot derail that. "I bet they'll talk about the burgeoning service business, which, like with Apple, has terrific margins. And not to mention, of course, they have an insanely large backlog," said Cramer.
AT&T's conference call can give color on how the Time Warner integration is panning out. "I think they're going to regale us with the greatness of their faster-growing media division, but I'm concerned that we'll also hear about that worrisome balance sheet that's caused the stock to lag dramatically behind Verizon," added Cramer.
Autos are weak and Cramer does not expect good numbers from Ford. On the other hand, cloud is strong and Microsoft will report a blowout quarter. Cramer expects strong numbers from Visa as its peers have reported a good quarter.
The stock of AMD has run up going into earnings. "I think you should certainly wait, if you don't have any, to buy it," said Cramer.
Comcast's earnings will focus on connectivity and growth. "So far, the stock's been true to its form. I think the decline's over," said Cramer.
Merck is also expected to report good numbers and is one of Cramer's favorites.
Amazon and Alphabet earnings would be good but tough for the street to understand. "I don't know if you should even buy them ahead of their quarters. Their stocks have come down, but if they miss, you're going to get an excellent opportunity to buy two of the finest growth stocks of our lifetime at substantially lower levels. I don't see much risk in taking a wait-and-see approach," he added.
Intel is not expected to have a good quarter.
Earnings: Colgate (NYSE:CL)
"I think the risk-reward will be muddled now that the stock's jumped a bit in sympathy with Procter," said Cramer.
The upcoming week will be busy and China and the Fed effect will be in focus.
CFO interview - PayPal (NASDAQ:PYPL)
PayPal reported a blowout quarter and the stock rallied 8%. Cramer interviewed CFO John Rainey to hear more about the quarter.
The company added 30M net new actives during the year and PayPal along with Venmo have 250M customers worldwide. "If we look at the most recent quarter, roughly one in four Venmo customers are using Venmo in a way today that we're able to monetize," said Rainey. "It's a bit of an inflection point for us. We saw growth of almost 80% in terms of total volume for Venmo in the quarter. That's the second quarter in a row that we've grown at that rate, and so we're just really excited about what we're seeing with this part of our platform," he added.
The company has partnered with Walmart (NYSE:WMT) and American Express (NYSE:AXP) as their non e-Bay (NASDAQ:EBAY) business grows at a much faster rate than the traditional e-Bay business. These partnerships will help PayPal drive more customers to the platform.
"PayPal is still focused on the roughly two billion people around the world who don't have access to financial services that many people 'take for granted,' like banking or checking accounts," said Rainey. "The key element of those two billion people is that roughly 70% of them have a mobile device. And this is where our value proposition really shines, where we can put all of the power of mobile commerce in the palm of their hand," he added.
PayPal is also buying back stock. They are a high growth company that is generating huge cash flow.
Cramer did his homework on stocks he could not opine on earlier.
Smartsheet (NYSE:SMAR): It engages in managing and automating collaborative work. Its platform provides solutions that eliminate the obstacles to capturing information, including a familiar and intuitive spreadsheet interface as well as easily customizable forms. Cramer said the street has become hostile to high growth stocks due to inflation and he would stick to Atlassian (NASDAQ:TEAM), which has a proven track record.
Funko (NASDAQ:FNKO): They engage in designing, sourcing and distributing licensed pop culture products. They offer products relating to movies, TV shows, video games, musicians and sports teams. This stock is a wild trader and is off 40% from its highs. They have a lot of good going in their favor and Cramer endorsed it for speculation.
United Rentals (NYSE:URI)
United Rentals reported an earnings and revenue beat, but still went down to its 52-week low on disappointing guidance. The largest equipment rental company in the United States lost 15% of its value on Thursday and is down more than 28% in October.
While there was nothing wrong fundamentally with the company's earnings, the investors were spooked as they could see a slowdown looming. The company is incredibly cyclical and its fate is tied to the success of the economy. The Fed's rate hike stance is not going well for the company.
"When the Fed signals that it's going to keep raising interest rates, making new building more expensive, everybody on Wall Street knows that's bad for business. In a potential Fed-mandated slowdown, stocks like United Rentals become totally toxic," said Cramer. As of this point, the actual earnings of the company do not matter to investors.
"They are looking for any excuse to bail because they know the numbers will be crushed in a slowdown. So be careful, because until the Fed relents, we could see many more cyclicals that get crushed after reporting good quarters that just happen to have a slight amount of hair on them," concluded Cramer.
Viewer call taken by Cramer
Iridium Communications (NASDAQ:IRDM): It has taken off and the up move is done.
Freeport-McMoRan (NYSE:FCX): It's China related. Don't touch it.
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