Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Friday, March 31.
Q1 was good for the market. S&P 500 rallied 5.5% and Nasdaq rallied 9.8% during that time. The market is looking good and the dips in the coming week could be an opportunity. With that, Cramer discussed his game plan for the week.
Bank earnings are due and rising interest rates are beneficial for them. Cramer will be watching the Fed presidents’ speeches to get an insight on upcoming rate hikes for 2017.
McCormick (NYSE:MKC) will hold its analyst meeting on Tuesday. If the company’s story is good and the stock rallies, the investors may get bearish on the economy. “Why? Because it shows that investors still buy into the economic expansion theory and, for that matter, the Trump stocks, which led this market for so long before handing the baton off to the hyper and senior growth stocks when it looked like the president had lost his mojo,” said Cramer.
Walgreens has been under pressure due to the Rite Aid (NYSE:RAD) acquisition being stuck with anti-trust officials. “At this point, it’s time for Walgreens to fish or cut bait; that’s why I’m so glad the company reportedly just gave the Federal Trade Commission a three-month deadline after which it’s going to just walk away,” said Cramer. The stock is going higher either way.
Cramer will be watching Monsanto’s report for clues on the takeover by Bayer.
Cramer is ready for Bed, Bath and Beyond to report disappointing numbers. If the results are good, the stock will rally.
CarMax has been struggling in 2017 with its stock being down 8%. “I want them to give us a read on both the new and used auto market, as well as giving us some commentary on the endless hand-wringing about car loan losses,” said Cramer.
Constellation Brands’ stock could get hurt with border tax imports. Cramer is wary of House Speaker Paul Ryan being able to get it through. “That makes me more inclined to buy Constellation, which I bet will continue hitting it out of the park,” he added.
Nonfarm payrolls report on Friday. “Many retailers have been painting a weaker picture and we know that consumer spending’s just been OK. On the other hand, we speak to a lot of companies here, many of which are hiring and expecting big things for 2017,” said Cramer. He expects strong numbers from the report on Friday.
The market has become too hot and one should wait for some weakness to buy into a relief rally.
Retail stocks have faced pressure for the past few years. There are a handful of stocks in the retail group that are doing well, such as discount chains like TJX Stores (NYSE:TJX) and Five Below (NASDAQ:FIVE), along with retailers having unique stores such as Foot Locker (NYSE:FL) and Ulta Beauty (NASDAQ:ULTA).
The best of the group is Burlington Stores (NYSE:BURL) that is up 400% since its IPO in 2013 and 73% in the last year. The company has a solid track record of beating earnings and raising guidance. They have a treasure hunt experience at their stores that helps keep the foot traffic at a time when retailers are facing declining traffic.
They also sell products online that are cheaper compared to stores. The company owns 600 stores but the management thinks they can open 1,000 stores across North America and take advantage of supply chain improvements to boost their margins.
The stock trades at 22 times earnings which is inexpensive considering their track record. It’s a well-managed business and Cramer thinks it could head higher.
World Wrestling Entertainment (NYSE:WWE)
The stock of WWE is up 20% for the year and Cramer dug deeper to find out if the rally can continue. The WrestleMania 33 in Orlando is the biggest wrestling event of the year. “When you take a sober look at the fundamentals, it becomes clear that WWE is actually on the right side of many powerful secular themes, like the ascendance of live programming, the rise of online media, and the embrace of video games as part of the stay-at-home economy,” said Cramer.
The company relied on pay-per-view previously, but ever since it has switched to the $9.99/year subscription plan, its growth has been tremendous. The stock has doubled since its bottom in 2014. They modernized the once-old-school media business and are not solely dependent on selling tickets, upping ratings, and pleasing broadcast partners to make money.
“With pay-per-view, WWE would only actually get to keep 40-50% of the revenue generated by a given event, with the rest going to the broadcaster. With WWE Network, though, they cut out the middleman and keep all the money,” said Cramer.
As the ratings keep rising and wrestling gains traction globally in countries like the U.K. and India, the company can bargain better with networks like NBCUniversal and USA that broadcast its events.
Their fans create a stocky revenue stream and it has become the fifth-largest over-the-top network. “In short, WWE Network was a very expensive enterprise to set up, but we’re now approaching the point where it really starts to pay off,” said Cramer. The company also gets $50M as licensing fees from giant game makers.
It’s a classic Trump stock as Trump chose its former CEO, Linda McMahon, to run the Small Business Administration. “WWE is firing on all cylinders here and the rollout of its online network has been a huge success,” said Cramer. The stock has run up a lot so it can be bought on its way down.
Viewer calls taken by Cramer
General Dynamics (NYSE:GD): Stay long on General Dynamics.
Comcast (NASDAQ:CMCSA): They have one of the best growth properties and a healthy cash flow.
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