Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Friday, April 21.
With the ongoing French elections and upcoming earnings, there is panic in the air. When there is panic, investors should be ready to buy. With that, Cramer discussed his game plan for the week.
Cramer’s take on Kimberly-Clark is that, “You buy Kimberly-Clark when it gets hit.” When Mattel (NASDAQ:MAT) reported weak earnings, it could pass negativity to Hasbro. “Hasbro’s developed a very different model from Mattel’s. It’s more experiential, and it does a huge amount of business selling Disney toys, and given that we’ve got a new Star Wars movie later this year and maybe a couple of Star Wars movies down the line, I bet it’s a winner, not a loser like Mattel,” said Cramer.
McDonald’s stock can get hit after earnings. “I say CEO Steve Easterbrook continues to deliver, but if you want to wait and see before you pull the trigger, I’m fine with that,” said Cramer. He also has faith in Eli Lilly’s pipeline and recommended buying it on earnings.
Chipotle is approaching the 18-month mark where the health scare concerns start to disappear. “However, the stock’s already had a big run. I don’t want you to chase,” said Cramer. He also said that 3M is a reliable company and a core portfolio holding. He was also bullish on Coca-Cola and Caterpillar.
Cramer expects Boeing to report good numbers and so does everyone else. There is no edge there. United Technologies also has a strong order book and Cramer expects good numbers from them. “Don’t forget, this is the year that United Technologies gets its breakthrough aircraft engine out of the teething phase and into the market in size. I think United Technologies is worth buying for that alone,” he added.
Pepsi has always been a consistent performer and this time will be no different. Cramer is curious to see the reaction that weak earnings from Twitter might get. “I say it’s too risky, at least until we see those [earnings] numbers. Then we make a decision,” he said.
Southwest Airlines (NYSE:LUV), Domino’s (NYSE:DPZ), Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), Starbucks (NASDAQ:SBUX), Microsoft (NASDAQ:MSFT), Under Armour (NYSE:UA), Amazon (NASDAQ:AMZN) and Bristol-Myers (NYSE:BMY) report earnings.
Cramer expects good numbers from Southwest Airlines. With Domino’s, the street expects an earnings miss from them but Cramer doesn’t agree. When they report good earnings, there will be a short-squeeze.
“Alphabet needs to show that it’s gotten its arms around the YouTube ad problem, where companies don’t want to be next to content that’s porn or hate speech. I think they’ll show you that they’ve gotten a handle around this problem and therefore the stock can rally,” he said. Starbucks is expected to show same-stores sales growth of 5-6%. With the new CEO at helm, Cramer thinks it might be difficult. If Starbucks reports the growth, the stock moves to $70, else it goes down.
Cramer is bullish on Microsoft and Amazon but thinks that Bristol-Myers and Under Armour might be expensive.
Both Exxon and Chevron will be buys if they announce that oil can head higher. General Motors, on the other hand, is struggling.
“Hope for panic next week and take action when you get it with some of these great opportunities. You should be able to get the best stocks at a discount because of France, even though you shouldn’t, and I think you will,” concluded Cramer.
Don’t listen to the hedge funds
Cramer has noticed that big hedge fund managers tend to not comment or recommend on high quality stocks. “I bet most of the people who run big hedge funds likely wouldn’t be caught dead owning any of those great stocks. If anything, they’d want to short them,” said Cramer.
Billionaires have different priorities than regular investors and they have no incentive to keep taking risks. For them, it’s more prudent for them to play safe and not lose money, but scaring everyone else out of the market is the wrong attitude for the rest.
“They made it in a couple of big trades at a time that’s not that relevant to this moment and at an age where they took big risks which makes it easy for them to now knock the market for being too expensive,” said Cramer.
“As long as they don’t take a stand, they can’t really lose, right? The only way they can tarnish their reputations at this point is by getting something wrong, telling you to buy something, so they do nothing. Believe me, I get it. You only need to get rich once but regular investors really shouldn’t be taking their cue from these uber-wealthy hedge fund guys who just don’t want to get in trouble,” said Cramer.
The Brocade acquisition by Broadcom is nearing a close. This means that the company will be on the lookout for its next acquisition target. Cramer thinks he has the perfect takeover candidate for them – Xilinx (NASDAQ:XLNX).
Nearly 99% of the world’s data passes through one of Broadcom’s chips. They are strategic acquirers and keep expanding their reach. They are also the future of fiber channel communications that businesses will upgrade to.
Cramer thinks Xilinx will be a perfect buy for them as they make programmable logic devices and chips for the coming 5G wireless transition. They have a market cap of $14B which fits well for Broadcom.
There are rumors of Broadcom bidding for Toshiba’s (OTCPK:TOSBF) chip business but it doesn’t make sense to Cramer as its price tag is $23B. Also, Toshiba makes commodity products which doesn’t fit well with Broadcom. Xilinx is a much better fit.
CEO interview – Proofpoint (NASDAQ:PFPT)
Proofpoint delivered strong earnings which sent its stock rallying 9%. Cramer interviewed CEO Gary Steele to hear more about the quarter.
Steele said that companies migrating to the cloud and increasing need for cybersecurity helped the company in the last quarter. Cyber attackers are not just targeting companies or infrastructure, but targeting people as well which makes Proofpoint’s products valuable.
For instance, many people use Microsoft’s Office365 and they need more security than Microsoft offers. That’s where Proofpoint steps in. “We employ a big team of threat researchers and data scientists, and through the innovation that we provide, we are very good at detecting these kinds of things,” said Steele.
“Today we have roughly half of the Fortune 100 and we have 34% of the Fortune 1000, so while we’ve done really well, we still have a long ways to go,” he added. The company is investing a lot in their R&D. “If you think about it from a financial point of view, we’re putting 19 cents of every revenue dollar back into research and development and through that investment, we’re delivering great capabilities to better protect our customers,” he said.
Cramer said that cybersecurity is the need of the hour.
Viewer calls taken by Cramer
Johnson & Johnson (NYSE:JNJ): It’s not as bad as people think. Let it come down and then buy it.
PPG Industries (NYSE:PPG): Cramer doesn’t like to see hostile takeovers. PPG’s business isn’t as strong as many think. It’s a win-win if the deal goes through.
Park Hotels & Resorts (NYSE:PK): Their spin-off was good. Cramer needs to work more on this stock before opining.
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Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.