Game Plan For The Week – Cramer's Mad Money (6/23/17)
Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Friday, June 23.
As the economic data remains mixed, there is lot of rotation going on in sectors depending upon which is more likely to perform. With that thought, Cramer dug into the game plan for the week.
Schnitzer Steel (NASDAQ:SCHN) will report earnings on Monday. A lot depends on Washington when it comes to steel. “Remember, Trump ran on preserving the steel industry above almost all others, save coal. I think he means business,” said Cramer.
Cramer thinks that the rise of the stay-at-home economy has not affected Darden. “Those of us who like Olive Garden know that we always feel like as though we ‘beat them,’ meaning that we get more food for less money than we could anywhere else, and maybe more than it even costs them to prepare. Why is it so hard for other operators to realize that, if you’re going to have people stay at the restaurant rather than take the food out, you’ve got to let them have seconds for free?” questioned Cramer.
KB Home has moved from $14 to $22 quickly. Cramer thinks it is due for analyst upgrades but the stock is not worth buying at current levels as it has run up too much. Toll Brothers (NYSE:TOL) is a better pick.
General Mills has disappointed for some time as it tries to reinvent itself. The top line growth is not enough and Cramer expects this to continue. “The home run would be an outright sale, but General Mills values its storied independence. And while I believe it would be a fantastic combination with none other than Mondelez (NASDAQ:MDLZ),” said Cramer.
Paychex is expected to do well when employment goes up. Cisco, on the other hand, has fallen out of favor as the market wants high growth tech stocks. “Maybe Cisco announces something that shows a brighter growth path. Otherwise I bet it will continue to sit out this multi-month tech rally,” he added.
The Fed will release the Comprehensive Capital Analysis and Review results on Wednesday. “All banks passed the stress tests with flying colors. But CCAR, as it is known, will be about green-lighting banks to return more capital. Now, the hope for many banks is that the Trump regime’s desire for deregulation will be reflected in these results and you’ll see some major dividend boosts and buyback in the wake of the news,” said Cramer.
Cramer thinks investors are underestimating Constellation Brands’ growth. All their acquisitions were at good prices and they are additive to earnings.
Nike has become controversial. “I despise battlegrounds, and Nike’s the Wall Street equivalent of the Somme. If you want to invest in apparel, go buy some PVH (NYSE:PVH), which is underrated and doing fabulously,” said Cramer.
Micron will report a blowout quarter as the street expects it to. “Micron’s management needs to raise its forecast enough to convince people that its business still hasn’t reached saturation,” added Cramer.
It’ll be the last day of the quarter. “My advice? If you’re a trader, anticipate this decline and do some selling Wednesday to get ahead of the scalpers on Thursday. But if you’re an investor, hey, I’ve got an idea. Keep your powder dry, and come in on Friday afternoon and do some buying,” concluded Cramer.
The stock of Athenahealth is up 37% in the last month. What keeps the fast growing stock rallying? Cramer dug deeper to find out.
The stock of Athena was growing for many years as the company moved towards profitability. When that happened, the strong CEO rubbed shareholders the wrong way. As expected, Athena could not deliver consistently on the bottom line and hence activist firm Elliott Management took a 9.2% stake in the company.
They think there is room for Athena to grow and are pushing for either a new management or a sale of the company. “Here’s the problem: Athenahealth has reported two bad quarters in a row and yet now its stock is only a few points away from its 2016 highs. I think it’s way too risky to speculate on takeovers in situations where the fundamentals are unsound and that goes double when the stock in question has already run,” said Cramer.
Either way, Cramer found the stock highly speculative at current levels. He thinks the easy money has been made already and one can think about buying only after a worthwhile decline.
CEO interview – Federal REIT (NYSE:FRT)
Cramer interviewed president and CEO Don Wood of the shopping center REIT, Federal REIT, which yields 3.1% and whose stock is down 12% in the current year.
“If you sit and you think about it, with every bit of retail news that happens out there, no matter what it is, it slams the REITs as much or more, in some cases, as the retailers,” said Wood. He admitted that it’s a challenging time. “Do you know that in our income stream, 8% of the income stream is grocer, 9% of the income stream is full-priced apparel, effectively, 6% is discount, 6% is residential rents, 7% is office rents? Basically, it’s the most diversified income stream in places that you wouldn’t possibly say, ‘Oh my gosh, the real estate is bad and it’s not as valuable,'” added Wood.
Wood said that the company has a strong balance sheet and their earnings are expected to grow. Their properties are strong which gives them flexibility giving them more choices when economic conditions are not favorable.
The rents have lowered over time but are up 36% in the past few months. “In some cases they’ll be able to, in other places they won’t be able to. It depends on the leverage in that particular spot,” he concluded.
CEO interview – Entergy (NYSE:ETR)
Cramer interviewer Entergy chairman and CEO Leo Denault to hear what lies ahead for this utility company that has a healthy 4.4% yield.
Denault said that though President Trump might have pulled out of the Paris accord, it does not change much for their business. “In reality, what we’re going to do with our asset mix is unlikely to be different now than it would’ve been with the Paris accord,” he added.
They continue to invest in new power plants and better technology for distribution lines and divesting their low-margin whole operations where margins are squeezed due to lower natural gas prices. “We burn very little coal as it is. We have 50-year-old coal plants. It’s only about 7% of our generation. Over time, they are going to close because you just don’t spend the money on 50-year-old plants to keep them going that you would with the new technologies being much more efficient, much more environmentally friendly,” said Denault.
Denault also added that the demand for power in their service areas is slowing due to trends like energy efficient homes. The same applies to the commercial power market as well.
Viewer calls taken by Cramer
Helmerich & Payne (NYSE:HP): It’s in pain but Cramer doesn’t recommend selling at this point. Let it come lower before buying.
Tailored Brands (NYSE:TLRD): The risk-reward is bad.
Eli Lilly (NYSE:LLY): The stock has run up. Wait for it to decline before buying.
Get Cramer’s Picks by email – it’s free and takes only a few seconds to sign up.
For more Cramer, visit here: Cramer’s Picks