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Friday, 03/28/08
Posted 03/28/08, 11:52
pm ET |
(Scroll down to see Jim's
comments below) |
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Today's date:
Friday, 03/28/08 |
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Dow Jones: |
12,216 |
- 86 |
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NASDAQ: |
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2,261 |
- 19 |
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S&P 500: |
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1,315 |
- 10 |
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Opening Segment 1
Title: |
'Cramer's Game Plan
For Next Week'
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. . . .
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Featured Stock(s): |
Target (TGT)
Wal-Mart (WMT)
Chesapeake Energy Corp. (CHK)
Schering-Plough (SGP*)
Kellogg Co. (K)
Pepsico, Inc. (PEP)
Coca-Cola (KO)
United States Steel Corp.
(X)
Potash (POT)
Textron Inc.
(TXT)
See Opening Segment 2,
below...
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After this segment, you
can see Jim's Lightning
Round picks
here... |
JJC:
Earnings season is
unfortunately upon us! I
say, "unfortunately"
because, for five weeks a
quarter, the information
comes so fast... the
conference calls at such
breakneck speed... that
all I can give you for a
Game Plan is this... where
the odds do not favor you
at the gaming tables...
The most important edge
you can have, when owning
a stock, is if the company
underneath the stock will
beat the earnings
estimates set by Wall
Street...
If there is one iron law
out there... it's not the
iron law of wages... It's
that stocks that beat the
estimates tend to go
higher!
How can you find them?...
You have to look for
trends that might have
occurred intra-quarter,
because earnings estimates
are set when a company
reports previously... and
that means we're looking
for changes between now
and the month of
January... the last
reporting period.
In preparation for this
show, I have looked at
sector after sector in the
S&P 500, to try to find
you an earnings edge and,
frankly, I am not
encouraged!...
I sincerely doubt, because
of the mortgage crisis,
that any of the major
financials... of there,
I'm speaking of the banks
and the brokers... will be
able to report numbers
that cause the estimates
to be raised...
Consider the best
financial that recently
reported...
Goldman Sachs (GS*)...
The company stayed up for
a nanosecond... and then
suffered a beatdown that
still seems to be going
on... That's because GS*
is a nice house in a
neighborhood that needs to
be redlined...
Tech is similar! People
are kidding themselves
about tech. I was on
(CNBC) this morning and
analyst after analyst came
on and told us not to
worry...the outlook for
tech is great... What are
they smoking? What are
they drinking?
Other than
Apple (AAPL),
which has an event... a
new phone... a 3G (i.e.,
third generation)
smartphone that comes out
at the end of the
quarter... I'm talking
July... I think we'll be
hard-pressed to see any
estimate bumps.
Estimate cuts will become
a regularity in the next
four weeks.
We may have cases like
Research
In Motion (RIMM)
next week, where they can
take up guidance, but that
could be a time to ring
the register, not buy...
Certainly,
Intel (INTC)
can tell a good story
about next quarter, but
that's because of problems
with
Advanced Micro Devices Inc.
(AMD)...
its principle and zero-sum
competitor...
But I have no conviction
that any other company can
beat numbers... My
conviction... my bet... is
number cuts across the
board.
Machinery... too tied to
the endless collapse of
the motor stocks... The
desire to build cars
elsewhere is hurting the
machinery stocks.
How about
telecommunications?... I
love a good yield, but
these companies are
cutting their rates this
quarter, and accelerating
their spending, because of
their desire to wipe out
Sprint Nextel Corp.
(S)...
and I think
AT&T (T)
and
Verizon
(VZ*)
could do that... Or they
want to blunt VZ* on the
cable side... which
Comcast (CMCSA)
has to do. I own VZ* for
my charitable trust... which I'm
proud to say, I've been
able to donate $470,000
from last year's winnings.
I take nothing...
When in doubt, you go with
yield support...
Retail?... An unmitigated
disaster. When they're
bad, like
J. C. Penney (JCP)
today... they go down
huge. When they're good,
like
Costco (COST),
they don't budge.
I'm flirting with
Target (TGT), at
$49, because it would be
low...
Wal-Mart (WMT), on any
pullback, is great,
because that's where you
shop, when you like that
hospital emergency room
environment... No
conviction away from these
though...
Restaurants?... Low
expectations, but I don't
know if those can be
beaten... Gasoline is too
high.
I'm worried about the
minerals. I feel that the
group is so hostage to the
vicissitudes of China,
that I cannot recommend
any of them right now...
Plus,
Alcoa, Inc. (AA)... (bear
sound)... should kick off
earnings season with a
weak number and a guide
down, given its heavy use
of energy to smelt the
metal... Sell, sell,
sell...
Even the oil patch may be
difficult. Most of the
integrateds (i.e.,
integrated oil stocks)
have refinery exposure,
and that business has been
a nightmare!
The natural gas companies
have higher price
realizations, but most of
them have raised numbers
already. I trust only
Chesapeake Energy Corp. (CHK)
to move up, and that's
because of the secondary
price yesterday that is
giving you a chance to get
in at a good price...
Now... Let's get to the
good ones. There are only
a couple...
Foods and drugs, for
instance...
The drug companies have
legal experience and a
couple of bumps, but
they'll all be weak-dollar
related, and not earnings
related... not product
related...
Schering-Plough (SGP*)... a
charitable trust
name... seems worth
trading now... It's under
$20, it has the most
overseas exposure, weak
dollar...
The foods should take
their cue from GIS, which
reported great numbers
this week.
Kellogg Co.
(K),
Pepsi (PEP) and
Coca-Cola (KO) should
follow suit, and all of
them should either be
hedged against higher
grain costs, or make it up
in solid overseas sales
and weak dollar
translations... I like all
three... three of a kind.
Which leads us to the two
groups with the greatest
ability to produce
earnings surprises... and
that's steels and
agriculture.
It's supply shortages and
no dumping in the U.S....
Our favorite is United States Steel Corp.
(X)... We
suggest buying weakness,
like we had yesterday...
and then selling strength,
like we had today... But
you want to be in there,
ahead of the numbers,
because they'll trash the
estimates...
Agriculture?... We saw
Monsanto (MON)
up this week. That was a
big estimate beat... a
pre-announcement. Frankly,
the group still reacts to
numbers when they're
surprising... We're going
to get a crop report
Monday from the
government. I think it
will cause momentary
weakness... smaller corn
plantings. My takeaway is,
if that happens, you buy
Potash (POT)... the fertilizer
company that has the
lowest estimates relative
to what I think the Street
is looking for, and will
beat them... Fertilizers,
like steels, put through
big price increases this
quarter. They're
determinant of upside
surprises.
Pullback? Here's one...
Defense contractors... We
talked about it earlier
this week... The cheapest?
Textron Inc.
(TXT). I expect imminently
the V-22 to be approved...
That will be a great
catalyst. It could happen
in a fortnight (i.e.,
within two weeks)...
. . . .
.
The Bottom Line!:
There are only two groups
set to beat estimates. We
can't be too optimistic
about this earnings season.
Be careful. Defense - and
not just in stocks - is the
watchword.
[See Jim's 2nd Opening
Segment stock picks
below... ]
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See all of tonight's stocks'
latest quotes on
Yahoo! Finance |
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Most popular
investing books ordered:
(click any book to see at
Amazon.com) |
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■ |
Stock Snapshots - Includes
all stocks mentioned above |
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Jim
Cramer's
rating on
this stock |
STOCK
SYMBOL |
Closing
price
that
day |
Opening
price
next
day |
Full Company
Name/Comments
(see comments above for
each) |
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TGT |
49.69 |
na |
Target (TGT)
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WMT |
52.12 |
na |
Wal-Mart (WMT)
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CHK |
45.50 |
na |
Chesapeake Energy Corp. (CHK)
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SGP* |
19.47 |
na |
Schering-Plough (SGP*)
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K |
52.48 |
na |
Kellogg Co. (K)
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PEP |
71.56 |
na |
Pepsico, Inc. (PEP)
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KO |
60.94 |
na |
Coca-Cola (KO)
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X |
125.69 |
na |
United States Steel Corp.
(X)
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POT |
160.57 |
na |
Potash (POT)
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TXT |
54.62 |
na |
Textron Inc.
(TXT)
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Mutual-Fund-Holdings.com
NEW RESOURCE!
See Ken Heebner's CGM
Focus Fund
Top 25 holdings - The No.
3 Top-Performing Mutual
Fund in 2007
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Opening Segment 2
Title: |
'Iron Age' |
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. . . .
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Featured Stock(s): |
AMAG
Pharmaceuticals, Inc.
(AMAG)
See AMAG's official
website
here.
See the Yahoo!
Finance profile for
AMAG
here.
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After this segment, you
can see Jim's Lightning
Round picks
here... |
JJC: For
Speculation Friday, I've
got a biotech stock that I
think has huge potential,
and the stock is....
AMAG Pharmaceuticals, Inc.
(AMAG)...
and it deals in iron...
unlike Alliant
Techsystems Inc. (ATK),
which deals in lead, and
we talked about yesterday.
AMAG is one of those
little biotech stocks that
makes a great speculative
play, especially if you
think about 1990, our last
real credit crisis, where
the biotech stocks were
among the strongest
performers... Take a look
at the
Amgen Inc. (AMGN)
chart during that period,
if you get a chance this
weekend [Note: We've done
this for you, highlighting
the 1990 chart for AMGN
here.]
AMAG is developing a drug
called Ferumoxytol.
And, according to them,
this drug could completely
change - if not
revolutionize - the way we
deliver iron to dialysis
patients, as well as
people with anemia...
This drug has been through
Phase III testing, and
AMAG submitted their new
drug application to the
FDA in December, so it's
just waiting for approval,
and I think the stock
jumps nicely, if the
expected approval comes...
the house of pleasure...
Why?... First of all, the
stock has already been
much higher. The stock
soared in September and
October, after AMAG
released the positive
Phase III study data on
this iron drug, which is
what happens before
approval...
And it only came down to
$39.34, where it is now,
after doing two secondary
offerings. In other words,
big chunks of stock, where
they use to finance (their
operations)...
I think this is a case
where you buy after the
secondary... because the
company now has about $17
in net cash per share, and
they'll be able to market
their new drug
effectively... They've
already got a top-notch
salesforce, but the extra
dough makes this a
relatively safer stock,
with more flexibility...
How about that out of a
speculation, right? We've
got some cash in the
bank... we've got a drug
about to be approved... I
say this is my kind of
thing...
But... what about the
drug?... Getting iron into
patients is tricky...
Right now, it takes a very
long time-consuming way...
a current method much less
safe... A longer infusion
time than AMAG...
In fact, currently,
doctors are more likely to
use a drug called EPO,
than to actually
administer iron. EPO's got
its drawbacks...
Ferumoxytol could change
that.
The drug's by far the best
of breed. It's said to be
safer, more convenient,
and could be much more
rapidly administered than
anything else out there...
So, if you can administer
significantly larger doses
of AMAG's iron in a jiff,
you could do with a
smaller dose of
currently-marketed iron...
in an hour or more...
Hey, that's a lot more
comfortable for the
patient... a lot more
efficient for the
doctor... saves costs. You
could see, right, why this
could be a real game
changer, in a period where
all we ever hear about is
costs for healthcare must
come down...
How about a ground-level
picture of the way this
works?...
A dialysis clinic gets a
dollar amount from the
government for a patient's
entire drug care. When
Ferumoxytol comes out, it
will become both cheaper
and safer to administer
iron, so the total
percentage of government
money that the doctor
spends on iron will
probably increase...
This drug is creating
what's essentially a
brand-new market for
iron... It can deliver it
much more swiftly at a
lower cost.
Right now, the market for
intravenous iron... let's
call it around $400
million. $300 to $500... I
think AMAG's drug will
quickly dominate, as it
seems to be clearly
superior to the
alternatives, in speed and
safety...
But what I was just
talking about... the
dialysis clinics spending
more on iron, because of
this drug... could
immediately expand the
entire iron market... not
in the numbers... not in
the numbers...
I think you're getting
AMAG at a really sweet
price. The stock's down on
the secondary. It's also
down on what seems to be
some, I don't know... I
don't think important
stuff... that should
eventually go away and let
the stock go higher... For
instance, the FDA rejected
a potential competitor's
iron drug, based on safety
issues that do not apply
to AMAG. I think that's
good news. The market
didn't see it that way.
Then there is... oh boy, I
am trying to be a
statesman this week, but
failing miserably...
There's a rookie sell-side
analyst at Merrill Lynch,
who downgraded it from buy
to neutral. I thought the
downgrade was ill-timed.
The guy deserves to be...
pants-ed!
The stock's also been
under pressure, because
one of its big analyst
backers at Deutsche Bank
left a few weeks ago...
Another big backer at Bear
Stearns...
Everytime you hear
baseless rumors about some
healthcare hedge fund
liquidation, AMAG could be
the speculative stock to
buy in response, to take
advantage of the false
negativity spread by the
bears.
. . . .
.
The Bottom Line!:
AMAG Pharmaceuticals,
Inc. (AMAG)
is what we call a game
changer. And, if
everything works out the
way I think it will, its
new iron drug could send
the stock... well, let's
just say... maybe
stratospheric.
. . . .
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■ |
Stock Snapshots - Includes
all stocks mentioned above |
■ |
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Jim
Cramer's
rating on
this stock |
STOCK
SYMBOL |
Closing
price
that
day |
Opening
price
next
day |
Full Company
Name/Comments
(see comments above for
each) |
|
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AMAG |
39.34 |
na |
AMAG
Pharmaceuticals, Inc.
(AMAG)
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Go to the LIGHTNING ROUND from
tonight's show
here >>
See current quotes on Yahoo!
Finance from
tonight's show stocks
here >> |
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Symbol keys: |
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A Charitable Trust stock.
- An asterisk next to a
stock symbol indicates that
Jim mentioned it is a stock
that he manages within
his
charitable trust portfolio.
You can see the complete
portfolio
of stocks
here >> |
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Thumbs up - indicates
he would buy the stock or,
at the very least, not sell
the stock. We do our
best to interpret Jim's
opinion on stocks, as we
think it is indicated by his
comments during the show.
Please read his comments to
decide for yourself. |
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Thumbs down -
indicates he has said not to
buy or to sell the stock,
based on his comments
We do our best to interpret
Jim's opinion on stocks, as
we think it is indicated by
his comments during the
show. Please read his
comments to decide for
yourself. |
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Back up the truck -
indicated by Jim, when he
says the stock is so good,
that he would do a
'mon-back' on the stock...
In other words, this is the
sound someone would say to a
truck driver, "Come on
back... " as he is "backing
up the truck" to load up on
his cargo. Translation
for buying stocks:
This recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point. |
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Stumped. - Of the
2,000+ stocks that Jim
Cramer has in his head, for
which he has an informed
opinion, he sometimes comes
across a caller with a stock
he does not know well enough
to opine on... He then
indicates he is stumped and
will have to come back to
it, after he does some
homework of his own on
the stock. This
usually occurs during the
Lightning Round, when Jim
does not know in advance who
is calling, or what their
stock question is about. |
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Definitions of key phrases
used by Jim, known as
"Cramerisms": |
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Definition: 'Pull the
trigger' is Jim's phrase for making
the decision at that point to trade -
either to 'buy' or
to 'sell' (although he
usually uses the phrase for
buying), as if to say you
should feel comfortable
enough to make the final
decision without looking
back... |
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Definition: 'Ring
the Register' is Jim's phrase for
selling a stock, and making
it a final sale, that you
should not look back on.
Put it behind you. |
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Definition: 'Let It Come In' indicates how you
may wait for it to pull back, or have the
stock price come down briefly, as your
chance (after letting it come in) to buy
the rest of your position (i.e., total
number of shares you own in that stock). |
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Definition: 'backing it up'
or 'doing a 'mon-back' is Jim's
phrase for the metaphor of backing up a
truck to load up on a stock by buying
it. 'Mon-back is short for the
imaginary worker saying, 'Come on
back...' as the truck is backing up to
receive its load... Notice that we use
the little truck icon to indicate where
Jim has mentioned this.
Translation for buying
stocks: This
recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point. |
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See more
"Cramerisms" & other
financial phrases
here >> |
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Helpful Websites: |
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See the stocks currently
known to be in Jim Cramer's
Charitable Trust at:
jim-cramer-charitable-trust-stocks.com |
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See the stocks currently
known to be in Warren
Buffett's portfolio
of
stocks at:
warren-buffett-portfolio.com |
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Stock Homework 101:
This is an excellent
upcoming site that provides
resources and links to help
you do that homework that
Jim Cramer recommends after
hearing his suggestions...
StockHomework101.com
This site is coming soon.
Thank you. |
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FastMoneyRecap:
This site will be a quick
summary of recommendations
made by the great Fast Money
TV show crew, that will
offer you a unique service,
to compare their picks to
Jim Cramer's past comments
about those stocks.
Fast Money Recap - Trades
for next day...
Compare these picks to Jim's
comments for the same
stocks. |
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© 2005-2007 MadMoneyRecap.com ■
Important disclaimer: This site is
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Cramer, and is not associated with
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thumbs up or thumbs down
indicators are not always clearly
indicated on the show and are
interpreted by us as accurately as
possible. Some comments have been
edited for brevity and clarity,
and extraneous material omitted. Please rely on watching
the show yourself, doing
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and reading the text of the
comments to draw your own
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on this site should not be used to
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accuracy, although attempted,
cannot be guaranteed. Please
consult with your own financial
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