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Cramer: Trading Next Week's Earnings Reports

Published: Friday, 9 Oct 2009 | 7:12 PM ET

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By: Tom Brennan
Web Editor, Mad Money

Next week offers a number of earnings reports against which Cramer will test his current investing theses. Is the mobile Internet still working? How strong are the banks? Could the health-care debate still hurt the sector’s stocks? The answers will depend on the numbers delivered by a few key companies.

15 Rules for Playing Defense

First, Cramer will be watching Xilinx [XLNX Loading... () ] and Cypress Semiconductor [CY Loading... () ], which announce earnings on Wednesday and Thursday, respectively. And Nokia [NOK Loading... () ] reports on Thursday as well. He expects disappointing news from Nokia, but if the first two give a thumbs-up to the mobile Web, then investors should buy Apple [AAPL Loading... () ]. Most likely, Nokia will weigh on the entire group, taking AAPL down to a more attractive level.

Cramer has said the banking industry, thanks to a tremendous amount of consolidation, is at the beginning of a multiyear turnaround. We’ll know if he’s right after hearing from JPMorgan Chase [JPM Loading... () ], Bank of America [BAC Loading... () ] and Citigroup [C Loading... () ]. Cramer predicted JPMorgan and BofA would “blow away the numbers,” but he’s pretty sure Meredith Whitney will trash them regardless. So investors should wait for that before doing anything. As for Citi, analysts expect a loss, but Cramer is looking for a gain. If that’s the case, then the stock should move closer to his $12 price target for 2012.

There’s another financial reporting next week as well: Goldman Sachs [GS Loading... () ]. If the stock gets hit because management isn’t bullish enough on the conference call, Cramer said, that’s an opportunity. He thinks the brokerages are in the middle of a turn as well, thanks to the lack of pricing competition now that Merrill Lynch, Bear Stearns and Lehman Brothers are gone. One note of caution, though: If Goldman’s bad, everything will dip, Cramer said, as GS has been “the ultimate barometer of this stock market.”

Johnson & Johnson [JNJ Loading... () ] and Abbott Labs [ABT Loading... () ] take the stage on Tuesday and Wednesday, respectively, and Cramer expects them both to report “great numbers.” But if the health-care debate is still raging, both names will take a hit. But, like Apple, that will set up a good entry point for investors.

Look for Intel [INTC Loading... () ] to talk about smartphone semiconductors, Cramer said, which should help to produce “slightly better-than-expected numbers.” This would be another sign that the mobile Internet is working. Also, Google [GOOG Loading... () ] should deliver a “monster earnings report” on Thursday, thanks to its continued poaching of advertising away from print and the renewed spending on ads as a whole. Cramer thinks GOOG is working its way to $600 a share.

Lastly, CSX [CSX Loading... () ], which “has [its] finger on the pulse of the global economy,” Cramer said, releases its results on Tuesday. The market’s next leg, up or down, will depend largely on what this company has to say about the present business environment, at home and overseas.