Cramer: Watch Best Buy Earnings on Wednesday
Over the past five days, Mad Money’s Invest in America series has highlighted the companies that will lead this country out of the recession and leave us stronger than before. Macy’s, Disney, Honeywell International, Ford and Nucor – they’re all great buys for the long term, Cramer said.
But what about the short term? On Friday, Cramer laid out his Game Plan for the coming week.
Tuesday, Dec. 15
Best Buy will deliver the most important report of the week, Cramer said. He has called this holiday season “a gadget Christmas,” and BBY will either confirm or contradict his theory. What should investors look for? Forty-five cents a share in earnings, the estimate from Best Buy’s top analyst. The stock had run ahead of its last few quarters, but not this time. That gives investors the chance to pick up BBY before Tuesday morning’s announcement.
Cramer expects good things from Adobe Systems when it reports after the closing bell. He’s looking for analysts, of which 10 rate ADBE a “hold” and two a “sell,” to upgrade the stock.
Boeing’s oft-delayed 787 Dreamliner is scheduled to finally take flight on Tuesday. In addition to liking BA, Cramer recommended related plays Honeywell International and Precision Castparts .
Wednesday, Dec. 16
Joy Global is up 105% since Cramer recommended it on Dec. 17, 2008. On Wednesday, the coal-mining-equipment maker reports, giving us a snapshot of the Chinese economy as well. After all, demand from China drives the coal business. If Bucyrus International’s late October earnings call is any indication, we should hear positive statements from JOYG.
Paychex’s numbers will serve a dual purpose as well, offering insight into both the company and overall employment growth. That’s why Cramer will be watching. Not to mention, he likes the stock, which yields 3.9% and is up 14% since his Aug. 12 call. He thinks PAYX has room to run, especially if the US jobs situation improves.
We’ll also hear from the Federal Reserve on Wednesday. While Cramer doesn’t expect an interest-rate increase, he will listen for any talk of an impending one. Regardless of what’s said, though, be prepared: Some pundit somewhere will have something negative to say about Chairman Ben Bernanke’s leadership.
Thursday, Dec. 17
Discover Financial Services is Cramer’s tell for bad-debt allowances, which have been trending positive. He predicted DFS would tell us during its report about a likely peak in credit-card-debt charge-offs.
General Mills must beat the Street’s consensus earnings estimate of $1.44 a share if the stock is going to continue its push higher, Cramer said. But don’t expect a pop if GIS does come through. Investors by now assume the company will deliver better-than-expected results.
After the bell on Thursday, Darden Restaurants , Nike , Oracle , Palm and Research in Motion all report. Cramer’s hoping to see Darden breakout on surprisingly strong same-store sales. Nike meanwhile could rise or fall based on its future orders, a key metric for the company. Cramer recommended waiting until after the release to buy, saying that even a good announcement won’t send the stock soaring. Investors who want to buy NKE will have the chance.
What about Oracle? Cramer, who’s not a fan of the company’s purchase of Sun Microsystems or the stock right now, wants to know about only the strength of the industry.
Finally, there’s Palm and RIM, two smartphone plays. Cramer said he’d watch Palm because it makes a logical takeover target for dumb-phone maker Nokia . Research in Motion, on the other hand, is so heavily shorted that Cramer thinks the stock is a buy. More importantly, though, he recommended using any negative news from either company to buy Apple . The strategy worked last quarter, and he said it could again.
Cramer's charitable trust owns Honeywell International.
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