Cramer: Earnings to Watch Next Week
What follows is “Mad Money” host Jim Cramer’ “Game Plan” for the week of Monday, May 21.
MONDAY, MAY 21
Home improvement retailer Lowe’s is scheduled to report its quarterly earnings results before the opening bell.
“I am circumspect on Lowe’s after the reaction that Home Depot got to a pretty darned good quarter,” Cramer said. “I worry because Home Depot said it picked up share and some of that could be from Lowe’s.”
Being as Lowe’s is only located in the United States, it is hardly affected by Europe’s debt woes. Nevertheless, Cramer still prefers Home Depot’s stock.
Meanwhile, Campbell Soup is also set to report earnings before the bell. The Camden, N.J.-based company’s stock pays a 3.4 percent dividend yield, but Cramer isn’t interested. In a recent conversation with The Hain Celestial Group CEO Irwin Simon, he learned that the Melville, N.Y.-based company is executing soup initiatives that could portend Campbell’s quarter.
Tech Data will also announce earnings before the open. Cramer isn’t interested in buying its stock, but he is curious what the company says about the state of the technology industry in general.
TUESDAY, MAY 22
Tuesday is a “high-risk” retail day, Cramer said. The day begins with an earnings announcement from AutoZone . The auto parts retail has one of the most successful buyback he’s seen, which is why he recommends buying it on weakness.
Best Buy will also report before the market’s open. To Cramer, it remains a value trap. The electronics retail recently went through a management shakeup, which makes Cramer nervous.
Polo Ralph Lauren is also scheduled to report Tuesday morning. While the apparel maker boasts a terrific story in both the United States and Asia, it faces challenges in Europe. Any bad data out of Europe will likely crush the stock, Cramer said.
Cramer is also looking forward to an earnings report from Dell , which he thinks will give a read on the technology industry. The Round Rock, Texas-based company is reconfiguring itself as a value added solutions tech company, Cramer said, which is far more valuable than just a personal computer maker.
“That’s a terrific strategy, but it is happening at the exact same time as some of Dell’s key customers — those in government and those in Europe — are struggling so the changes might not yet matter,” Cramer said. “That makes Dell too risky but the hefty cash position will limit the downside.”
WEDNESDAY, MAY 23
The turnaround in housing has been one of the biggest themes of 2012, Cramer said. It will likely be bolstered, too, when Toll Brothers reports earnings before Wednesday’s opening bell.
“The company’s been very upbeat of late and the stock’s taken off,” Cramer said. “You might want to buy some Toll if the market gets hit off of Europe because Toll’s a 100 percent domestic player that is more levered to lower mortgage rates, a healthier consumer and cheaper raw materials than to anything in Greece, Spain, Italy or the rest of Europe for that matter.”
Hewlett-Packard will report ahead of Wednesday’s opening bell, too.
“The bottom callers are out there in full force. I think that new management’s struggling with many of the same issues Dell is coupled by what very well might be a faltering consulting business given the furious competition from the likes of Accenture and SAP ,” Cramer said. “Calling bottoms in tech is well-nigh impossible. I’m not going there.”
Pandora is also scheduled to report Wednesday. Cramer called it an “unmitigated disaster.” He wants to know whether the company is more focused on profitability than it was. Either way, he thinks it’s a bust right now and remains so until it puts together several good quarters.
Finally, apparel maker PVH will report earnings. Cramer praised its management team. Cramer thinks it might best be played with deep-in-the-money calls to cut off your downside and giving you nice upside. He wouldn’t buy until after RL reports, though.
THURSDAY, MAY 24
Cramer is looking forward to an earnings report from Costco on Thursday. The retailer recently increased its membership dues, so Cramer thinks its earnings may surprise to the upside after all.
Tiffany will also deliver earnings on Thursday. The jeweler recently increased its dividend by 10 percent. While a dividend increase is usually a terrific sign of a company’s prospects, Cramer said the company is “in the penalty box” after its last quarter disappointed.
When this story was published, Cramer’s charitable trust owned Costco.
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