Mad Money

Earnings Season Is a No-Trading Zone


On Monday, Alcoa takes the earnings stage, marking the ceremonial start of the season. Cramer’s expecting a “parade of positive reports” this time around, and he’s warning investors not to get lured in.

Of course, strong earnings are a good thing. But when beat after beat is announced they can be too tempting not to trade. One thing Cramer’s learned over his 30 years of trading, though, is that you just can’t make money on these reports. Too many companies are reporting and there’s too little time to do the necessary homework. The Game Plan going forward then is to just sit tight and listen.

Game Plan

Cramer on Friday discussed the most important earnings releases of the coming week and what investors should look for. Here they are:

Again, Alcoa , the largest aluminum producer in the US, goes first on Monday. The two markets – aerospace and industrial gas – that failed to hit their targets last quarter are at the beginning of “long, positive cycles,” Cramer said. And Alcoa has the cash flows and cost controls necessary to capitalize on them. He recommend maybe buying some AA after the Street dumps it, because he’s expecting the two markets to have a strong second half in 2010.

Among the banks, JPMorgan Chase and Bank of America report in the coming week. Cramer expects vast improvements over last year, enough to possibly push JPM past the $45 level its been stuck at for a while. And while BAC’s report won’t be as clean, with asset write-downs and provision expenses still a problem, Cramer thinks we’ll see a second straight quarter of better credit costs. That could take Bank of America to $20, he said.

Also, one of Cramer’s favorite regional banks, First Horizon National , releases its numbers. He’ll be looking to see if we can finally confirm that worst is over, he said, “and FHN is now on its way to becoming one of the best banks.”

In tech, Intel and Advanced Micro Devices will gives us a read on the semiconductor cycle. Cramer’s a fan of INTC – his charitable trust owns it – for its new products, the balance sheet and the 3% dividend yield. He thinks the stock right now is cheap too. Also tech in the coming week is Google . Cramer wants to hear more about China and what the company thinks about Apple’s move into what was once largely GOOG’s turf: advertising.

Yum! Brands will report more than earnings on Wednesday. It will tell us about the strength of the consumer, too. Are they eating out again? Cramer’s only concern is whether or not people are choose Yum’s Pizza Hut if they do. He thinks KFC will save the quarter, thanks to a new spurt in growth in China.

The rails are always some of the best barometers of economic health – because of the products they carry – which is why Cramer’s watching CSX on Tuesday. And the company’s coal loadings, in particular. If those are up, then it might be a chance to buy more Walter Energy , Mad Money’s favorite play on metallurgical coal. Cramer likes it up to $100.

PPG Industries is the way to play the continued chemical side of the rebound. The “polys” and “ethyls” of this industry are the building blocks of the economy, and they’ve been performing well. Cramer said we’ll probably get more good news about them from PPG on Thursday. If Asia’s has become more than 20% of the company’s business, Cramer thinks the stock could run past $70.

Lastly, there’s General Electric – parent company of CNBC. This conglomerate touches on a number of industries, and good earnings from GE often translate into great investments in related companies. Also, GE will give us an idea of worldwide credit conditions, which Cramer said should be “the best they’ve been in three years.”

Cramer’s charitable trust owns Apple, Bank of America, JPMorgan Chase and Intel.

Call Cramer: 1-800-743-CNBC

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