Game Plan For The Week – Cramer's Mad Money (11/3/17)

Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Friday, November 3.

Cramer said that Friday’s action was benign. “You combine a good, not too hot, not too cold non-farm payroll number from the Labor Department that had little wage inflation, throw in some blockbuster earnings and voila, you get the kind of benign action that gives you multiple opportunities to make money,” he added. With that, he discussed the game plan for the week.

Monday

Qualcomm (NASDAQ:QCOM) – Broadcom (NASDAQ:AVGO): Monday will bring news on the Qualcomm-Broadcom tie up. If it goes through, semiconductor stocks will get a boost.

CVS Health (NYSE:CVS): CVS will report earnings and shed light on the Aetna (NYSE:AET) acquisition.

Priceline (NASDAQ:PCLN): “If you think back to competitor Expedia’s quarter, which was nasty, you might get heartburn when you see this one, or at least some agita,” said Cramer. To gain market share, these companies lose on margins.

Michael Kors (NYSE:KORS), Skyworks (NASDAQ:SWKS) and International Flavors and Fragrances (NYSE:IFF) will report earnings and Cramer likes both SWKS and IFF. He doesn’t expect KORS to have a good quarter.

Tuesday

Emerson Electric (NYSE:EMR): Cramer expects strong numbers from Emerson Electric and color on their bid for Rockwell Automation.

Valeant Pharmaceuticals (NYSE:VRX) and Snap (NYSE:SNAP): Cramer expects good numbers from Valeant but thinks Snap’s report could be disappointing. “I bet Snap will give it the old college try. I mean, didn’t these guys just get out of college? The Street will rally around it, but all in all, I think you should forget Snap,” he added.

Marriott International (NYSE:MAR): Marriott International will see growth due to scarcity of lodging properties.

Take Two Interactive (TTW): Cramer advised waiting for them to announce earnings before buying the stock due to negative market reaction on the earnings of its peers.

Wednesday

CenturyLink (NYSE:CTL): Cramer wonders if their 13% yield is safe? “That’s usually a sign that there’s a dividend cut coming. I’m calling that one problematic,” said Cramer.

Thursday

Kohl’s (NYSE:KSS), Macy’s (NYSE:M) and Nordstrom (NYSE:JWN): All these 3 retailers report earnings on Thursday and Cramer was bearish on all of them. Macy’s hit a 52-week low and Cramer thinks the company might not be able to maintain the 8% dividend yield.

Disney (NYSE:DIS): Cramer expects the same thing for Disney that happens every quarter. “Subscriber losses and cord-cutters will overwhelm all the amazing positives from the movie business and theme parks and advertising. At least the consensus is that the stock will do nothing, and even if it’s wrong, I bet that view will dominate the action in the stock,” he said.

Nvidia (NASDAQ:NVDA): This remains as one of Cramer’s favorite stocks. “But the stock does have a habit of trading down after it reports, so I want you to wait until we hear the conference call before you do any buying,” he added.

Friday

J.C. Penney (NYSE:JCP): They had pre-announced a disappointing quarter already. That should not change on Friday.

“The flood of earnings continues next week and that means it will be almost impossible for you to take everything in and make rational decisions. Even the best portfolio managers can’t,” concluded Cramer.

Expectations

Cramer said the action in stocks post their earnings depends upon what was expected of them. Case in-point is Starbucks (NASDAQ:SBUX) and Activision Blizzard (NASDAQ:ATVI).

Starbucks reported an earnings miss, slowing domestic sales and guided down after which the stock went down. Activision Blizzard, on the other hand, reported an earnings beat and the stock went up in early hours of trading. “But when the market opened this morning, Activision Blizzard’s stock collapsed while Starbucks’ stock soared. How the heck is that even possible? Well, you see, it’s all in the expectations,” said Cramer.

In the case of Starbucks, large shareholders saw the tepid growth as a given and bought the shares on Friday erasing the losses from Thursday. Activision, on the other hand, spoke about sales competition on their conference call and their stock went down.

“What’s ironic here is that I think that Activision Blizzard should be bought and bought aggressively. But you know what? I would not chase the stock of Starbucks here unless we knew for sure that the guidance they gave, the new guidance, wasn’t too optimistic,” concluded Cramer.

Spinoffs

Cramer said break-ups and spinoffs are a good way to create value for shareholders. Smaller companies can focus and do better on their own and they also make good takeover targets. DuPont spun off Axalta (NYSE:AXTA) in 2012 which has been under-performing. As Akzo Nobel (OTCQX:AKZOY) expressed interest in Axalta, the stock rallied.

“Look, not every spinoff is a success. I mean, it’s just not that easy, right? But if you know what to look for, a good spinoff can often became a big winner. So let’s talk about what works in a spinoff, what leads to an Axalta-type situation, and who could be the next Axalta,” said Cramer.

Chemours (NYSE:CC) was spun off from then-Dow Chemical in September 2017. Its core business of titanium dioxide had started to show a turnaround and hence Cramer had recommended the stock. “My only regret is that I didn’t pound the table even harder. Since then, Chemours has vaulted from $7 to $55. That’s a 647% gain, monster, crushing the performance of the broader market and its old parent company,” he said.

Adient (NASDAQ:ADNT) was spun off from Johnson Controls (NYSE:JCI) and Cramer had recommended Adient as well. The company reported a good quarter and issues strong revenue guidance and yet it went down. “I didn’t see anything wrong with it. This might be the buying opportunity,” added Cramer.

Spinoffs can make attractive takeover targets. “Oftentimes, a big conglomerate will resist selling off one of its divisions to a competitor, but split that division off as a separate company, give it its own board of directors and its own shareholders, and suddenly, they become a lot more amenable to a takeover,” said Cramer. He mentioned that Honeywell’s (NYSE:HON) spinoff and DowDupont’s (NYSE:DWDP) breakup into three are the ones to watch out for.

CEO interview – Integrated Device Technology (NASDAQ:IDTI)

Integrated Device reported good earnings and guidance in the last quarter. Cramer interviewed CEO Greg Waters to find out what lies ahead.

Waters mentioned that their acquisitions in 2016 have started to pay off and the result can be seen in revenue. “We’re bringing out new devices, like all sorts of smart-senses for automobiles. We’ll introduce devices in early next year that take these complex safety avoidance, autonomous-driving-type devices and reduce that to a set of chips that’ll fit in the palm of your hand,” he added.

The current electro-mechanical systems that power cars’ self-driving cost $10,000 but will eventually become a few hundred dollars. They can be added to cars, tractors, farm equipment and other vehicles in the future.

They are a leader in wireless-charging as well. Waters expects the segment to expand multifold in the near future. “I think the imagination for what’s going to come to cars and transportation in general is just starting, and we have just entered that as another leg to the growth stool,” he concluded.

Viewer calls taken by Cramer

Verizon (NYSE:VZ): It’s good for income.

Philip Morris International (NYSE:PM) and Altria (NYSE:MO): Cramer doesn’t like recommending tobacco companies but blessed their stocks.

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