A lot of companies are reporting earnings next week, Jim Cramer told his Mad Money viewers Friday, but the biggest story will be any news on the latest coronavirus outbreak and whether health officials are able to get the epidemic contained as it spreads out of China.
On Wall Street Friday, stocks finish down after the Centers for Disease Control confirmed a second patient in the U.S. has been infected with the coronavirus, designated 2019-nCoV.
Cramer said the effects of this coronavirus remain an unknown: It probably will be under control, but investors should keep an eye out in case worries about the virus start to impact travel-related sectors, such as hotels, casinos, cruise lines, luxury good makers and airlines.
Cramer said his game plan for next week starts on Monday with earnings from home builder D.R. Horton (DHI) . He said if earnings are strong, it could lift the entire sector.
Next, on Tuesday we hear from United Technologies (UTX) , which should update investors on their merger with Raytheon (RTN) . Cramer was bullish on Apple (AAPL) and Advanced Micro Devices (AMD) , but cautioned that both stocks have run going into earnings. He was also cautious on 3M (MMM) and Starbucks (SBUX) , but liked HCA Healthcare (HCA) .
Wednesday brings earnings from Boeing (BA) , who will update investors on the 737 Max saga. Cramer was bullish on the other companies reporting on Wednesday, including Facebook (FB) , Microsoft (MSFT) and Goldman Sachs (GS) .
The earnings continue on Thursday with Coca-Cola (KO) and Verizon (VZ) reporting. We'll also hear from Amazon AMZN, which Cramer cautioned is still in spending mode, and will likely not make the analysts happy. He was bullish on Western Digital (WDC) .
Finally, on Friday we get earnings from Exxon Mobil (XOM) and Chevron (CVX) , two great oil producers. Unfortunately, the world is turning against fossil fuels and Cramer said he can't recommend these stocks any longer.
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Banking on Being Exceptional
Investors need to pay less attention to the market's elevated valuations and focus instead on the anomalies, Cramer told viewers. One of those anomalies is First Horizon National Bank (FHN) , whose CEO, Bryan Jordan, appeared on Thursday night's show.
The market hasn't been kind to the financials, Cramer said, and the regional banks are particularly under-appreciated First Horizon operates in the best region of the country, is growing fast and sports a 3.4% dividend. If First Horizon were a fast-growing utility, like American Electric Power (AEP) , it would receive a much higher valuation. But despite being conservative and very well run, First Horizon is overlooked by the analysts.
Once First Horizon's merger with Iberiabank is complete, the company will be a regional powerhouse, Cramer said, with lots of great opportunities in Louisiana, Texas, the Carolinas and South Florida.
On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.
What the heck is going on with shares of L Brands (LB) ? The operators of Victoria's Secret and Bath & Body Works were the fifth worst performer in the S&P 500 last year and shares have collapsed from highs near $98 in 2015 to less than $20 today. But after numerous recent analyst upgrades, Cramer said he's still not convinced the stock is a buy.
There are plenty of reasons to dislike L Brands, Cramer said. The company is largely a mall-based retailer and the Victoria's Secret brand has been falling out of favor for years. With so much new online competition, it's hard to see how the company could turn itself around.
But 10 months ago, activist investors became interested in L Brands and the analysts seemingly now feel that things are so bad, the company has no choice but to take drastic actions to turn itself around.
Cramer said the problem with this theory is that turnarounds take time, and investors could lose a fortune while they wait. He agrees that L Brands has options available to change its fortunes, but investing in the stock at this early stage should be done slowly, if at all.
Cramer Does His Homework
In his "Homework" segment, Cramer followed up on a few stocks that had stumped him during earlier shows. He said that Everbridge (EVBG) , the critical event management platform, is an intriguing story. The company debuted at $12 a share and now trades over $90. With strong fundamentals and a new CEO, Cramer said, the stock is still cheap at nine times sales estimates, given its stellar growth rate. He suggested buying the stock, but only into weakness. Shares of Everbridge are up 55% over the past 12 months.
Cramer then followed up on Iveric Bio (ISEE) , a speculative biotech with shares that surged 455% on positive data from its clinical trials. Cramer said he has no edge on this stock and after such spectacular gains, investors need to take their winnings and sell. He recommended Regeneron (REGN) as his favorite eye care stock.
Am I Diversified?
In the "Am I Diversified" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer to see if investors' portfolios have what it takes for today's markets.
Cramer said he wasn't a fan of this portfolio. He recommended selling Six Flags and Smile Direct and adding a stock like Clorox (CLX) .
Cramer blessed this portfolio as properly diversified.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Friday evening:
American Express (AXP) : "That quarter was beautiful."
Teledyne Technologies (TDY) : "This one is terrific and I've liked it for years."
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