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NEW YORK (TheStreet) -- This week's stock market is a minefield, Jim Cramer cautioned his Mad Money viewers Monday. The markets will be overloaded with earnings, he continued, and that means lots of snap judgements, most of which will be dead wrong.
For tomorrow, Cramer said investors should listen to the commentary from Apple (AAPL) - Get Report, a stock which he owns for his charitable trust, Action Alerts PLUS. Investors have been fretting over China but that weakness, if it exists, won't be reflected in this quarter. Also on Tuesday, Microsoft (MSFT) - Get Report and Chipotle Mexican Grill (CMG) - Get Report report. Cramer said Microsoft will be tough to call with declining PC sales and Nokia write-offs, and Chipotle will be risky since shares are up 12% in the past two weeks.
Next on Wednesday, Boeing (BA) - Get Report, Coca-Cola (KO) - Get Report, American Express (AXP) - Get Report and Qualcomm (QCOM) - Get Report will be reporting. Cramer said Boeing remains a buy, but the rest may be under pressure.
Then on Thursday, more earnings from Caterpillar (CAT) - Get Report, McDonald's (MCD) - Get Report, Amazon.com (AMZN) - Get Report, Starbucks (SBUX) - Get Report and Eli Lilly (LLY) - Get Report, just to name a few. Cramer endorsed owning McDonald's, which pays investors to wait for its turnaround, along with Amazon.com, which continues to impress. Starbucks is another wait-and-see quarter, as the company has exposure to the strong U.S. dollar.
Celgene Stock Rise No Surprise
Sometimes, great stories get even better, Cramer told viewers. That was certainly the case with Cramer fav Celgene (CELG) - Get Report buying another long-time Cramer fav, Receptos (RCPT) for $7.2 billion, a 540% premium from where Receptos traded just a year ago.
Typically, the stock of an acquiring company declines on a takeover, but not in this case. The reason? Cramer said Celgene's stock had been lagging as of late, as investors feared the company was too levered to its blockbuster drug Revlimid. But now with Receptos, Celgene has taken its biggest step so far to diversify its product portfolio and put its growth worries to rest.
The combined company could earn as much as $13 a share in earnings by 2020, and if true, that means charges of Celgene are trading at a scant 10 times those 2020 targets. That makes the Receptos deal a steal for shareholders and makes Celgene once again a company fund managers are willing to pay up for given its clear growth path and long-term visibility.
Johnson & Johnson Should Split
Cramer explained that Johnson & Johnson is actually three companies bundled into one. It includes a pharmaceuticals company, a medical devices company and the consumer products company we all know and love with brands like Band-Aid, Listerine, Tylenol and Splenda. The problem? All of these companies are totally different, with different marketing, customers and supply chains, making it hard to manage and hard for analysts to model.
Cramer said as separate entities, he'd value J&J's consumer products at $10 a share, medical devices at $63 a share and its pharmaceuticals at $78 a share, for a combined total of $151.
PC and Coal Go Down the Chute
Always avoid industries that are in secular decline, Cramer warned viewers, as he highlighted two such industries, the unlikely pairing of coal and personal computers.
Coal production has been falling steadily at a rate of about 2.5% a year since 2008, Cramer noted, but this year, things took a big turn for the worse, with the second quarter alone falling 8.4%. Coal is not coming back, he said, as the rise of natural gas, along with new environmental regulations will mean the eventual closure of our remaining coal-based power plants.
This is bad news for everything related to coal, from coal producers to the railroads that carry it to the mining equipment makers like Joy Global (JOY) .
Then there are the personal computers, those devices we now buy a lot fewer of in the age of tablets and smart phones. PC sales are even worse than coal, declining 9.5% in the second quarter. That spells long-term pain for anything with ties to PCs, from the PC makers to all of their components.
Investors looking for turbo-charged growth stocks to buy during the next market pullback need to remember "FANG," Cramer's acronym for Facebook (FB) - Get Report, an Action Alerts PLUS holding, Amazon.com (AMZN) - Get Report, Netflix (NFLX) - Get Report and Google (GOOGL) - Get Report, also in the Action Alerts portfolio.
With the slowdown in all things PC-related and the strong dollar continuing to hamper international companies, Cramer said these growth tech names will continue to be en vogue for the foreseeable future. He was also a fan of names like Ambarella (AMBA) - Get Report, which is making all the right chips in all the right devices, and the newly-minted Paypal (PYPL) - Get Report.
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At the time of publication, Cramer's Action Alerts PLUS held positions in AAPL, JNJ, FB, GOOGL.