Earnings are what should matter most during next week's trading, Jim Cramer told his Mad Money viewers Friday. But investors need to proceed with caution, he said. Even strong earnings reports could be interrupted at any time by more news about the coronavirus.
Cramer's game plan for next week begins on Monday with earnings from Allergan (AGN) - Get Report for its last quarter as an independent company. Cramer said he's expecting to hear good things. We'll also here from Restaurant Brands (QSR) - Get Report, but Cramer said he preferred Wendy's (WEN) - Get Report. He was bullish on XPO Logistics (XPO) - Get Report.
Next, on Tuesday, we hear from Hasbro (HAS) - Get Report, Under Armour (UAA) - Get Report and Lyft (LYFT) - Get Report. Hasbro will likely feel the pinch from the slowdown in China and Under Armour is still a comeback story, Cramer said, but he was bullish on Lyft.
The earnings really kick in on Wednesday with CVS Health (CVS) - Get Report, Shopify (SHOP) - Get Report and Barrick Gold (GOLD) - Get Report -- and Cramer was bullish on all three. We also hear from Applied Materials (AMAT) - Get Report, another Cramer favorite, and Cisco Systems (CSCO) - Get Report, which Cramer said is a "show me" story.
For Thursday, Cramer liked PepsiCo (PEP) - Get Report, Nvidia (NVDA) - Get Report and DexCom (DXCM) - Get Report, but he was bearish on Kraft Heinz (KHC) - Get Report, Waste Management (WM) - Get Report and especially Expedia (EXPE) - Get Report, which will undoubtedly take a coronavirus hit.
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Some Unicorns Are Real
What happens when a money-losing unicorn starts to look real? Look no further than Uber (UBER) - Get Report and Pinterest (PINS) - Get Report to find out. Both stocks shot up over 10% Friday after making money when no one thought they could.
Cramer explained that like most venture capital-funded unicorns, Uber and Pinterest took advantage of their first-mover advantage to grow, not turn a profit. But this quarter, they did an about-face, with Pinterest earning 12 cents a share and Uber scaling out of their low-margin businesses, like UberEats. The results were striking, with both stocks handsomely rewarded.
Now that these companies have proven they can make money, shares are not done going higher.
That's not the case with Casper Sleep, however. The online mattress company and newly minted IPO plunged 18.1% in its second day of trading. Cramer said Casper should have never been allowed to come public as it's also losing money, but unlike Pinterest and Uber, Casper has no viable plan to turn a profit.
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Don't Lose Sleep Over Bad IPOs
After last year's WeWork debacle, the market has no patience for low quality IPOs, Cramer told viewers, and that's a good thing for your portfolio. Bad IPOs encourage more bad IPOs, he said, and that causes supply to overwhelm demand and puts pressure on the entire market.
But beyond supply and demand, Cramer said investors have little tolerance for fast-growing, money-losing IPOs like Casper Sleep. The company was forced to lower its price range from between $17 to $19 all the way down to between $12 and $13, ultimately pricing at the bottom of the range at just $12 before plunging to $11 today.
Investors were skeptical, Cramer said, and that's exactly what you want to see. Casper isn't a growth stock, as its growth slowed from 40% to just 20% this year, nor is it a value stock. While the company may claim it's disrupting the mattress industry, it is in fact a company that makes a terrific mattress and sells it online.
Cramer said he's not a fan of Casper given its current trajectory. The stock is not cheap, he said, even at these levels.
Executive Decision: Taylor Morrison Homes
For his "Executive Decision" segment, Cramer spoke with Sheryl Palmer, chairman and CEO of Taylor Morrison Home Corp. (TMHC) - Get Report, the nation's fifth largest home builder. Taylor Morrison just closed on their $2.4 billion acquisition of William Lyons Homes.
Palmer said it's a great time to be a home builder. Interest rates are low and the consumer is feeling confident. She said the acquisition of William Lyon gives the company access to new markets and depth in existing markets, as well as a lot of synergies to help serve customers better.
When asked about low interest rates, Palmer explained that five million more families can now afford a home thanks to low rates. Taylor Morrison caters to first-time home buyers, she said, as well as offering homes for all consumer groups.
Turning to the topic of gender equality, Palmer said even though Taylor Morrison has been recognized for their efforts in this area, they don't have set quotas or policies. She said their culture just breeds diversity organically, which is how it should be.
Executive Decision: Synaptics
In his final "Executive Decision" segment for the week, Cramer spoke with Michael Hurlston, president and CEO of Synaptics (SYNA) - Get Report, the touch interface technology company that just posted blowout earnings that sent shares up 20.5% by the close.
Hurlston said Synaptics is focused on improving gross margins instead of chasing revenue growth and that strategy is paying off for them.
When asked how the coronavirus will affect their supply chain in China, Hurlston said it's hard to tell at the moment, but they've offered conservative guidance and they feel pretty good that factories will reopen on Monday.
Turning to their business outlook, Hurlston said that Synaptics only has a limited presence in the automotive industry, but touch screens in cars are getting bigger and they're becoming more prevalent. The same technology that goes into mobile phones and PCs will be coming to cars very soon, he said.
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:
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At the time of publication, Cramer's Action Alerts PLUS had a position in CVS, CSCO, PEP, NVDA.