The positive news that the U.S. and China have reached a preliminary deal on trade means investors can focus on earnings next week, Jim Cramer told his Mad Money viewers Friday. But without a lot of specifics about the agreement, he says, investors should proceed with caution.
He laid out his game plan for next week: Overall, Cramer said, he's expecting earnings this quarter to be better than expected.
The week kicks off Monday with news on Brexit. Cramer said any news will help to lift the uncertainty. Then on Tuesday, the earnings begin with the banks, including JPMorgan Chase (JPM) - Get Report , Citigroup (C) - Get Report , Goldman Sachs (GS) - Get Report and Wells Fargo (WFC) - Get Report . All of these banks should have good earnings, but their shares will likely fall when they report. Cramer said that's the time to buy.
Also on Tuesday will be Johnson & Johnson (JNJ) - Get Report , which is mired in legal battles, UnitedHealth Group (UNH) - Get Report , Cramer's favorite among the health insurers, and an analysts meeting for Workday (WDAY) - Get Report . Cramer said he'd be a buyer of Workday.
Earnings continue on Wednesday with Bank of America (BAC) - Get Report , IBM (IBM) - Get Report and Netflix (NFLX) - Get Report . Cramer felt Bank of America could break out of its trading range when it reports and he was bullish on IBM's acquisition of RedHat. Netflix remains controversial, he said.
Thursday sees earnings from Honeywell (HON) - Get Report , Union Pacific (UNP) - Get Report and Morgan Stanley (MS) - Get Report . Cramer was bullish on Morgan Stanley, especially if earnings are strong on Tuesday for its rivals.
Finally, on Friday, it's Coca-Cola (KO) - Get Report , American Express (AXP) - Get Report and Schlumberger (SLB) - Get Report reporting. Cramer told viewers to avoid Schlumberger, but felt the other two were excellent.
Cramer and the AAP team are looking at everything from earnings and tariffs to the Federal Reserve. Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts Plus.
Executive Decision: Wendy's
Penegor explained that breakfast has been a growing category for long time and Wendy's is offering a great menu of products that are redesigned to compete. The company's franchisees love their low-cost, high-return model that makes efficient use of labor. Overall, Wendy's will be hiring 20,000 new employees to meet the demand.
Wendy's has seen a lot of success in social media, and Penegor said that's because of their lighthearted and fun approach that pokes fun at themselves as much as it does their competition. Social media has added a new level of engagement with their customers.
Turning to other operational issues, Penegor said that speed and consistency remains a priority for Wendy's. They continue to focus on mobile ordering, where checks are typically 20% higher than at the counter, and on delivery, which is available in select markets.
Finally, Penegor said they're happy to reward shareholders with a 20% dividend boost and share repurchase program.
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Acushnet vs. Callaway
When you find a powerful secular trend that's working, you need to stick with it, Cramer told viewers, and that means the stocks of Acushnet Holdings (GOLF) - Get Report and Callaway Golf (CLY) . Cramer recommended both stocks earlier this year and said the only thing he got wrong was which company would perform better.
Cramer's top pick had been Acushnet, makers of Titlist golf balls and other gold equipment. The company reported disappointing earnings in both May and August, but fortunately, it didn't seem to matter as the stock continued to surge higher. With both the weather and production issues turning in the company's favor, Cramer said he expects the strength to continue.
Callaway, meanwhile, has been the surprise winner, delivering strong earnings in May and August, while also acquiring Jana Partners as an activist investor pushing for even better execution at the company. Callaway also owns a stake in the high-tech TopGolf franchise, which could come public soon.
Beyond these two winners, Cramer said, he's still partial to Nike (NKE) - Get Report , even with shares at these levels, as well as EPR Properties (EPR) - Get Report , the recreational REIT that owns the land under many TopGolf locations. EPR is currently yielding 5.8%.
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 the medical aesthetics maker Inmode (INMD) - Get Report is a rarity in the biotech space as the company has both rapid revenue growth and actual earnings. With its products in demand, Cramer said its valuation of 15 times earnings makes it cheap, although he cautioned that the company is small and the stock is speculative.
Next, he said that Biolife Solutions (BLFS) - Get Report is another intriguing biotech play. The company offers cold storage solutions for cells, tissues and organs. While it's a tiny company with just a $300 million valuation and a volatile stock, Cramer said he likes its story.
Getting Traction on Trade
In his "No-Huddle Offense" segment, Cramer said whether you love President Trump or you hate him, it's hard to say the president's strategy with China isn't working. Friday's concessions come after months of increasing pressures that have included rising tariffs, sanctions and threats of capital constraints, among others. Add to that the continued protests in Hong Kong and it's easy to see why China may be in the mood to negotiate.
Cramer has long held that China needs the U.S. more than the U.S. needs China, and that strategy may finally be bearing some results.
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At the time of publication, Cramer's Action Alerts PLUS had a position in JPM, C, GS, JNJ, UNH, HON, SLB.