NEW YORK ( TheStreet) -- "Next week is a huge week for earnings," Cramer told the viewers of his "Mad Money" TV show Friday. He told investors to "stop, look and listen," to the earnings calls of a few key companies to get a read on several key sectors. In the financial space, Cramer said Citigroup ( C) will set the tone on Tuesday for the litany of other banks stocks that report next week. Keep an eye on the net interest margins, he said, as well as any mention of a return of Citigroup's dividend thanks to its declining loan losses. Cramer said Apple ( AAPL), a stock which he owns for his charitable trust,
Wasting Asset"Sometimes a huge yield can be a big red flag," Cramer warned investors as he explored Vector Group ( VGR), a little known tobacco player, and weighed it again the industry leader, Altria ( MO). Cramer said Vector's juicy 9.3% dividend yield make look attractive, but when compared to Altria, it's anything but. Cramer called Vector a wasting asset, one that's gradually losing value over time. He said in a market of declining cigarette volumes, only the strong will survive as it becomes tougher and tougher to stay viable. While Altria commands over 50% market share in cigarettes, Vector has a scant 2.7%. But Altria also has a 50% share in smokeless tobacco as well as a thriving business in cigars and a stake in SABmiller brewing, the world's second largest brewer. Vector saw its operating income decline 28% last quarter, while Altria saw a gain of 5.6% thanks in part to a 94% gain in its smokeless tobacco products. Then there's the dividend. Cramer said Vector is the clear winner at 9.3% versus Altria's 6.3% yield, but Altria, unlike Vector, has a consistent track record of raising its dividend. Vector, on the other hand, now pays out 40 cents a share, while it only earned 14 cents a share in earnings. Cramer said paying out more than double what you make is clearly not sustainable. Cramer said with shares of Vector already off 13%, any potential gains from the company's high dividend have already been offset, which is why he views the company as a wasting asset.
Citigroup's Crucial TestWith Citigroup reporting earnings on Tuesday, Cramer said the bank needs to deliver on four key points, or it will likely sell off as it has after so many other recent earnings releases. First, Cramer said the bank must deliver profits over the eight cents a share Wall Street is expecting. Second, Citi must continue its overseas expansion, slowly transforming itself into an emerging growth play and away from simply a domestic bank. Third, Citi should announce something "feel good," like a reverse stock split. And finally, he needs to hear that the selling off of bad loans is continuing. Cramer said if Citigroup can deliver on all four points, then its next stop will be $6 a share, on its way to Cramer's target of $12 a share by the end of 2012. He said Citigroup is at a crucial point having just passed $5 a share, since most institutional investors won't consider stocks under $5. Cramer said if Citi can hold onto $5 a share, then it will mean good things for his speculative stock of the year for 2011.