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NEW YORK ( TheStreet) -- Everyone is expecting lousy earnings next week, Jim Cramer told "Mad Money" viewers Friday, and when the bar is set low, even mediocre news can send stocks higher. That's why Cramer said his game plan will be paying attention to a few key earnings reports. Cramer said on Monday he'll be watching the German industrial production numbers as well as any news out of China over the weekend. In a "less is more" scenario, Cramer said he wants to see bad news from Germany, which will force them to play ball with the rest of Europe, but good news from China. Tuesday brings earnings from Alcoa ( AA) and Yum Brands ( YUM), two stocks very closely levered to the health of the Chinese economy. Cramer said Alcoa will likely be hurt by Chinese aluminum production, but he likes Yum Brands in the low $60s. Then on Wednesday, Costco ( COST) will be reporting. Cramer said that owning expensive stocks in this environment is risky, which is why anyone still owning Costco is being greedy. Also on Wednesday, a FedEx ( FDX) analyst meeting. Cramer said with the bar set low, any positive numbers could send that stock higher. For Thursday, it's grocery chain Safeway ( SWY) that's due to report. Cramer said Safeway remains "a falling knife" and he much prefers Whole Foods ( WFM). He was also bullish on trucking company JB Hunt ( JBHT), a stock that could send the transports higher as its not exposed to Asia, nor does it ship crops or coal. Finally on Friday, it's Wells Fargo ( WFC) and JPMorgan Chase ( JPM), two stocks he owns for his charitable trust,
Executive DecisionIn the "Executive Decision" segment, Cramer sat down with Nolan Watson, president and CEO of Sandstorm Gold ( SAND), a company that helps finance gold mining operations in return for a percentage of the gold produced at that mine. Watson said that unlike a traditional bank, Sandstorm is 100% equity financed, which means it can take on risk over longer periods of time. He said miners actually prefer to work with Sandstorm versus offering equity themselves, since many mining executives own shares themselves and don't like dilution.
Watson said Sandstorm has just a $1 billion market cap, compared to the $10 billion valuation of Franco-Nevada ( FNV) and $14 billion for Silver Wheaton ( SLW). That means that many smaller deals are ignored by the bigger guys, leaving plenty of room for Sandstorm to grow. When asked how the company makes money, Watson explained that in return for financing, Sandstorm gets to purchase gold at just $400 an ounce and has additional contracts that ensure the company doesn't lose money no matter how low the price of gold may go. Given Sandstorm's strong cash flow, Watson said his company will become a dividend payer once its current stage of growth is complete. Finally, when asked how high the price of gold could go, Watson said he easily sees $2,000 an ounce as a possibility in the near future. Cramer said like Franco-Nevada, Sandstorm remains a terrific investment in a choppy market.
Speculation FridayFor "Speculation Friday," Cramer returned to one of his favorite themes: orphan drugs. He said when it comes to betting on biotech, nothing is more lucrative than an orphan drug that receives government protections and can charge big premiums for the patients they serve. That's why he once again recommended Vertex Pharmaceuticals ( VRTX), a stock that's seen a 73% gain since Cramer recommended it two years ago. Cramer said Vertex' new drug, VX-809, is currently in phase II testing to treat cystic fibrosis. The company published bullish data back in May, news that sent the stock up $20 in a single day. But about a month afterwards, Vertex was forced to admit it misinterpreted some of its data, news that slowed its progress and cooled its share price. Vertex is set to announce the final phase II data Thursday, and Cramer said he expects the former troubles will finally be put to rest. Given VX-809 could fetch as much as $200,000 per year per patient, Cramer said peak sales could be $6 billion for Vertex. Given similar valuations, the company's stock could be worth double or more. Cramer advised getting into Vertex ahead of Thursday's conference. Investors wishing to do more homework don't have to hurry, though, as VX-809 won't hit the market for at least a year.