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NEW YORK (TheStreet) -- With just about every industry coming up short in the earnings department, Jim Cramer told his Mad Money viewers Friday that he's advising caution. The data are not encouraging, he said, but there's still a steady drumbeat of investors expecting a Federal Reserve interest rate hike when what's really needed is another rate cut.
Cramer's game plan for next week's trading begins over the weekend, with Greece. If a deal can be reached, that would be good; if not, be prepared for more pressure on the markets.
Then, on Thursday, J.M. Smucker (SJM) reports, along with Verifone (PAY) and chipmaker Ciena (CIEN). Cramer is a fan of Smucker and Verifone for the long term, but told viewers to be careful with Ciena, which has run up ahead of the quarter.
Finally, on Friday, it's the all-powerful non-farm payroll report. Cramer said nothing moves the markets more than this statistic. If it's strong the market will sink, but if it's weaker the Fed may be on hold, which would be a boon for stocks.
The United States may be stepping back from its role as the world's policeman, but that doesn't mean our defense contractors are cutting back as well. In fact, new export rules on military exports means that the time is right to start buying this group.
Among the group, Cramer is a fan of Raytheon (RTN), which makes missile defense systems and just landed huge contracts in Poland and Qatar. He is also a fan of Lockheed Martin (LMT), which makes the F-16 aircraft and trades at just 15 times earnings with a 3.2% yield.
Also making Cramer's recommended list are United Technologies (UTX), which may be unlocking value by spinning off its helicopter division, and General Dynamics (GD), known for its armored ground vehicles.
Cramer suggested buying any of these names on any weakness such as what the markets are seeing right now.
Hungry for Burger Stocks
With some sectors, the valuations and trading patterns are enough to make your head spin, Cramer told viewers. You wouldn't expect such irrational behavior among the burger restaurants, but that's exactly what we're seeing.
With the recent IPOs of Shake Shack (SHAK) and Habit Restaurants (HABT), things have just gotten crazy, as the Wall Street community gobbled up these chains they're familiar with, while at the same time snubbing those like Red Robin Gourmet Burgers (RRGB), which have no locations in Manhattan.
So just how crazy are the valuations? Right now, every Jack in the Box (JACK) location is valued at $1.1 million. Red Robin locations are valued at $2.2 million, while McDonald's (MCD) goes for $2.5 million.
Compare that to Wendy's (WEN), which also generates respectable returns, yet only fetches $635,000 per location.
Ah, but then there are the Wall Street darlings. Each Habit location is currently valued at $8 million, while Shake Shack takes the cake at a whopping $40 million per location.
Among this cohort, Cramer said he'd bet on Jack in the Box, which is the cheapest of the group, but he's not willing to count out McDonald's, which appears to have finally gotten the message that they need to change and fast with a Domino's Pizza (DPZ) style turnaround.
Steer Clear of Airlines
With the airline stocks suddenly in decline, is now the time to start bottom fishing? Not so fast, Cramer warned. He couldn't think of any sector in recent memory that has been able to pull off a quick turnaround.
Cramer learned on last night's show that Southwest Airlines (LUV) is taking a disciplined approach to growth, but that doesn't mean its competitors are. Ultimately, that means the earnings estimates are likely too high and will need to be lowered, and stocks just don't bottom ahead of estimate cuts.
That means investors need to trim their positions in these names and steer clear until the cuts have run their course. After that happens and these stock stabilize, Cramer said he'd be reaching for Southwest first because it remains the best operator.
In his "Homework" segment, Cramer followed up on a few stocks that stumped him during earlier shows. He said that Dynavax Technologies (DVAX) should only be bought for speculation, as FDA approval for its Hepatitis-B drug is not a sure thing.
Cramer was more excited about Aduro Biotechnology (ADRO) but noted that biotechs like these can be tricky, which makes buying in a lower level the right way to invest.
When it came to Mimedx Group (MDXG), Cramer said he was downright bullish because this stock is both profitable and consistent with growth catalysts ahead.
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