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A version of this program was last aired on April 16, 2015.
NEW YORK (TheStreet) -- There are some great companies reporting earnings next week and Jim Cramer smells profits. But he told his Mad Money viewers Friday they should only buy on weakness because our stock market is still being controlled by events overseas.
Cramer's game plan starts on Monday when he'll be watching Estee Lauder (EL) and Urban Outfitters (URBN). He called the former one of the best performing consumer stocks out there but noted with a 30 multiple, it's not inexpensive. As for Urban, while the stock has come down a great deal, Cramer still expects more disappointments.
Next, on Tuesday, investors will get another read on housing starts, news that typically boosts the home builders over the next few days. Cramer noted both Toll Brothers (TOL) and Lennar (LEN) remain cheap. He expects good things from Home Depot (HD) and TJX Stores (TJX) but is taking a wait-and-see approach with retail giant Wal-Mart (WMT).
Wednesday brings earnings from Lowe's (LOW), Target (TGT), a stock Cramer owns for his charitable trust Action Alerts PLUS, and food maker Hormel (HRL). While Lowe's is not the best of breed, Cramer said the stock can be bought, as can Hormel, a stock that will let you sleep at night. As for Target, Cramer suggested waiting for it to fall to a 3% dividend yield.
Finally, on Friday, John Deere (DE) will be reporting, but Cramer said he has little appetite for farm equipment companies. However, he is bullish on Foot Locker (FL) and advised buying on any weakness.
Off the Tape
In his "Off The Tape" segment, Cramer sat down with Tien Tzuo, CEO of the privately held Zuora, a software-as-a-service company that offers automated billing and analytics services for our new subscription-based economy.
Tzuo said that as a former employee of Salesforce.com he learned all too well that people would rather subscribe than own many types of items, from media to software and beyond. That's why Zuora helps companies manage their subscriptions and turn them into a strong, recurring revenue model.
When asked about becoming a public company, Tzuo said that right now the focus is on building the business and perfecting offerings, but the company will most certainly file for an IPO when it's ready.
Invest Like a Pro
Individual investors can not only invest like the pros, they can beat them, too, Cramer said, detailing the methods to his investing madness.
Cramer said it doesn't take a lot of effort to invest one's own money, just a few hours a week for research, the "homework," as he so often calls it. But the results from that research will bear far more fruit than blindly dumping money into an index fund or, worse, a bond fund in a time of historically low interest rates.
Where can investors find their research? Fortunately, it's practically everywhere, said Cramer, on sites like CNBC.com, TheStreet.com, Yahoo! Finance and others, as well as on the Web sites of every publicly traded company.
When starting out, Cramer recommended using the 52-week high list. The new highs list shows stocks with true momentum, said Cramer, especially in a bad market. But that does not mean that investors should just blindly chase every stock on that list. Instead, research will still need to be done to separate the truly great stocks from the ones that are just lucky.
After researching the new high list and picking out the true winners, Cramer said the next step is determining when to buy them. He said a pullback of at least 5% is usually a good entry point, especially when that pullback is caused by general market weakness. You should only buy stocks that have pulled back from the new high list if you're confident they'll make a comeback, he continued.
Cramer said he always advises adding to a position on weakness, then trimming those positions into strength. A broad, market-wide selloff provides an excellent entry point for adding to positions, he concluded.
Look for the Insiders
Cramer's next trick for investors: Look for stocks with strong insider buying. Company executives are no dummies, explained Cramer. If they're buying their company's stock, then maybe you should, too.
Cramer said executives can sell company stock for all sorts of reasons. But buying, especially in large quantities, should be a clear signal that execs are highly confident in their outlook and are putting their own money on the line to prove it.
This is especially true of stocks at or near the 52-week high list, said Cramer. If a stock is already at sky-high valuations, and insiders are still buying, that is a powerful endorsement. There is nothing more telling than when an insider backs up the truck for his own stock when its sitting at a high.
Avoid paying too much attention to small, token purchases, Cramer cautioned. Look for only large, meaningful insider purchases. Sometimes execs want to make it look like they have confidence in their stocks. But when they actually do have conviction, that's the time to follow their lead.
When to Sell
Then comes the critical question of when to sell a hot stock. He said there's certainly a lot of money to be made by owning a hot momentum stock, but investors have to know when it's time to leave the table or risk losing it all.
So how can investors tell when a momentum stock has peaked? Cramer said one thing they can look for is the analyst coverage. For smaller, more speculative stocks, Cramer said the rule of thumb is that when a stock has half-a-dozen or so analysts covering it, the stock will begin to peter out because it's become too well known.
One of the best examples of how this process plays out is still Hansen Natural, the previous name of Monster Beverage (MNST), which was the hottest stock in 2004, the hottest stock in 2005 and the hottest stock for the first half of 2006, noted Cramer. The whole run higher, the skeptics were warning the energy drink maker's momentum would fade. But with analysts still initiating coverage and touting Hansen's stock, it continued its run higher.
Until May 10, 2006, recalled Cramer, when Hansen stock split five-for-one but was also picked up by Goldman Sachs, the fourth analyst to begin coverage. After Goldman brought Hansen into the spotlight, Cramer said the stock immediately started to cool off because it had hit that critical mass of analyst coverage.
Small momentum stocks are worth owning, said Cramer. But when investors see analysts jumping on the bandwagon, it's time to get out.
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