Own stocks that are cheap on a price to earnings basis

Own stocks that are cheap on a price to earnings basis

CNBC’s Jim Cramer on Friday previewed next week’s roster of earnings and advised investors to stick to companies that are profitable yet affordable for investors to own.

“In this environment, you need to own companies that make stuff and do things profitably, but let’s add, also, with stocks that remain cheap on a price to earnings basis,” the “Mad Money” host said.

Even as the Fed tries to tamp down higher prices, “we’ve already seen signs that inflation is peaking in many areas. Unfortunately, so is the rest of the economy,” he later added.

Cramer said that on Monday, he’ll be keeping his eye on Russia’s invasion of Ukraine and its effect on commodity prices. He also said he’ll be watching the 30-year Treasury bonds.

“The 30-year, not the 20[-year], is where all the action will be once the Fed starts selling its bond portfolio. You need to know that this sell-off in the 30-year is signifying that much higher rates are on the way,” Cramer said. “Get ready for them. Higher long rates will likely hurt the Nasdaq like we saw today, not the Dow, which can hold up just fine because it’s full of tangible companies that fit my criteria.”

The Dow Jones Industrial Average on Friday rose 0.4%. The S&P 500 dropped 0.27% while the Nasdaq Composite tumbled 1.34%. All three declined for the week.

Also on Cramer’s radar is an expected “red-hot reading” in the March consumer price index releasing next Tuesday.

“It’ll be inexorable and nasty until we see the peak in everything. Whatever the so-called consensus is, it’s almost always too low right now, and so that’s going to gaffe the bondholders and put pressure on the stock market that day, “he said.

Cramer also previewed next week’s slate of earnings and gave his thoughts on each reporting company. All earnings and revenue estimates are courtesy of FactSet.

Tuesday: Albertsons, CarMax

Albertsons

  • Q4 2021 earnings release before the bell; conference call at 8:30 am ET
  • Projected EPS: 64 cents
  • Projected revenue: $16.76 billion

Cramer said he expects great results from Albertsons and is on the lookout for an announcement, whether they’re planning on going private or revealing a big buyback or dividend.

CarMax

  • Q4 2022 earnings before the bell; conference call at 9 am ET
  • Projected EPS: $1.27
  • Projected revenue: $7.5 billion

“Any sign that this endless series of price hikes is over, or that demand has been destroyed … will reinforce my thesis that all the used car companies must be sold,” Cramer said.

Wednesday: JPMorgan Chase, Bed Bath & Beyond, BlackRock, Delta Air Lines

JPMorgan Chase

  • Q1 2022 earnings release at 6:45 am ET; conference call at 8:30 am ET
  • Projected EPS: $2.72
  • Projected revenue: $30.57 billion

“Every time the Fed raises rates, these guys instantly become more profitable on a risk-free basis,” Cramer said.

Bed Bath & Beyond

  • Q4 2021 earnings release; conference call at 8:15 a.m. ET
  • Projected EPS: 4 cents
  • Projected revenue: $2.08 billion

“The question here is simple: Will big new shareholder Ryan Cohen, of Chewy and GameStop fame, join the board, and will the Buy Buy Baby business be sold to private equity? I think it’s all on the table, and the stock goes up substantially,” Cramer said.

BlackRock

  • Q1 2022 earnings release before the bell; conference call at 8:30 am ET
  • Projected EPS: $8.95
  • Projected revenue: $4.73 billion

Cramer said he’s interested in hearing about how “individuals might get to vote their index fund shares.”

Delta Airlines

  • Q1 2022 earnings release before the bell; conference call at 10 am ET
  • Projected loss: loss of $1.30 per share
  • Projected revenue: $8.74 billion

Cramer said he’s in favor of travel stocks but believes airlines are currently a tough sell “given how much money they can lose in a Fed-mandated recession.”

Thursday: Goldman Sachs

Goldman Sachs

  • Q1 2022 earnings release at 7:30 am ET; conference call at 9:30 am ET
  • Projected EPS: $8.95
  • Projected revenue: $11.98 billion

“I have never seen Goldman Sachs stock this cheap, ever. … I think you’re getting a fairly good chance to catch a bounce here, if not an investment, because by this point, it should be no surprise that Goldman’s first quarter was ugly,” Cramer said.

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