Next week may be difficult without stimulus deal

Business


The stock market’s next move hinges on the state of coronavirus stimulus talks in Washington, CNBC’s Jim Cramer said Friday.

“If the Democrats and Republicans in Congress can make a stimulus deal over the weekend, this market can indeed keep running,” the “Mad Money” host said. “Without some progress in Washington, though, next week could be a lot more difficult because we’re entering the most horrifying phase of the pandemic.”

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The comments come after the major averages climbed higher, despite a disappointing jobs report that came out in the morning. The indexes all enjoyed a positive week of trading, rising between roughly 1% and 2% over the past five trading days to new highs.

On Friday, the Dow Jones Industrial Average rose 248.74 points, or 0.8%, to 30,218.26. The S&P 500 moved 0.9% higher to 3,699.12. The Nasdaq Composite grew 0.7% to 12,464.23.

In November, about 245,000 jobs were added to the U.S. economy, though the count was far below the 440,000 number that was estimated in a Dow Jones consensus. The unemployment rate dipped to 6.7% from 6.9% as the U.S. economy continues to claw back from the coronavirus slowdown earlier this year.

Republicans and Democrats remain divided on key items to push through another coronavirus spending bill.

“If the supercharged stimulus talks don’t lead to some kind of agreement over the weekend, I fear that we are going to get hammered when we come in on Monday,” Cramer said.

Cramer gave his game plan for the week ahead. All earnings projections are based on FactSet estimates:

Monday: Toll Brothers, Coupa Software earnings

Toll Brothers

  • Q4 fiscal 2020 earnings release: after market; conference call: Tuesday, 11 a.m.
  • Projected EPS: $1.23
  • Projected revenue: $2.08 billion

“They have metro properties, but they’re also known for exactly the kind of suburban homes that affluent people are flocking to right now,” Cramer said.

Coupa Software

  • Q3 fiscal 2021 earnings release: after market; conference call: 4:30 p.m.
  • Projected EPS: 16 cents
  • Projected revenue: $160 million

“They bill tcrmmselves as the Salesforce.com of expense management,” he said. “I like Coupa a lot, so let’s listen.”

Tuesday: Salesforce investor day

Salesforce

“I hope after the meeting people will realize that Slack isn’t just some also-ran loser that Salesforce stumbled over,” Cramer said. “The company just reported an amazingly strong quarter, even better than the results from Salesforce.”

Wednesday: Lowe’s, Starbucks investor days; Campbell Soup, Adobe earnings

Lowe’s

“I believe in [CEO Marvin] Ellison’s vision and once he finishes executing it, Lowe’s will once again rival Home Depot in profitability and growth,” Cramer said. “I think this is going to be a very positive meeting.”

Starbucks

Starbucks’ “stock was running all day today in anticipation of this meeting, but I don’t think it’s a reason to take profits. They’ve got a huge Chinese business and that Chinese business is already back to normal,” he said. “When we get the vaccine here, the lagging U.S. business will catch fire, too.”

Campbell Soup

  • Q1 fiscal 2021 earnings release: before market; conference call: 8:30 a.m.
  • Projected EPS: 91 cents
  • Projected revenue: $2.32 billion

“The last time they had a great quarter, but they gave guidance that was I think misinterpreted as being tepid. I bet you that they won’t let that happen again so therefore I think you should buy some Campbell’s going into the quarter,” the host said. “I recommend buying it before earnings.”

Adobe

  • Q4 fiscal 2020 earnings release: after market; conference call: Thursday at 11 a.m.
  • Projected EPS: $2.67
  • Projected revenue: $3.37 billion

“This company’s tied up in digitization and I’m expecting terrific sets of numbers,” he said. “It’s another buy.”

Thursday: Disney investor day; Costco, Broadcom earnings

Disney

“We’re going to hear about rising profitability of Disney Plus, that’s my suspicion,” Cramer said. “Remember the last time Disney held a big analyst meeting, the stock gapped up huge. This time it might not happen because Covid’s out of control, but my charitable trust still owns this one and we’re betting that we’re going to like what we hear.”

Costco

  • Q1 fiscal 2021 earnings release: 4:15 p.m.; conference call: 5 p.m.
  • Projected EPS: $2.05
  • Projected revenue: $46.33 million

“People didn’t like the last month’s numbers from Costco. I say, ‘will you give me a break?’ They just gave you a special dividend,” the host said. “It’s the most consistent retailer in the world. Shut up and own it. You actually should hope it comes down so you can buy some more.”

Broadcom

  • Q4 fiscal 2020 earnings release: after market; conference call: 5 p.m.
  • Projected EPS: $6.24
  • Projected revenue: $6.43 billion

“If Broadcom delivers, there will be excellent, excellent pin action throughout the [chipmakers] group,” he said.

Disclosure: Cramer’s charitable trust owns shares of Broadcom, Salesforce and Costco.

Disclaimer

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