Sometimes pros buy high and sell higher. Jim Cramer crunched the numbers to determine which leaders might continue to drive the market in Q2.
Looking at the 10 best stocks Cramer said, "I see plenty of potential for repeats." However at least 3 will probably run out of gas.
"First, up, we've got Netflix (NFLX)," Cramer said. "It was the leader in the S&P 500, up more than 100%, and despite its run I think the stock has a strong chance of going higher." Cramer thinks Netflix has a few favorable trends, some of which are in their infancy. "First, after believing that Netflix could be an enemy, the major producers of content have decided to endorse it as a friend," Cramer said. Also, independent networks are producing more and more series and Netflix can offer instant distribution.
In addition, Cramer sees Netflix as a stealth housing play. "The more homes built, the more Netflix subscriptions increase. It's a natural tailwind," he said. "And finally, I do believe that Netflix remains a takeover target, most particularly for Apple which needs a mobile content offering as well as something proprietary to run on Apple TV."
"Hewlett-Packard and Best Buy seem more like bounce back stocks than growth stories. However, without some real earnings momentum, I don't see them climbing any higher," he said.
Looking at H&R Block Cramer had even stronger words of caution.
"When I examined the run of H&R Block I came up with nothing. I just couldn't find any fundamental reason for the stock to run up 58%. I think it is a sell."
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Micron (MU) was the next stock on the list and Cramer called this chip maker 'one of the most intriguing of the Q1 leaders.' "This semiconductor's stock had been a victim of the company's focus on also-ran technology, notably the DRAM where there has been tremendous competition and incredible pricing pressure," he explained.
However, there's been a shakeout in the industry. "Two years ago there were seven companies (in this space), now there are only three and Micron will become the second biggest. This consolidation has enabled Micron to reverse the direction of ever-declining average selling prices. The result, a 38% jump in DRAM revenues. I think this one goes higher, maybe much higher. It's the best spec of the bunch."
Turning his attention to Celgene (CELG), Cramer said, "I think it can continue to run on the strength of new product approvals and a very low multiple on the out-years." This is a stock Cramer talked about at length back on Monday March 25th. (Click to go to Celgene: Cramer's Quest for Next Pharma Powerhouse )
Looking at "Tenet Health (THC) Cramer said this stock wasn't a personal favorite but admitted that hospital stocks are soaring after the passage of the Affordable Care Act. "I suspect that as we get closer and closer to 2014, this one continues to go higher."
Moving on, Cramer said "two of the remaining three stocks in the top ten, Marathon Petroleum (MPC) and Avon Products (AVP) might have a tough time repeating their outstanding performance, but at the same time, neither was expensive." Still he thought there were better ways to make money than in these two stocks.
Cramer then said, he saved the best for last - Safeway (SWY).
"There's multiple catalysts here. First, Safeway's expected to bring public its Blackhawk subsidiary, which dominates the pre-paid card industry. Also it's been able to meet the challenge of Whole Foods with its own line of organics."
And despite recent gains, Cramer thinks Safeway remains cheap. "Even after the stock's 45% run this quarter, it trades for 11 times earnings. That's a bargain."
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