China trade deal let’s us focus on some big earnings reports

An initial United States-China trade agreement appears to finally be coming to fruition.

CNBC’s Jim Cramer noted that the Chinese government has a history of backing away from its verbal commitments, but said the tariffs that remain on imports from China are a “powerful enforcement mechanism.”

The “phase one” deal, which has yet to be signed by both countries, includes some tariff relief from the U.S. and agriculture purchases from China. After a volatile trading day, the major averages all inched higher by the close. The Dow Jones Industrial Average finished at 28,135.38, the S&P 500 3,168.80 and the Nasdaq Composite 8,734.88.

“Now that we’ve got a phase one trade deal with China, we can go back to focusing on the earnings,” the “Mad Money” host said. “I think next week — with the exception of FedEx — we’re going to see a lot of good ones.”

Wall Street will find out the beneficiaries of China’s ag buys, Cramer said. Currently, the country has a major pork shortage due to African swine fever and prices for the meat spiked 100% in November. Cramer said he expects to see the Chinese government to prioritize buying hogs.

“If pork prices are headed higher, you as an investor might be thinking about buying Tyson Foods,” Cramer said. “That’s the leading protein play that also sells chicken and beef, and they will become more competitive” in the U.S.

Cramer is also expecting a short-term boost in the credit card, large bank, large machinery and oil service stocks.

FedEx will hold an earnings call for its fiscal 2020 second quarter after the market closes. The shipping conglomerate is forecast to record earnings of $2.80 per share along with almost $17.6 billion in revenue.

“Their future looks brighter with a preliminary trade deal,” Cramer said, adding he expects the quarterly report will be “awful, but the stock’s been clobbered so much that I’m betting it could rally if management says something even mildly positive about trade.”

Cintas reports second-quarter earnings for its 2020 fiscal year. FactSet estimates the uniform company to record $2.03 in earnings per share and revenue of $1.8 billion.

“I’m expecting a terrific quarter from Cintas thanks to robust business growth, but the emboldened short-sellers could make this a real battle royale,” Cramer said.

Paychex releases the results of its fiscal quarter ending in November before the morning bell. The payroll processor is expected to make a profit of 68 cents per share and do $987 million in revenue.

“While people didn’t much care for that last quarter, I told you it was a buying opportunity … and I was right on this,” Cramer said. “If Paychex pulls back once again, please, before the quarter, I would do some buying.”

Herman Miller has a quarterly earnings release in the morning. The office furniture manufacturer is expected to produce 87 cents profit per share on $695 million in sales.

Micron Technology reports quarterly earnings after the market closes. The storage chipmaker is estimated to make 47 cents in profit per share and $5 billion in revenue, a forecast that is more than 36% less than the same number a year ago.

The stock is up more than 61% this year so far.

“Given how much it’s run, this is not the ideal time to do some buying,” Cramer said, but if the stock gets hit on Monday or Tuesday “you probably want to buy some Micron.”

General Mills also has an earnings call for its second quarter of the 2020 fiscal year. Analysts estimate earnings of 88 cents per share and more than $4.4 billion in revenue.

Conagra reports quarterly earnings in the morning. Analysts forecast the packaged foods company to deliver 57 cents EPS and $2.8 billion in revenue.

Darden Restaurants also reports Thursday morning. The Olive Garden parent is expected to have earnings of $1.07 per share and bring in more than $2 billion in revenue, according to FactSet.

Nike’s quarterly results will come out in the afternoon. The sports apparel brand is expected to record more than $10 billion in receipts and return 58 cents EPS, according to analyst estimates.

“Let’s hope the stock comes in before the quarter because I think it’s worth buying on a pullback,” Cramer said.

CarMax reports in the morning. FactSet forecasts the used-car dealer to record more than $4.6 billion of revenue and $1.15 of profit per share.

Winnebago also releases quarterly numbers before the market opens. The recreational vehicle maker is estimated to produce 74 cents of earnings per share off of $538 million in revenue.