As retail stocks drag the market down on weak earnings reports, Jim Cramer feels like some stocks will need positive news from Washington policymakers to see any real upside.
“But on a case by case basis, there’s still plenty to cheer about with individual stocks,” the “Mad Money” host said.
That’s why Cramer is looking forward to Tuesday, when next week’s onslaught of retail earnings begins with one unexpectedly promising name.
“Tuesday marks the beginning of next week’s retail gantlet — boy, it doesn’t end, does it? — and it starts with the least Amazon-able of all the major retailers. It starts with the despot, Home Depot (HD),” Cramer said.
Because the retailer deals in home improvement products and tools, Cramer has always liked this stock versus the other struggling names.
“I always encourage people to buy this stock, but not all at once because you know what? Home Depot, up here, [has] become quite volatile. So maybe you pick up some Monday and then some after they report,” he advised.
Even though some on Wall Street are predicting a turnaround for Target (TGT) and blessing the stock because of its seemingly safe 4.3 percent yield, Cramer is not so convinced about what its Wednesday earnings report will bring.
“All I can say is that big dividends sure didn’t do much good for the people who own shares of Kohl’s (KSS) or Macy’s (M). So as tempting as Target might be, I am not going to sanction a buy of it,” he said.
Yet another tech name benefiting from the rise of the cloud, Cramer expects excellent numbers from Salesforce.com’s (CRM) Thursday earnings report.
“Remember, the stock does act weirdly, though, even on good quarters, so don’t attempt to trade it. Just own it,” Cramer advised.
Cramer says that Foot Locker is one of two stores that is bucking negativity around mall-based retail. After Kohl’s management said business from Under Armour (UAA) and Nike (NKE) was good and Adidas (ADS-DE) reported a strong quarter, Cramer expects positive things from Foot Locker’s Friday earnings report.
Data visualization may sound complex, but for new Tableau Software (DATA) President and CEO Adam Selipsky, his company’s world-class platform can be applied to everything from a baseball team to a liquor company.
“What we’re really about is helping people see and understand data, and then eventually taking action based on that,” Selipsky told Cramer on Friday.
Selipsky nodded to his company’s recent partnership with the Texas Rangers, who previously received data from a series of jumbled sources including individuals’ Excel files that were difficult to share and integrate into their operations.
“With Tableau, everybody can pull from the same data sources, can share views of their data. They’ve got full tracking of who’s coming to the ballpark, what they’re buying at the ballpark, what’s happening with operations, and even down to small things such as how many ticket booth staff do they need given what the weather is and how long is it before opening pitch,” Selipsky explained.
Cramer also spoke with Joe Kiani, the chairman and CEO of medical device maker Masimo Corporation (MASI), on Friday to discuss his company and a recent reporting error that caused its stock to unjustly tank.
After the Associated Press’s automatic reporting mechanism incorrectly reported that the company had missed earnings and guidance estimates when it had not, Kiani said it set off a cycle that became increasingly worse as the news disseminated.
“I guess, in this day of fake news, we should’ve expected something like that,” Kiani said. “But unlike the normal fake news, this had even a greater impact because you have these robo-news agencies trying to use artificial intelligence to give information, but unfortunately, when they get it wrong, you have robo-computers selling or buying based on that news. So I think this had a terrible, vicious cycle.”
In reality, Masimo handily beat estimates, thanks in part to a nearly $5 million investment from the Bill and Melinda Gates Foundation to support its state-of-the-art pulse oximeters, which measure oxygen levels.
“They looked at 20 pulse oximeters. They took the top three to five countries where a million children are, unfortunately, dying every year from pneumonia and tested it. Our error rate was less than 3 percent. The next-best pulse oximeter was over 30 percent. So I’m really happy to tell you we partnered with [the] Bill and Melinda Gates Foundation,” Kiani told Cramer.
When Mark Cuban says something bullish, Cramer listens, especially because the billionaire investor is known for being strategically skeptical.
“So I was blown away yesterday when Cuban came on ‘Fast Money‘ and was asked whether it bothered him that four stocks — Amazon (AMZN), [Alphabet (GOOGL)’s (GOOGL)] Google, Facebook (FB), and Apple (AAPL) — now account for $2 trillion in market capitalization. His answer? ‘In terms of stock price?’ he said. ‘No, they are all undervalued.’ Undervalued? Holy cow!” the “Mad Money” host said.
Cuban’s reason for being bullish is simple: the tech giants are well positioned to expand and do business in the areas of machine learning and artificial intelligence.
“I couldn’t agree more,” Cramer said.
Finally, Cramer sat down with Randall Hogan, the chairman and CEO of Pentair, to hear more about his company’s impending spinoff of its valves and controls business.
“We were complex. And when the oil and gas problems happened, the downturn in the markets, that really hit our valves and controls business hard, and we focused on restructuring that. And we looked at a number of things to improve the business and decided, ‘You know what? That business would be in better hands with someone else’ and sold it to Emerson (EMR),” the CEO explained on Friday.
While Hogan said splitting was not the only option management considered, he touted its benefits to both new companies.
“We’re going to be launching both of these companies with extraordinarily strong balance sheets and low leverage,” he told Cramer. “Not only will they be able to focus on the execution of their businesses individually, they will be able to deploy their own capital and not be playing second-fiddle to one or the other.”
In Cramer’s lightning round, he flew through his take on some caller favorite stocks, including:
Del Taco Restaurants (TACO): “You know, Del Taco had a good quarter. It had a good quarter, but you know, I do like Chipotle (CMG) more if we’re going to stick with that theme.”
Bed Bath & Beyond Inc. (BBBY): “You know, it’s got [a] good balance sheet, but the numbers are just so-so, and they are one of these retailers that’s just kind of caught up with that raise on debt problem. What’s the reason to exist? I’m going to have to say don’t buy, and you know what, if it bounces a little, I’d cut some back.”
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