Markets Not Crashing On Healthcare Bill Failure Is A Sign - Cramer's Mad Money (3/27/17)

by: SA Editor Mohit Manghnani


Accenture is poised to rally.

Occidental Petroleum is worth speculating on.

Domino's is better than Papa John's.

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday, March 27.

The market did not crash on the healthcare debacle. Cramer said it's a sign that the market showed resilience. Firstly, the rally in the market was not because Trump won, but because Clinton lost. She was seen as pro-regulation and anti-business by many. Cramer gave three critical reasons for the market not crashing on the failure of the healthcare bill.

First, with focus away from the healthcare bill, other agendas like tax reforms and deregulation come into the limelight. It's far easier to cut taxes than pass the healthcare bill. That is what the market wants. Trump's budget director Mick Mulvaney confirmed that Trump's administration's focus for the first 100 days will not be on replacing Obamacare.

Second, improvement in earnings gives the market confidence despite what's going on in Washington. "Many people may want to lump everything into the Trump rally rubric, but earnings play a far more important role when it comes to the direction of the stock market," said Cramer. Good earnings from Darden Restaurants (NYSE:DRI) and Red Hat (NYSE:RHI) show that companies can do well despite Trump.

Thirdly, companies are sure deregulation does not require Congressional approval and this helps the psyche of businesses. "Going forward, though, it's important to understand that not crashing is one thing, and rallying is another. The latter will be hard to do, given that we're on the verge of a new earnings season and we have an upcoming employment number that needs to be strong or else we'll start hearing about a stalled-out economy on account of the cratering of Trumpnomics," said Cramer.

Accenture (NYSE:ACN)

When the market is in a confused state, investors should load up on high quality stocks that are trading below where they deserve. Accenture is one such high quality company. They engage in the provision of management consulting, technology, and outsourcing services. In other words, they help other companies go through technological change.

"If you're looking to migrate to mobile or the cloud or maybe you want to embrace advanced data analytics software, they're the guys who can help," said Cramer. The company has a pattern of reporting strong but not perfect quarters due to which the stock goes down only to rebound later. The same happened with their recent quarter. Their guidance was less than many analysts had expected. Cramer said that the important thing to note is that cloud and digital security services account for 45% of their total revenue.

"That's why I predicted this sell-off in my game plan a week and a half ago, and it's why I'm pounding the table on Accenture here, because I don't want you to miss this terrific buying opportunity," said Cramer.

Occidental Petroleum (NYSE:OXY)

The shares of Occidental Petroleum peaked at $101 in 2014 and fell all the way down to $60 in January. They are an international oil and gas exploration and production company with a major position in the Permian Basin in the US, as well as the Middle East.

Their November earnings were disappointing with an earnings miss and lower production targets that led to analyst downgrades. However, as the company improved production targets in the recent quarter along with a sharp drop in costs in Permian Basin, the stock gained momentum.

They also got analyst upgrades from Bank of America and Credit Suisse which said that a rebound in oil prices to $50 will improve Occidental's standing. "If you believe that oil could be poised to rebound here back to the mid $50s, admittedly a very big if, then Occidental could be worth speculating on because it may be too hated and some very good analysts who didn't care for it higher are now positive," concluded Cramer.

Off the tape

Cramer went off the tape to review the privately held company Endgame. They are a cybersecurity company that detects, prevents, responds to and automatically hunts cyberattackers on company servers. He interviewed CEO Nate Fick to hear his take on cybersecurity in the US.

Fick believes the US is underprepared for cyber-attacks. "If we're going to talk about a policy point, there's a real deterrence failure in cybersecurity. The Russians interfered in the US election via cyber means, because if they'd done it by sending agents into our polling places, we would've responded. And our adversaries know that we aren't organized to respond yet digitally," he added.

They have partnered with Accenture, who helps the US Air Force to implement cutting-edge hunting tactics in its networks. "There's a misconception out there that the government is somehow behind in cybersecurity. In fact, there are parts of the government that are really out there on the vanguard, and the Air Force is one of them," said Fick.

He added that the testing of Endgame's platform suggests that the Russian attack could have been prevented but there is no way to know for certain. Knowing where an attack has originated from is difficult as assailants can bounce their attack through obscure servers on different continents to conceal where it originated. "And what we find is most of our commercial customers don't really care where the attack came from, they just want to stop it," said Fick.

He advises businesses to become value-based rather than risk-averse. "Incorporate it into an overall enterprise risk management framework, and make a value-based decision on where you should spend," he added.

Viewer calls taken by Cramer

Papa John's International (NASDAQ:PZZA): Domino's (NYSE:DPZ) is a much better company. It's a tech company that sells pizzas and they have a much better business model.

McDonald's (NYSE:MCD): Cramer thinks CEO Steve Easterbrook is killing it.


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