Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday, May 2.
Break up the banks?
Suggestions that a possible government shutdown in September is not such a bad thing?
Investors should ignore the noise coming from President Trump, and instead focus on what's working on Wall Street, Mad Money's Jim Cramer told viewers Tuesday.
Cramer, hosting his show in San Francisco, lamented about Trump's uncensored "musings" and how they impact the markets. "We've gone from someone who was going to save American business to wondering if American business can handle the erratic nature of this man's pronouncements," he said.
Instead, Cramer said, investors should pay attention to what's driving the market: Earnings.
He also offered four points companies and their leadership should focus on if they want to survive the Trump presidency... or, more importantly, adjust to what may appear to be a slowing economy (Cramer pointed to poor April car sales and slowing GDP as concerns):
- Break up companies so they can see more value in their businesses.
- Do mergers and acquisitions that allow the core business to grow.
- Have a sizable business in Europe and Asia to offset U.S. weakness.
- Have a better mousetrap that the customer loves.
Taking these ideas, Cramer offered four examples of success:
- Breaking up: IAC/InterActiveCorp (NASDAQ:IAC) is acquiring Angie's List (NASDAQ:ANGI). Instead of putting the acquired company into the core business, IAC is splitting off Angie's List with its HomeAdvisor business.
- M&A: Martin Marietta Materials (NYSE:MLM) is acquiring small aggregate businesses in key growth states. That has transformed the company from a small regional player to a big, nationally focused one.
- International exposure: Truck engine maker Cummins (NYSE:CMI) reported in its latest earnings that North American sales have slipped. However, its international business is expanding. Cramer said Cummins's business in China "is booming."
- A better mousetrap: For this one, Cramer dug into Apple's (NASDAQ:AAPL) latest earnings out Tuesday night. The number of iPhones sold didn't meet some expectations. He reminded viewers that Apple will present a new phone later this year.
New Highs for the Tech-Heavy Nasdaq
Cramer leaned on data from technical analyst expert Ed Ponsi of Barchetta Capital Management for ideas on tech's rise. Digging deeper into the data, he pointed out that Ponsi, using the IGV software ETF, found that software-specific companies are outpacing a lot of the other sectors in tech and also the market.
Companies that stand out may be no surprise: Microsoft (NASDAQ:MSFT), Salesforce.com (NYSE:CRM) and Adobe (NASDAQ:ADBE). These stocks continue their rise higher, so much so that Cramer said investors should wait for a pullback before buying any of the shares.
Dividend-paying companies with big yields - topping 5% - have caught Cramer's eye. But are they a good bet for investors?
Telecom giants Verizon (NYSE:VZ) and AT&T (NYSE:T) now both sport 5% yields. The companies, however, are struggling, as evidenced by customer losses reported in recent earnings. Cramer said "these companies don't feel safe."
Instead, he looked at retailers with 5% yields: Macy's (NYSE:M) and Kohl's (NYSE:KSS). Macy's could deliver for shareholders in the future if it continues to close stores in malls that are struggling, the Mad Money host said. But Cramer said his pick of the bunch is Kohl's.
Expedia (NASDAQ:EXPE) stock is up more than 20% year to date. The online travel giant continues to focus on growing its key businesses.
President and CEO Dara Khosrowshahi, a guest on Mad Money, said while Wall Street analysts are focusing on the company's margins, "I'm focused on growth." And that means putting money into brands that are delivering for Expedia. "Whatever is winning, we put money behind it," he said.
Two sites that are delivering for the company are Trivago and HomeAway, units Khosrowshahi said are "super-chargers" for the company. The CEO added Expedia is particularly investing aggressively into HomeAway as it transitions into a global transactional business.
PayPal (NASDAQ:PYPL), last week, delivered earnings that beat both EPS and revenues projections. Dan Schulman, president and CEO, told Cramer that the company "not only is adding more customers, they are using (the service) frequently." Schulman touted the 6 million net new active users PayPal added in the quarter.
PayPal also continues to forge strategic partnerships in the financial industry (the company recently added Wells Fargo (NYSE:WFC) as a partner). The push is supported by its philosophy "to be a customer champion," Schulman said.
The CEO also highlighted how PayPal's Venmo service has grown rapidly without much marketing or promotion. Schulman said Venmo's success lies in its social networking abilities. He added that PayPal is looking to take Venmo to the next step, putting the service in front of merchants.
Calls Taken By Cramer
Home Depot (NYSE:HD): Home Depot is in a sweet spot as it gears up for spring sales, its key selling period. "Don't sell," Cramer said.
Yelp (NYSE:YELP): Cramer mentioned he likes the stock. He also suggested it's an acquisition target.
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