Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday, May 23.
"It's not easy to figure out the economy," said Cramer. It's sending mixed signals and at the current moment a lot is unclear. It's like a glass half full, glass half empty situation.
On the positive side, the job numbers are the best since 1998. This signals strength. The housing economy is red hot; look at home-builder earnings. Although housing represents only 10% of the economy, the parts that come with it are seeing a good time. The travel and leisure economy is strong, as well as airlines stocks which are rallying. The revolution in technology is adding lots of jobs and money to the economy.
There are also a lot of negatives. The bond market is showing there is no demand for money and hence there is no reason to raise the interest rates. Auto sales have been weak and auto part companies reported poor numbers. Retail is struggling and the tax reforms or cash repatriation will not come in the near future.
The stocks that are leading the market are consumer packaged goods companies and utilities. These stocks are considered safety stocks which people buy in times of turmoil.
The weakness seems to outweigh the strength.
Off the charts
Cramer went to the charts to check if the recent move in video game stocks is long term or short term. He reviewed Electronic Arts (NASDAQ:EA), Activision Blizzard (NASDAQ:ATVI) and Take-Two Interactive (NASDAQ:TTWO) with the help of technician Bob Lang.
Electronic Arts has been lagging behind compared to the rest of the group. It's up 30% in the last six months. The stock gapped up two weeks ago and is consolidating gains. The move is on strong volume which shows strength in the stock. The RSI is showing the stock is ready for an up move and Lang thinks the stock could see $120 soon.
Activision Blizzard reported good numbers recently and the stock has been up ever since after its gap up opening. The money managers have been accumulating the stock. The Chaikin Money Flow indicator is strong and Lang thinks the stock should be bought on weakness.
Lastly, Lang was bullish on Take-Two Interactive as well as the charts show a bullish flag pattern and has broken above the flag on Tuesday. With a strong Chaikin Money Flow, it's a buy and can head up to $85.
The video game stocks have more room to run.
FANG's Chinese counterparts
The FANG stocks have done well in 2017. However, it's worth noting that their Chinese counterparts are doing even better. Chinese stocks like Alibaba (NYSE:BABA), Baidu (NASDAQ:BIDU), JD.com (NASDAQ:JD) and Weibo (NASDAQ:WB) are up on an average of 50% in 2017 with Weibo up 90%.
Alibaba is like the eBay or Amazon of China, Baidu is the Google, JD.com is the Amazon and Weibo is the Twitter. The growth opportunities in these stocks are tremendous and they are maturing just like their US counterparts. Investors are ignoring the short-term weakness in these stocks for long-term gains.
China has the largest internet population in the world and hence these stocks are growing. All these stocks though have growth, but are less reliable as they are not as transparent as US companies. These stocks have run up too fast which makes them dangerous.
Alibaba is trading at 22 times earnings despite 60% revenue growth and hence that can be bought. However Cramer thinks the other stocks should not be touched or chased at current levels.
CEO interview - Schneider National (NYSE:SNDR)
Schneider National is an 82-year-old trucking company that went public last month. They reported good numbers on May 11th. Cramer interviewed CEO Chris Lofgren to find out what lies ahead.
The trucking industry does not have many advantages for scale, but adopting new technology is making them more efficient. They use data and predictive analytics to improve and make changes.
The growth of e-commerce in the country is changing how the products move around. It creates opportunities to handle big items like furniture and appliances. They have made acquisitions to grow which makes them positioned well to handle the growing e-commerce.
Lofgren said the trucking industry is seeing a challenge currently. The hour of service regulation will start to take effect in December and this change is disruptive for the business. He urged Washington to pass a rule and stick with it so the industry can adopt those rules. He also thinks that society is not ready for driverless trucks yet.
Viewer calls taken by Cramer
Axon Enterprise (NASDAQ:AAXN): It's a controversial stock and an event driven stock. The CEO is doing a good job and Cramer thinks the stock is inexpensive.
LendingClub (NYSE:LC): It's too speculative for Cramer.
General Electric (NYSE:GE): The cash flow in Q1 was not good. Q2 needs better cash flow to maintain the dividend.
Tata Motors (NYSE:TTM): Cramer is not a fan of auto stocks right now.
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