Market's In A Confusing Zone - Cramer's Mad Money (5/24/17)

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Includes: CAT, DOW, FDX, GRUB, HD, JPM, LOW, PSA, PVH, TTWO, UPS, VALE, XPO
by: SA Editor Mohit Manghnani

Summary

Europe and China are seeing sales growth for Tommy Hilfiger and Calvin Klein.

JPMorgan and Caterpillar are the key stocks to watch to get a reading on the market.

Vale can go up to $11, but not more than that.

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday, May 24.

Jim Cramer reiterated that it's tough to figure out where the market is headed. Looking at both bull and bear cases, he thinks that neither extreme will happen.

Considering the extreme bear case, Cramer thinks the likelihood of Fed taking away liquidity or President Trump's impeachment is zero. It's not going to happen.

Considering the bull case, American Nobel laureate and economist, Robert Schiller, who is also a bearish guy said that he sees the markets at least 50% higher because the Republicans will eventually get the tax cuts passed.

Cramer doesn't know who's correct. Even earnings are giving mixed signals. Lowe's (NYSE:LOW) stock got hit on an earnings miss and it took the entire sector down. However, Home Depot (NYSE:HD) reported good numbers and gave an indication of a strong economy.

Cramer said that pessimism often leads to missing good stories like Home Depot. Bottom line is that the market is in a confusing zone.

CEO interview - PVH Corp (NYSE:PVH)

Retail might be in a difficult space but PVH reported good numbers along with rising gross margins. Cramer interviewed CEO Manny Chirico to hear more about the quarter.

According to Chirico, Europe and China saw big gains in sales. The upside was a surprise. Their order books are full and people are loving Tommy Hilfiger and Calvin Klein brands. The story in the US is different. The retail industry is seeing a shift due to store closings.

Chirico said the US has too many stores which makes distribution an issue. He is happy with the store closings and called it a move in the right direction. The key to manage the US is to control expenses and manage inventory tightly.

Cramer said he is bullish on PVH.

Stocks to watch

Cramer remembered the old days before cell phones, where he was on the road calling Goldman Sachs (NYSE:GS) using quarters to find out about the overall market. Since one could ask for quotes on only a few stocks, Cramer chose important stocks to get a read on the entire market. Today, he wants to know how JPMorgan (NYSE:JPM) and Caterpillar (NYSE:CAT) are doing. These stocks are the key to this market.

Since financials form 20% of the economy, they have a huge impact on the overall market. JPMorgan is most levered to interest rates and any reduction in regulations or compliance will highly benefit them.

Caterpillar, on the other hand, gives a reading of how the rest of the world is doing. Be it Chinese infrastructure or coal mining, the performance of Caterpillar gives an idea of how the world is functioning.

CEO interview - Take-Two Interactive Software (NASDAQ:TTWO)

The stock of Take-Two Interactive went down on the announcement of a delay in 'Red Dead Redemption 2'. The company then reported solid earnings and the stock rose again. It's up 58% for the year. Cramer interviewed CEO Strauss Zelnick to find out what lies ahead.

Zelnick said that Take-Two has evolved from a one hit business to a sustainable one where there is user engagement that is monetized. They have higher gross margins compared to other years. He added that delaying 'Red Dead Redemption 2' was a tough decision but they focus on quality and hence the wait.

Zelnick was also excited about the company's joint venture with the NBA to create an e-Sports league. It will be the first competitive gaming league for a pro sports franchise. 17 NBA teams are participating in the league and there are 80M fans around the world.

Cramer continues his bullish rating on the stock.

CEO interview - GrubHub (NYSE:GRUB)

The stock of the online food ordering and delivery service GrubHub is up 14% in 2017. They had a good Q1 where they showed solid revenue growth. Cramer interviewed CEO Matt Maloney to hear what lies ahead.

Maloney said GrubHub now has the right restaurants in the right markets. Their customers are happy and GrubHub is seeing double growth in smaller markets compared to the larger ones. They have 50,000 restaurants in 1,100 cities.

He added that the company is taking market share from competitors and first movers' advantage was critical for them. They have 8.8M diners and process 324,000 orders a day. He said that delivery is not a side business for restaurants anymore; it can be the main line of business.

Cramer said the growth in the stay-at-home economy is helping GrubHub and there is lot to like about the company.

Viewer calls taken by Cramer

Lowe's (LOW): Their quarter was not good but Cramer thinks it'll be fine. He prefers Home Depot over Lowe's.

Vale (NYSE:VALE): Iron ore is in excess supply. The stock can go up to $11 but not more. It has $1 down and $3 up.

Dow Chemical (NYSE:DOW): The stock has been riding and paying dividends. Cramer thinks the Dow-Dupont merger will go through and he wants investors to hold the stock.

Public Storage (NYSE:PSA): It's a baby boomer retirement stock. It has growth and good yield.

United Parcel Services (NYSE:UPS): No. Buy the stocks that are winning - FedEx (NYSE:FDX) and XPO Logistics (NYSEMKT:XPO).

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