70 S&P500 Stocks Are Hitting New Highs - Cramer's Mad Money (5/31/17)

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Includes: BA, CCL, COST, CSX, ED, EPR, EXPE, HAS, HPQ, LUV, MA, MMM, NCLH, O, PYPL, RCL, SAVE, SLB, WMT, WYNN
by: SA Editor Mohit Manghnani
Summary

Carnival Corp. is the best cruise liner.

Buy Schlumberger at $65.

Southwest Airlines is the best of breed.

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday, May 31.

The market is not as dangerous as people think. How does Cramer know this? He looked at the new high list and found that it's not only the high growth stocks that are taking the market ahead, there are 70 stocks in the S&P500 that are making new highs.

11 out of the 70 stocks are the high growth tech stocks, 23 stocks are utilities that act as bond market equivalents, which means there are 36 other companies that are leading the market.

Some of those include stocks like 3M (NYSE:MMM), Boeing (NYSE:BA) and its suppliers. CSX Corp. (NYSE:CSX) and Carnival (NYSE:CCL) show that not all rails and transports are down. Many defense stocks make the list along with healthcare device makers and toy maker Hasbro (NASDAQ:HAS). In retail, Wal-Mart (NYSE:WMT) and Costco (NASDAQ:COST) have been on the new high list for a while.

Banks and financial stocks are not doing well as they need rate hikes to rally. However, MasterCard (NYSE:MA) and PayPal (NASDAQ:PYPL) are on the list. The market is not great but it's not as bad as many perceive it to be either.

Cruise stocks

The cruise stocks have been doing well in 2017 with Royal Caribbean (NYSE:RCL) up 34%, Carnival up 23% and Norwegian Cruise Lines (NASDAQ:NCLH) up 18%. The story was different three years ago due to the Ebola outbreak and ship accidents, and the industry faced slack.

Fast forward to 2017, things are much better. The industry is expected to spend $6.8B on new ships that will carry 30,000 additional passengers a year.

"Before the rise of social media, taking a cruise was kind of an old person's game. But now that millennials feel the need to take selfies from cool locations all over the world, they're taking cruises like never before," said Cramer.

Cramer likes Carnival Corp. the most as it has cut costs, delivered on earnings and tapped the Chinese market. As cruises become more popular, Carnival will be able to raise ticket prices. The company has also raised its full year guidance. "This fall, Carnival will be launching its Ocean Medallion program. That's an interactive platform that's meant to personalize your cruising experience. And, of course, they're still cutting costs while replacing old ships with more efficient new ones," he added. It trades at 15 times earnings.

Royal Caribbean is next as it has been able to cut costs and has a superior product. It delivered $7.21 in earnings which is twice what it earned three years ago. It is investing in new technology and improving customer experience. It trades at 13 times earnings.

Lastly, Norwegian trades at 11 times earnings and the market has ignored it. It had strong earnings and guidance but the stock has not done well since then due to higher strength in the other two cruise liners. "But I think it's been punished enough. The bookings were very, very strong worldwide on both volume and price, and marketing spending is just fine if it ends up pulling in more customers," said Cramer.

CEO interview - HP Inc. (NYSE:HPQ)

HP Inc. reported solid earnings along with good guidance and the stock is up 60% from its 2016 lows. The stock was a laggard but has now caught fire. Cramer interviewed President and CEO Dion Weisler to find out what lies ahead.

Weisler said that HP is not a laggard in innovation. A high school intern prompted his team to create the new blockbuster printing device. "I said, 'Well, hang on a second, what about putting a photo on your wall? And with perfect innocence, this kid said to me, 'What, stick my phone on the wall?' And it was kind of at that point that we said, 'We've got to make print relevant. Emergency meeting, everybody. How are we going to do that?' and that's when the idea of the Sprocket came up," he said.

It's a $129 device that allows people to print photos directly from their phone. "It's about reducing that glide slope of decline that we'd seen in home-based printing, and I think it's this kind of innovation that really is required and expected of market leaders," said Weisler.

He added that innovation was the driving factor behind the company's performance along with cost cutting. "You've got to look at the market, you've got to be realistic. Get those costs under control. Then you start to think about, 'How can we innovate? How can we think through the lens of a customer and deliver sleek, beautiful designs, sprinkles of magic, deliver on a security promise across both printing and personal systems and, you know, do that in a cost envelope that really adds value to customers. And when you do that, it works," added Weisler.

He also sees a huge opportunity ahead as 3D printing kicks off and it will change the way companies manufacture products. "In the future, we're going to democratize manufacturing in a way that really hasn't changed since the assembly line more than 100 years ago."

CEO interview - Consolidated Edison (NYSE:ED)

In the second executive decision segment, Cramer interviewed Consolidated Edison CEO John McAvoy. Their recent quarter was good and their stock yields 3.3%.

McAvoy said that they have a three-pronged approach to growth. They invest heavily in infrastructure, remain conservative with finances and are moving towards clean energy. They are the fifth largest solar energy producer in North America.

He added that customers also want clean energy despite whatever is happening in Washington. The local communities are committed for a cleaner and greener future. They have spent $290M since 2009 on energy efficiency which is a huge advantage for their 320,000 customers.

Consolidated Edison is taking cyber-security seriously. They are actively testing plans for avoiding a disaster.

Viewer calls taken by Cramer

Schlumberger (NYSE:SLB): It has a nice yield and great balance sheet. Buy at $65 as oil goes lower.

Realty Income (NYSE:O): Commercial Property REITs are risky for just 4% yield. EPR Properties (NYSE:EPR) is much better.

Spirit Airlines (NASDAQ:SAVE): Cramer said that Southwest Airlines (NYSE:LUV) is the best of breed.

Wynn Resorts (NASDAQ:WYNN): It's a winner.

Expedia (NASDAQ:EXPE): Let it come lower to buy more.

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