Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday, June 12.
"I like stocks more when they're coming down than when they're flying high," said Cramer. He added that the pullback is like a markdown which means that investors should not run away from the sale but run towards it.
The decline started with Nvidia (NASDAQ:NVDA) which had run up a lot and there was profit taking. "He wasn't saying that it had done anything wrong or made any mistakes. The stock had accumulated, after going up, up, up, a lot of weaker hands who may not even know all that much about Nvidia and these tourists were easily panicked," said Cramer referring to the analyst downgrade.
The second reason for the pullback is Apple's (NASDAQ:AAPL) downgrade. "For starters, the report talks about the valuation being too high. In reality, this stock is cheap relative to most fast-growing tech stocks, particularly the ones that sold off, and all of the consumer products companies, which I think are the most apt comparisons," said Cramer. He's not giving up on the stock yet as it is the strongest consumer brand in the world.
The third reason for the decline was the dip in growth stocks like 'FANG'. There was profit taking and rotation into banks, retail, oil and healthcare which could soon reverse. Cramer added that Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) are still cheaper based on next year's estimates.
"The bottom line is that all that cuts for an orderly decline that gives you a chance to buy stocks for well below where they were selling last Thursday. In other words, the sale's still on and that's not something to freak out about. It's something to embrace," he concluded.
General Electric (NYSE:GE)
There is a management shakeup at GE and CEO Jeff Immelt will be replaced by John Flannery. What does this mean for the stock? Cramer said his trust holds the stock and he thinks investors should buy it too. GE has been the worst performing Dow stock since Jeff Immelt became CEO. "Much has been made of the fact that Immelt became CEO just a few days before 9/11, an unlucky break given all of the exposure that GE has to the aircraft business," said Cramer.
He added that this reason is not good enough as Boeing (NYSE:BA) is exposed to the aircraft business as well, and it has returned 289% in the same time. People also consider it unfair to compare Immelt with former CEO Jack Welch who increased the company's value by 4,000% in his tenure. "First, I could argue that Welch is mortal, and it's not like there was no way for anyone to overtake the man's record. Second, Immelt's had 16 years to try to get the stock back to $40, where it was before he took over on September 7, 2001," said Cramer.
When Nelson Peltz took a position in the stock, there was renewed hope. But Immelt was unable to deliver on the cost cuts that Trian Partners wanted which led to the CEO switch. "We have been telling people that it's worth holding on to for any change, and now that we're getting one, it makes no sense to sell. I think there will be some pain here, as Flannery probably has to guide down the Street's expectations, but there's plenty of value too and I'd hold on for that," said Cramer.
Cramer said that Immelt is a solid and honest man but his execution wasn't crisp enough. He advised holding the stock to see what happens next.
Pool Corp. (NASDAQ:POOL)
The summer is hotter than ever and this means that Pool Corp. will benefit. "When we get an especially cold winter, we use more energy heating our homes and the natural gas stocks rally. When we have a particularly mild winter, people buy less cold weather apparel and companies which make North Face, tend to suffer. Likewise, when summer gets hot, people dive into the pool," said Cramer.
The company not only benefits from building new pools as home prices rebound, they also get money from maintenance and upkeep of those pools which is growing thanks to the bigger pool season. The drought in California has ended which is good news for Pool Corp. as that will mean more business going forward.
The company is shareholder friendly with a 1.2% dividend yield and a buyback of $1.2B. The company has delivered 26% CAGR since going public in 1995. "I like companies that prosper thanks to big-picture themes, and that's exactly what Pool Corp. is doing. Plus, shorter-term, the end of the drought in California coupled with the beginning of what could be a very long, hot summer make this stock very attractive right here, right now," concluded Cramer.
CEO interview - Ollie's Bargain Outlet (NASDAQ:OLLI)
The stock of Ollie's Bargain Outlet is up 160% since its IPO in 2015. The discount retailer is expanding and Cramer interviewed chairman, president and CEO Mark Butler to find out what lies ahead.
Butler said that nothing impresses buyers like a good deal. "That is retailing - the right item at the right time, but for Ollie's, it's at the right price. And that's what turns on the American consumer. Give them a bargain. It will never go out of style," he added.
The company's loyalty program has 8M members and this helps the management track the buying patterns across all its 247 locations. They are expanding and Cramer saw a bullish growth pattern in the company. "I can tell you I've never had a store lose money. It doesn't matter where we go, it doesn't matter who we're next to, it doesn't matter what shopping center we're in, each store stands on its own. We've committed to a mid-teen store count growth year-over-year, and we've been able to open up these stores at or above our expectations," said Butler.
Their two distribution centers in Pennsylvania and Georgia have the capacity to support 400 stores. They may start looking for additional distribution centers in 2019.
"In our business, the complexity is in the simplicity. We buy cheap and we sell cheap. That's what we do, and we pass the savings right to the consumer and give them a bargain. And you know what? Then we say 'Thanks,' and they come back in. So it's a pretty cool concept," added Butler.
Viewer calls taken by Cramer
Yahoo (YHOO): Sell into the tender.
Snap (NYSE:SNAP): Wait until their lock up expires in August which will give a better entry point.
Sherwin-Williams (NYSE:SHW): They had a good quarter. But half now and half after their merger performance can be seen.
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