Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday, July 31.
"It's really hard to stay positive about this market in the face of conventional wisdom that is so darned negative," said Cramer. There are many factors stopping the bull such as Washington's failure to pass healthcare and tax bills and the North Korea situation. He expects Congress to pass simple bills like repatriation of overseas funds.
Despite the gridlock, Cramer is not entirely pessimistic. Analysts have called the FANG stocks along with Nvidia (NASDAQ:NVDA) overvalued. Cramer agreed that these stocks have gone into the overvalued territory, but they had strong reports. "Here, again, though, you need to understand that the key to this bull is its rotational nature," said Cramer.
The money is flowing out of high tech names into some biotech stocks and other companies doing M&A. "As far as the aging and allegedly senile nature of the bull? I think that's the top down talking. I analyze the actual stocks from the bottom up and things look OK," he added.
He also compared the current market with the Great Depression of 1929. "Every book about the great crash of 1929 mentions how the shoeshine boys around the New York Stock Exchange were playing stocks with borrowed money right up until the crash. That kind of thing is cited as the sure sign of a top," he said. This is not happening currently for sure.
Still, "nobody got hurt taking a profit," said Cramer. He is raising money for his charitable trust to keep cash to buy when the stocks cool off. "The skepticism has been so darned thick that until we get others naming their pets after cloud plays or touting stocks while shining shoes, I'm going to remain constructive on the future, the future of the best-performing asset class, the future of equities," concluded Cramer.
New York Times (NYSE:NYT)
President Trump has said close to 50 times on Twitter that The New York Times is failing. Cramer has a different take. "Bizarrely enough, when you look at The New York Times as a company and as a stock, it's not failing. It's thriving," he said.
He pointed at their Q2 earnings and the fact that the stock is up 70% since the election. Their digital-only subscribers grew 50% Y/Y. The rise of the internet has transformed news from a necessity into a commodity.
When the company was at its low in 2009, it took Mexican billionaire Carlos Slim for a turnaround. By 2011, it cleaned up its balance sheet and introduced a paywall for its online operations and yet the subscription revenue was flat by 2016. "The crux of the problem? OK, newspaper companies like the Times make their money in two ways: from circulation fees and from selling advertising. Believe it or not, contrary to President Trump's take on The New York Times, the company's circulation revenue has actually been growing pretty steadily year after year after year. It's on the advertising side where they've been getting killed," said Cramer.
Since the election, the Times got 41,000 new subscribers in the first week. Digital operations account for 61% of sales and 33% comes from advertising. "So where do I come down with this? First, sorry, Mr. President, but The New York Times is thriving here, not failing," said Cramer.
"But while the company's made a remarkable turnaround, I think it might be too late to buy the stock here. Easy money has most certainly been made. But on a decline, it sure is tempting. If the Times is failing, it's failing upwards," said Cramer. The stock is expensive at 26 times earnings but Cramer thinks it can be bought at lower prices.
CEO interview - Domino's Pizza (NYSE:DPZ)
The stock of Domino's fell 10% after the last earnings which were good. Cramer interviewed CEO Patrick Doyle to hear more about the quarter.
Doyle said there was weakness in Europe and the U.K. "You know, these are fixable problems. There is nothing going on in the economies, anything external. This is about us executing, getting this right and we know how to get this done," he added.
The management is not happy with their 2.6% overseas same-store sales as it did not meet their expectations of 3-6%. "Ultimately, we've got a lot of best practices around the world that we can share with them. Obviously, the U.S. still put up a terrific quarter and so we know what to do with the business." he added.
Doyle said that the weakness had nothing to do with McDonald's (NYSE:MCD). There is nothing from a competitive standpoint that they are not doing. They are not slowing their store growth and franchises are still building stores.
He concluded by saying that everyone is talking about delivery now. "We've been doing delivery for 57 years. We're really good at it. And so that service, convenience, everything continued to come together very, very well for us, so the domestic story continues to be absolutely fantastic."
In a market with red-hot, high-flying tech names, there are 3 B's that are delivering growth in the medical device space - Baxter International (NYSE:BAX), Becton Dickinson (NYSE:BDX) and Boston Scientific (NYSE:BSX). Their stocks are up 36%, 22% and 23% respectively in 2017.
All three are medical device plays but deal in different products. Baxter makes dialysis machines and infusion systems, Becton Dickinson makes needles, syringes and catheters and Boston Scientific makes pacemakers and defibrillators and other cardiovascular and endoscopic devices.
As the aging demographic of America increases, a lot goes in their favor and they are able to post such growth. They also innovate rapidly by introducing new products and improving existing ones. There are a lot of positives about these growth stocks and yet they trade at 23, 19 and 19 times earnings respectively.
"What a great place to be when you hear about all of the turmoil. None of it's going to affect their businesses. It has nothing to do with them. The three 'killer B's' of the medical device space are some of the market's strongest unsung heroes. Baxter, Becton Dickinson and Boston Scientific, they just keep roaring, and you know what? I don't think they're done. I think all three have more room to run," concluded Cramer.
Viewer calls taken by Cramer
Wayfair (NYSE:W): It's a short-squeeze. Cramer suggested avoiding the battleground.
Barnes & Noble (NYSE:BKS): Cramer likes the company but not the stock.
Disney (NYSE:DIS): It's a long-term buy although there are short-term bumps.
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