Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday, October 19.
Stocks sold off their highs on Thursday. "That's when you need to go over all your notes that were written in a calmer moment after watching the show about what to buy, your shopping list and how, if you get a pullback that has nothing to do with the merchandise that you want, damaging just the stock but not the company, you should use it to pounce at sale prices rather than being so confused by the fog of war that you panic like everyone else," said Cramer.
It began with Unilever's (NYSE:UL) weak earnings and drop in Apple's (NASDAQ:AAPL) forecast. As every selloff is different, Cramer warned that simply buying recession-proof names will not help as charts for these companies show more downside ahead. It's best to buy the stock of companies that have recently shown strength on fundamental basis.
IBM (NYSE:IBM) showed it was at a turning point but Cramer thinks it isn't pulling back. Adobe (NASDAQ:ADBE) wasn't either as they pre-announced strong earnings. Johnson & Johnson (NYSE:JNJ) will also maintain its gains due to strong earnings. Apple, however, may go lower as the iPhone 8 news gets priced in and that would be the time to buy it.
Companies that have reported strong earnings and got analyst upgrades should be looked at. "Abbott Laboratories (NYSE:ABT), down this morning after reporting a fabulous quarter yesterday. Unfortunately, the discount didn't last past the morning. But if you caught it, hallelujah!" Cramer thinks FANG stocks are going down on profit taking, but he thinks Alphabet (NASDAQ:GOOG) is worth buying after announcing $1B funding in Lyft (LYFT).
"The buy on a pullback strategy is not a myth, it's just that you need the guts to actually stick with your game plan when everything is getting crushed and everyone around you is panicking. And, repeat after me: nobody ever made a dime panicking," concluded Cramer.
CEO interview - Skyworks Solutions (NASDAQ:SWKS)
As the tech world changes rapidly, semiconductor stocks like Skyworks have become important. The stock is up 38% for the year and they had a good last quarter in July. Cramer interviewed CEO Liam Griffin to know what lies ahead.
When asked about the cellphone market saturating, Griffin said, "I think the cell phone market is incredibly healthy and it's really about the data; this mobile internet economy is incredible. It's what we do at work, how we play, how we educate, how we interact socially. That's not changing." The top five companies in the S&P500 are all mobile-centric companies. "Mobile growth is really the catalyst behind what we do, and that forces companies like Skyworks to develop more creative engines to make that mobility happen," he added.
Commenting on the current telecom spectrum, Griffin said that it is in a digital traffic jam. 3G and 4G will not be enough to handle the number of mobile users in the world soon and hence 5G is the next thing. "5G is going to solve this. It's going to be a brand new network. If you look at the five billion mobile subscribers that are walking around this earth today, and two billion without a phone, the five billion 3G and 4G users will upgrade to 5G. New frequencies, new filtering, new technology for us. So all of that is forward-looking."
The company has a good cash position and they have been able to double their revenues in the last four years and increase their operating margin to 40%.
1987 market crash
Cramer remembered the major market crash of 30 years ago. The black Monday in 1987 had a bad crash that wiped out 20% of the market value. "But as bad as Black Monday was, believe it or not, it was the next day; Terrible Tuesday, as it was known back then that really scared the bejesus out of people," said Cramer.
Nothing worked on Tuesday. "It was as if the world had ended and it didn't matter what you owned, it was going to be beaten down to a pulp by the endless cascade of Chicago S&P futures raining on the New York Stock Exchange," said Cramer. He had started his fund in Feb. 1987 and he got a call from Karen Cramer who was a trader at a large institutional firm to sell everything. He sold his entire position apart from small holdings in JNJ and the put option made him $100K.
However, it was unclear whether he will be paid or not. When the then Fed chairman announced liquidity, things started to get normal. Cramer received the money in the following week. Everyone asks Cramer if he took advantage of the market as the economy was healthy, to which he said, "First, you didn't know the economy was sound. Markets are supposed to be forecasting machines, and even though the economy seemed strong, you simply could have no confidence that it would stay that way after two disastrous days. Second, and more important, there was no, what we call, price discovery. You just couldn't get a market of any size because nobody could figure out what the prices should be for great American companies. The market flat-out failed."
People are comparing the markets today to that of 1987. "My takeaway is that while the machines do rule, at least we have circuit breakers that slow things down and make it so the market does function, albeit at times in a fashion that forces you to use limit, not market orders, so you don't get picked off as many were in the flash crash a few years ago," he concluded.
CEO interview - Winnebago Industries (NYSE:WGO)
Winnebago Industries is the maker of motorized and towable recreation products along with support and services business. Their stock went up by 3% on strong earnings and is up 44% for the year. Cramer interviewed CEO Michael Happe to know what lies ahead.
"Winnebago has been synonymous with the RV lifestyle throughout its history. But what we're seeing today is really this race for people to get outdoors and create memories and create experiences," said Happe.
They are on a high growth trajectory and are investing to increase capacity to meet market demand. They have recently acquired RV maker Grand Design and the industry expects highest level of RV shipments in 2017.
Happe added that 80% of the RV owners still want to be connected when on the road. Hence their new products are equipped with technology to enable them.
Viewer calls taken by Cramer
Tutor Perini (NYSE:TPC): The infrastructure situation is very hard in the US. Don't buy until the situation improves.
Government Properties (NYSE:GOV): Looking at the political landscape, Cramer doesn't feel the certainty for the stock.
Blackstone (NYSE:BX): They have and raised a lot of money. It's a plain buy.
Freeport-McMoRan (NYSE:FCX): It needs China to be on fire to go up. There are better stocks to buy.
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