Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday, November 20.
This is the time of the year when money managers "anoint" stocks to show clients at the end of the year they have invested in winners. For a stock to qualify as a winner, it should be having a great year; there should be a long-term thesis; nothing should go wrong between now and year-end for the stock. Cramer gave a list of the top 15 stocks that will be anointed this year.
- Alibaba (NYSE:BABA): This is the biggest retailer in the world and it had a good singles day. "Alibaba's stock may be up 114% for the year, but I think portfolio managers would be happy to pay even more for the top Chinese stock in a year where China again became investable."
- Adobe (NASDAQ:ADBE): It has strong sales and new cloud- and AI-based products. Adobe has been a consistent performer and is up 76% for the year.
- Align Technology (NASDAQ:ALGN): The stock is up 165% for the year and yet it's a cheap stock for momentum chasers as dentists want to sell the new product.
- Amazon (NASDAQ:AMZN): "Amazon's really two companies: a retailer and a web service provider. If you broke them up, the sum of the parts could be worth $1T. Given that Amazon currently has a market cap of $541B, that gives portfolio managers plenty of leeway to buy more."
- Apple (NASDAQ:AAPL): The world's largest company sells at just 14 times earnings. The stock is up 46% for the year and their new products are loved by everyone.
- Arista Networks (NYSE:ANET): Cramer doesn't know much about Arista, but the stock is up 149% for the year. He also thinks this Cisco (NASDAQ:CSCO) rival looks unstoppable.
- Boeing (NYSE:BA): It's up 70% for the year and the demand for their aircraft is high.
- Home Depot (NYSE:HD): The stock is up 27% for the year and has more room as the home economy improves.
- Lam Research (NASDAQ:LRCX): The stock is up 103%. "This semiconductor equipment maker just keeps putting up fabulous numbers, yet it hasn't been rewarded nearly as much as it deserves given that it sells for just 14 times earnings. That's nuts, people."
- 3M (NYSE:MMM): Despite the great earnings, the stock is up 30% for the year. Cramer called it "the ultimate blue chip for 2017".
- Nvidia (NASDAQ:NVDA): Their chips are in almost everything. Many institutions are buying the stock no matter what the price.
- PayPal (NASDAQ:PYPL): It's up 92% for the year and Cramer thinks the stock can surpass $100 in the near term.
- Square (NYSE:SQ): The stock has run up 232% for the year and is still riding on the bitcoin theme.
- VMware (NYSE:VMW): Just like Adobe, VMware has good products.
- Wal-Mart (NYSE:WMT): This is the only company to challenge Amazon, is up 41% for the year and still trades at only 22 times earnings.
"At this time of year, it's very unlikely you'll get a pullback in the anointed winners, as hedge fund buyers can't get enough of them. But if by some fluke, by some chance, any of these names dips, well, you should jump all over them," concluded Cramer.
Netflix (NASDAQ:NFLX) and Amazon
"Rarely do you come across an executive who's so comfortable in his own skin that he can speak his mind about so many different companies. Most execs insist they can only speak about their own businesses; they don't want to step on anyone else's toes," said Cramer. Liberty Media (QVCA) Chairman John Malone called Amazon the "death star" and said that by using scale, reduced cost and convenience, Amazon can strike every industry on the planet.
The same goes for Netflix (NFLX). It is hurting cable companies as Netflix controls the content, distributes it internationally, uses AI to know what consumers are watching and want to watch. "Netflix will beat anyone trying to scale. They've got the directors willing to work for them. And that's why Malone said 'it's way too late' for the cable companies to band together to stop Netflix," said Cramer.
Netflix's valuation of $83B doesn't justify the opportunity it has. "After watching that interview with Malone, I've gotta tell you that, if anything, I think Netflix's stock is cheap at these levels and I think it can go higher. Maybe much higher," concluded Cramer.
Ollie's Bargain Outlet (NASDAQ:OLLI)
Ollie's Bargain is a discount retailer that Cramer recommended 19 months ago and it has doubled since then. "This company is an off-price retailer, and that's the best acting portion of retail. It means when other merchants are struggling, Ollie's comes in and buys their excess inventory for very low prices. Very often, the rest of retail's pain is their gain," said Cramer. Ollie's is like a scavenger that feasts on national store chains shutting down. When Citi downgraded Ollie's saying the expectations have got high, Cramer decided to look at the bear case again.
"The bullish thesis has been the dominant theme here ever since Ollie's came public, and that was back in the summer of 2015," said Cramer. Their deep discounts and customer loyalty program is loved by consumers. The company has 240 stores and a distribution network that can support 400 stores which gives them room for growth.
The bear thesis says that the expectation might have gone ahead of itself as dollar stores, mass-market retailers and Amazon prohibit many of Ollie's brand-name products from being sold online. The planned construction of their new distribution center will narrow its profits margins in 2020. "Put it all together and Citi's basically saying that the stock has run very far very fast, and while the business sure looks good right now, there are all sorts of ways things could potentially go wrong," said Cramer.
While he doesn't fully agree with Citi's thesis, the stock is not cheap trading at 32 times next year's earnings. This is the kind of stock to buy on weakness only for the long-term thesis.
CEO interview - CyberArk Software (NASDAQ:CYBR)
CyberArk had a good quarter with earnings and revenue growth. Cramer interviewed CEO Udi Mokady to find out what lies ahead for the company.
Mokady said that they are in process of globalizing their salesforce and are proactively looking for new customers. He added that cybersecurity is not just about protecting banks or military. They signed a deal to protect a large hospital system and are signing customers from retail, manufacturing and government as everyone can be a target.
Mokady said that cloud is the new frontier for hackers. CyberArk now wants to prevent the dark side of bitcoin as well. No matter the increasing popularity, the main way to pay off ransomware is still bitcoin. "We're trying to prevent it. We work with enterprises who are mostly trying to combat it, but we do see, especially small organizations, often succumb to the ransom," he added.
"Geopolitical tensions increase cybercrime. We can't stop them, but we can help with cyber hygiene to make sure that you can catch a cold, but it won't bring you down. That's our approach," he concluded.
Viewer calls taken by Cramer
Johnson & Johnson (NYSE:JNJ): It's down on profit-taking. It's a buy.
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