Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday, December 11.
What's the reason behind the market's endless rally? "Stocks have indeed come very far, very fast, we're right on the cusp of multiple rate hikes, there was a terrorist attack in Times Square, we've got a special prosecutor investigating the White House and last week we almost had a government shutdown that was only temporarily averted. Yet stocks are in great shape," said Cramer.
When job growth is strong, people are confident and when that happens, they buy homes, cars and devices etc. The economy is strong, manufacturing is growing and exports of natural gas continue to rise.
More importantly, the anticipated tax bill promises to bring benefits to businesses and those that pay higher taxes. When giants like Boeing (NYSE:BA) get tax benefits, it will result in buybacks and dividend payments. They will also use the money to hire more and innovate. "We know they have far more plane orders than they can handle. They need to expand their capacity. Maybe they get the money to make that happen," said Cramer. Aerospace is generating a ton of business.
The banks will also get a boost from the rate hike and deregulation and retail is also seeing a pullback. "I think the reason why this market keeps hanging in there matters a lot more. The truth is, when the economy's this good, you are indeed unlikely to get a sustained decline," concluded Cramer.
Bitcoin futures started trading on the exchange and the euphoria around it continues. "Along comes Bitcoin and its related cryptocurrencies, and while I'm concerned that they're too disorganized, too dark, too dependent on software that then can be hacked, I don't want to begrudge anyone from trying to profit from anything," said Cramer.
There are two things Cramer doesn't like about Bitcoin - first, a commodity should not trade at different prices on different exchanges. The newly opened futures should allow price discovery going forward. Second is the cryptocurrency's parabolic move.
"I never want to stand in the way of anyone making money as long as they know the risk. So if you want to put your money in Bitcoin, please, ask yourself, do you know the risk? And if you do, be my guest. I'm not stopping you. If not, though, maybe you should be on the sidelines, because my first rule is do no harm," he concluded.
Auto parts retailers
Many times, the market overreacts to bad news. After the recession, people started holding on to their cars for much longer which resulted in higher maintenance. The auto part retailer stocks started gaining from 2013 to 2016, only to fall later.
The retailers attributed the weakness to a mild winter and lagging tax returns as reasons for earnings shortfalls. Many other investors also saw competition from Amazon (NASDAQ:AMZN) as the reason for declines in the stocks of O'Reilly Automotive (NASDAQ:ORLY), Advance Auto Parts (NYSE:AAP) and AutoZone (NYSE:AZO).
Cramer said these fears are overblown and that can be seen from strong earnings and same-store sales posted by these 3 companies. Advance Auto beat earnings and reaffirmed guidance, AutoZone had a strong quarter and O'Reilly raised its full year guidance.
"I've even recommended Advance Auto Parts as a takeover target at the Deal Economy conference a couple weeks ago because Jeff Smith, who runs Starboard Value, the activist fund, is Advance Auto's chairman. I bet he'd love to get a deal out of this one," said Cramer.
All these stocks are still cheap with Advance Auto trading at 17 times earnings, AutoZone at 14 and O'Reilly at 19.
Acadia Pharmaceuticals (NASDAQ:ACAD)
Acadia has been a roller-coaster ride. "A lot of people don't like roller-coasters, so even if you like what I'm about to say about the stock, it may not suit you. That said, I think that Acadia's got enough going for it that this stock is indeed worth speculating on, meaning you can invest a small portion of your discretionary mad money portfolio in Acadia. Not for your retirement money, but I like this one," said Cramer.
It's a biotech that develops treatments for central nervous system disorders like mental illness and Parkinson's. The market for Acadia's drugs is huge. Its drugs are one of a kind and the ones in clinical trials reduce the severe side effects from treating serious psychosis.
It's still a one drug company that is depending on the latest clinical trial data which was positive in 2016 and not in this year. There has also been chatter of a takeover. "As far as I'm concerned, the bullish story is intact, it's just that this stock goes through periods of being overly liked followed by periods of excessive hatred. Frankly, this was, I would say, the most volatile stock that I've ever done the work on," concluded Cramer.
It's worth speculating on a pullback.
Viewer calls taken by Cramer
Insperity (NYSE:NSP): Cramer likes the stock but he advised not buying more at these levels.
Johnson & Johnson (NYSE:JNJ): Cramer sees JNJ going to $155 without a problem.
Carvana (NYSE:CVNA): The stock is up and Cramer would like to find out more before opining.
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