Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday, December 14.
The weakness in the market on Thursday was a buying opportunity according to Cramer. As the headline on Thursday was mostly dominated by Sen. Marco Rubio not voting for the new tax bill, Cramer said that these issues lead to large sellers selling the index. However, the data suggests otherwise.
Since 1927, the government has cut corporate taxes 10 times, and in the year after, the S&P has increased 11.3% on an average. During the same period, the taxes have been raised 13 times and the S&P has rallied 12% in the year after.
"Taxes just aren't nearly as important as many may think. What really matters, though, is where we happen to be in the business cycle, the level of euphoria, a dramatic increase in the value of other rival assets like bonds, and most important, the things that individual companies do to help themselves," said Cramer.
Great CEOs are working tirelessly to create value for shareholders. Cramer pointed to Disney's (NYSE:DIS) deal of buying critical assets of Fox (NASDAQ:FOX) which will give the former the scale to grow and compete. This shows that there is more to success of the stocks than the tax bill.
"When you consider all of the mergers we're seeing, when you consider activism, when you consider buybacks, when you consider dividends and just the terrific earnings we've seen from so many companies, then even after the market's recent move, I think there's a lot to like," concluded Cramer.
When not to sell stocks
Cramer was frustrated to see the bank stocks go down when the interest rate hike was announced. "What the heck? All because Fed Chair Janet Yellen didn't say the economy is red hot, so hot that incoming Fed Chair Jay Powell, her successor, had better tighten four times next year instead of the suggested three? It literally is that stupid," said Cramer.
After the stocks of major banks went down, Cramer said investors are jumping the gun. This is only because Fed did not talk about multiple rate hikes. "There's some sort of weird unrequited love for stocks that then causes a quick jilt to kick in and suddenly the romance is over," he added.
The same case was with 3M (NYSE:MMM) which according to many did not raise the guidance substantially and the stock sold off briefly. This was an opportunity to buy for those who would have seen the substance of the meeting. Similar patterns were seen with Home Depot's (NYSE:HD) and Danaher's (NYSE:DHR) analyst day.
"So the next time you see weakness in a formerly strong group, remember that stocks do get cheaper as they go down. Far too many people treat pullbacks as reasons to sell, when in reality, they can be excellent buying opportunities, especially as stocks break out of their old ranges and fail to be contained by what you thought would contain them," concluded Cramer.
CEO interview - AeroVironment (NASDAQ:AVAV)
The stock of military drone maker AeroVironment is up 103% for the year. Their recent quarter had a big unexpected profit. Cramer interviewed president and CEO Wahid Nawabi to know what lies ahead.
Nawabi mentioned that despite all negative reports about the company, the results speak for themselves. He spoke about the company's defense solutions and showed the product Switchblade, which has been around for 10 years. The military personnel use it and it allows them to monitor their adversaries and it can transform into a missile on command. The revenue from this product has topped $75M last year.
The company's electric car charging product has good market share and AeroVironment has tied up with 9 of the world's top automakers. "This represents a significant, large, multi-billion-dollar opportunity for us globally in the years to come. It's small, compact, indoor-outdoor, UL-certified, safe, and we are in the leading position in this market for both residential and commercial applications of electric vehicle charging," he added.
The company's $16,500 autonomous drone is a product from farmers and others in the agricultural industry. "What we've done is we've taken drones and software analytics and turned it into an app. If you can turn on a tablet, push go, the drone and the software does all the rest. It's fully automatic: take off vertically and transition to horizontal flight, come back and land on its own while you're having a cup of coffee," he concluded.
CEO interview - Nutanix (NASDAQ:NTNX)
The stock of cloud provider for servers - Nutanix - came public 14 months ago at $16 and since then has been on a roller coaster ride by rising to $37, falling to $14 and trading near $36 currently. Cramer interviewed CEO Dheeraj Pandey to know what lies ahead.
Nutanix leads to customers swapping bulky hardware for software- and cloud-enabled data centers. Pandey compared this to the introduction of iPhone. "Before iPhone, nobody really knew how to really put an appliance or a phone around it. When Apple showed their design pattern of what a smartphone should look like is when Android really gained credence," he said.
As everything goes digital, data centers are also going digital and single-purpose servers are being replaced by software. Pandey also acknowledged that they are a younger competitor to VMware (NYSE:VMW) and they have a different philosophy.
Cramer said that the data center market is big enough for both companies.
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