Market Winners Are Getting Narrow - Cramer's Mad Money (3/7/18)
Summary
- General Electric should several good quarters before one buys it.
- Nordstrom is turning around.
- Honeywell is heading to $185.
Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday, March 7.
After a down opening on Wednesday, the bulls came back and the market recovered. This can be confusing for investors as to which market is the real one. Cramer dug deep to find out.
Cramer reiterated that the resignation of chief economic advisor Gary Cohn was not the end of the world, as the President is willing to make an exception for Canada and Mexico for tariffs. But the fact that Trump will not just stop at steel and aluminum is a real possibility. Another bear market thesis is that the Fed might raise rates depending on the non-farm payroll number on Friday. If that happens, lots of sectors will get hurt.
While the labor market is tightening, the reaction from stocks like Dollar Tree (DLTR) dropping 15% on earnings was overboard, since it costs more to employ people.
Another reason for worrying is that the market winners are getting narrow with few stocks leading. Only cloud plays and high growth tech stocks are leading the market but that will not be enough to offset the damage from other stocks. Cramer agrees that the market has room to go down but investors get spooked when just a few stocks are winners.
"Even though we got a nice relief rally today, you can't just decide. We need to remain mindful that we're operating in a treacherous new landscape since the end of January and today's sellers may not be finished or sated when they're crushing stocks, even if it feels, for the moment, that maybe we're okay again," concluded Cramer.
CEO interview - Polaris Industries (PII)
The stock of terrain vehicle and motorcycle maker Polaris went up 40% in the last year but is facing a rough patch due to the announcement of tariffs on steel and aluminum. Cramer interviewed CEO Scott Wine to find out what lies ahead.
Wine said the company is facing a rough patch but is ready to deal with it. He added that the tariffs will add about 1% to the cost but they are prepared. They don't want a trade war but advocate a level playing field.
They had huge savings from tax breaks which was invested in their employee bonuses and their business growth. Wine is bullish on the future as the company's innovation differentiates them from peers and makes them competitive.
Strategy session
Cramer continued with viewer calls in his strategy session.
The first caller was retired and reluctant to put his savings in this volatile market. Cramer suggested having 10-20% in cash for peace of mind.
Is it time to invest in General Electric (GE)? Cramer said he'd like to see some good quarters before recommending a buy.
Should Blackstone (BX) be swapped for JP Morgan (JPM): Cramer endorsed the move.
How should one invest in electric cars? Cramer suggested going for utilities like ConEd (ED) and American Electric Power (AEP).
Nordstrom (JWN)
Nordstrom has been up on bad news and the stock is 11% up from its lows.
The family wanted to take the business private since last year but has failed on multiple occasions. Even though the $50/share bid was rejected, Cramer thinks a takeover bid will be good for the company as it is in the middle of a turnaround.
The company is not only seeing higher revenues and same-store sales growth, the technical chart of the stock shows that buyers emerge on weakness. Cramer said Nordstrom is at an inflection point as their capex will keep reducing and their investments will keep paying off.
Viewer calls taken by Cramer
Honeywell (HON): This stock can head to $185. It's a winner.
Royal Dutch Shell (RDS.A) or Valero Energy (VLO): Cramer said Royal Dutch is the better of the two but he is not a fan of fossil fuel stocks.
Match Group (MTCH): It had a great quarter and Cramer likes the stock.
JD.com (JD): Cramer is not a fan.
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