Seeking Alpha

Trump's Tweets Are Hurting The Markets - Cramer's Mad Money (4/5/18)

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Includes: AMZN, CELG, FB, GOLD, GOOG, MDXG, NFLX, OLLI, PEI, SIRI, SPOT
by: SA Editor Mohit Manghnani
Summary

The Toys "R" Us bankruptcy will be a tailwind for Ollie's Bargain Outlet Holdings.

Cramer digs into the Spotify IPO.

It's a good time to start a position in Randgold Resources.

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, April 5.

The volatile nature of the market has got Cramer worried. It's not going to be smooth sailing, as there are new risks affecting the market's rally.

  • A strong nonfarm payroll report that would mean further hike in interest rates.
  • Another errant tweet from Trump.
  • The trade conflict between US and China.
  • Trump's push to renegotiate NAFTA.

The biggest worry for Cramer is Trump targeting Amazon (NASDAQ:AMZN), which is pulling the FANG stocks down, thereby affecting the market directly. He advised investors to be vigilant, and said buying on weakness will not be the best action over the next few days.

CEO interview - Ollie's Bargain Outlet Holdings (NASDAQ:OLLI)

Ollie's reported good earnings, but the stock went down on lower-than-expected guidance. Cramer interviewed Chairman, President and CEO Mark Butler to find out more about the quarter.

Butler said that Ollie has beaten every estimate since coming public, which has led to more exposure with customers and suppliers, and that this year was the company's biggest ever. Ollie's loyalty program has 9 million members, and it's growing at a rapid pace as the company adds more rewards for loyal shoppers.

The company can support 950 stores and it only has 274 currently, which means there is room for growth. The Toys "R" Us bankruptcy will lead to excess inventory coming to Ollie's, and customers may soon be able to buy toys at bargain prices.

CEO interview - Pennsylvania REIT (NYSE:PEI)

The stock of PEI is down 16.6% for the year, and it yields a dividend of 8.5%. The REIT sector is seeing weakness due to retail closures and rising interest rates. Cramer interviewed Chairman and CEO Joseph Coradino to know what lies ahead for the company.

Coradino said the company is ahead of the curve, using retail bankruptcies as a tailwind. It has sold 40% of its portfolio and is reinvesting in the remaining properties.

PEI is diversifying by substituting struggling retail department stores with higher rent-paying tenants, like dining, entertainment and fitness, which is increasing the overall foot traffic to its properties.

Spotify IPO (NYSE:SPOT)

Spotify listed last week, but it was not the usual IPO process. The company chose to list the shares directly, barely had any interviews and there was no roadshow either.

In the direct listing process, the company's shares are not diluted, and whoever wants to sell can do so, as there is no lock-up. This is a rare deal, and since institutional buyers did not have pre-IPO shares, the first-day rally was not artificial. CEO Daniel Ek provided his employees and investors with an easy way to sell the stock.

The company has 159 million active subscribers, and its revenue grew 39% last year. It trades at 4.2 times revenue, while rival Sirius XM Holdings (NASDAQ:SIRI) trades at 4.9 times and Netflix (NASDAQ:NFLX) at 8.1 times revenue. If Spotify had similar valuations, the stock would have much room to go higher.

Cramer said he would buy the stock if it goes lower.

Viewer calls taken by Cramer

Celgene (NASDAQ:CELG): There could be a lot of things wrong at the company. There is no catalyst for it to go up, and hence, calling out a bottom is futile.

MiMedx Group (OTC:MDXG): This is in the group of short-sellers. Cramer said he needs to work more on this one to opine.

Randgold Resources (NYSE:GOLD): There are lot of negative things going on with the company, and the stock has come down. Start a position here.

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