Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday, May 1.
The real killer of stocks is not interest rates or inflation, it's the burden of unrealistic expectations. However, this is not the failure of stocks but that of analysts who have been upgrading endlessly. Apple (NASDAQ:AAPL) is an exception to this as the stock had estimates cut by analysts many times due to supplier surveys and channel inventory checks. When Apple reported after the market closed, it shocked the market and the stock went up. It sold more iPhones than anyone expected including the new iPhone X.
"The service revenue, bolstered by 100M new customers year over year bringing paying members to 270M accelerated dramatically, and the expected big guide-down didn't occur, even if the rumored $400B buyback didn't occur, either," said Cramer. CEO Tim Cook echoed similar sentiments on the conference call.
He was also positive on the US-China relationship despite how the market is reacting. "I am pretty optimistic there. I think that China and the U.S. have this unavoidable mutuality where the U.S. can only win if China wins, China can only win if the U.S. wins and the world can only win if both win," said Cook on the CNBC interview to Cramer.
However, for other stocks where expectations have been rising, this leads to even good quarters appearing as disappointments. That was the clear case with Caterpillar (NYSE:CAT), Cummins (NYSE:CMI) and United Technologies (NYSE:UTX) as they went down on good earnings reports.
Analysts seem to control the direction of the stock instead of earnings. If the analysts set proper expectations, stocks would go up on good news and not down.
Off the charts
Cramer went to the charts with the help of technician Marc Chaikin to review the oil refiners and industrial stocks.
The stocks of oil refiners have consistently been making new highs. Chaikin believes they can withstand the market downturn and should be bought on pullback. The stock of Marathon Petroleum (NYSE:MPC) has been in the news on the acquisition of Andeavor (NYSE:ANDV) which will make it the largest refiner. The Chaikin Money Flow indicator and Relative Strength tool are showing bullish signs. The Chaikin Power Gauge shows positive signs too. "As far as Chaikin's concerned, this is a stock that has nearly everything going for it from a technical perspective. Even with that not-so-hot quarter the company just reported, the Andeavor merger will turn Marathon into a powerhouse; the top refiner in this country. The selling here is very excessive," said Cramer.
The daily chart of EOG Resources (NYSE:EOG) also fits similar criteria. It has been going up along with the price of oil. All three indicators show a bullish sign. If oil goes down from here, the stock has floor of support at $110. "You might want to think about picking some up in a pullback. If you feel compelled to own an oil producer here, you could do a lot worse than EOG," said Cramer.
The chart of General Electric (NYSE:GE) is interesting. The Chaikin Power Gauge turned bullish last week after staying neutral for 18 months. The RSI is negative but Chaikin Money Flow is showing good signs after being in the negative territory. Cramer believes a lot changed after GE reported the first quarter.
"These charts, as interpreted by Marc Chaikin, suggest that Marathon Pete, EOG Resources, and General Electric are exactly the kind of stocks you might want to buy into the current weakness," concluded Cramer.
CEO interview - AGCO Corp (NYSE:AGCO)
AGCO reported good earnings along with a 7% boost in dividend. Cramer interviewed CEO Martin Richenhagen to hear more about the quarter.
Richenhagen was excited about the bounce back in North American agriculture as their revenue went up 30%. Internationally, they saw strength in England, Germany and France and weakness in South America which according to him will pick up soon.
When questioned about trade tariffs, Richenhagen was not happy with Trump's plan. "We like free trade. We don't like all kind[s] of protectionism. We don't like sanctions. We don't like customs. We want to do business all over the world," the CEO told Cramer on Tuesday. "The problem with China, for example, hitting back is not so much our problem, but it's a problem for the American farmers. So what the government is doing right now, I think, is not really well thought through, and they're always surprised by the reactions. I hope they learn," he said.
"I think it's stupid to believe that with this kind of protectionism, you can achieve anything. That's maybe old people with old ideas like Wilbur Ross, who doesn't know about business anymore. I know him pretty well. The guy seems to be sharp. He made money when, basically, Bush sanctioned steel, and so maybe he believes that this is good for the industry. I don't think so. I try to very politely raise my voice, but I think right now we have people in Washington who don't listen. They don't read, they don't listen and they have, maybe, not the brightest background, I would say," added Richenhagen.
After the tax reforms were passed, the market rallied. However, the market has repealed all those gains. Despite many believing in doomsday for the market, the economic data says otherwise. There is strength in the U.S. economy.
After interviewing many CEOs, Cramer has realized how bullish they are. All the utility companies are seeing a pickup in energy usage which is a sign of economic growth. Ford (NYSE:F) is seeing an uptick in F-Series pickups which show the strength in small businesses. First Data (NYSE:FDC) and Visa (NYSE:V) are doing well which shows strength in finance.
The interest rates are rising and yet the housing companies have found a way to grow which is seen in their revenue and profit. Companies are looking to hire more and acquire other companies with the extra cash saved by the lowered tax rate. Things are good.
Viewer calls taken by Cramer
Skyworks Solutions (NASDAQ:SWKS): They are going down on their relationship with Apple. This is a roller-coaster due to U.S.-China relationship. Cramer still expects good earnings from them.
CRISPR Therapeutics (NASDAQ:CRSP): The stock is good but the sector is not.
Southwestern Energy (NYSE:SWN): As much as oil has gone up, natural gas has not. Southwestern Energy has been going down due to too much natural gas. Cramer is not a fan although the stock can bounce back.
Arconic (NYSE:ARNC): Their conference call was not good and Cramer said one might have to wait on this stock.
Get Cramer's Picks by email - it's free and takes only a few seconds to sign up