Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday, May 23.
The market was wild on Wednesday and it was rewarding for the companies that told good turnaround stories. Case in point - Tiffany (NYSE:TIF), Lowe's (NYSE:LOW) and Ralph Lauren (NYSE:RL). All these 3 stocks were formerly hated by the market but a good turnaround story for all of them led to huge gains.
Tiffany reported a stronger than expected quarter that surprised analysts. They reported same-stores sales growth of 7% when the market expected only 2.3%. Their operating margins expanded and they gave good guidance. As a result, the stock soared 23%. Cramer attributed the company's success to good execution by new CEO Alessandro Bogliolo. "Almost overnight, he's transformed what was once the stodgiest and least-up-to-date luxury retailer around into a growth powerhouse. Bogliolo doled out credit and was incredibly self-effacing, talking about how the whole segment did well in retail, not just Tiffany," said Cramer.
Ralph Lauren reported tepid earnings but the market took notice of margins improvement and the stock rallied 14%. More importantly, Lowe's reported an earnings miss but Ackman betting on the turnaround of Lowe's by taking a stake and expecting the new CEO to drive the company towards growth led to the stock rallying 10%.
"Today's action tells me that you need to keep your eyes open for change because, boy, oh boy, has it ever been rewarded," concluded Cramer.
CEO interview - Carnival Corp. (NYSE:CCL)
As Carnival launched the second of four planned cruise ships, Cramer interviewed CEO Arnold Donald to hear what lies ahead.
Donald said in the last five years the cruise line industry has outperformed the market and the company's stock has doubled in that time. He added that cruise line opportunities are still big as almost all markets remain under-penetrated. "China, someday, will be the largest cruise market in the world. It's in their five-year plan, so if cruising is in their five-year plan, they're going to make it happen," he added.
Passenger volumes from China are the largest in Asia as they account for more than two-thirds of the volume. "We just want to be a part of that. We partnered with the China State Shipbuilding Corporation and the sovereign front, China Investment Corporation, to establish a domestic cruise line there and to build the first ship in a Chinese ship yard, so that's in 2023," said Donald.
Carnival serves 700 ports around the globe with 105 ships. Land vacations still make up 98% of the market and that is where the real competition is. Carnival's investment in technology and AI is helping the company serve guests more efficiently with the help of collected data that improves overall customer experience.
CEO interview - Global Payments (NYSE:GPN)
The stock of payments technology provider Global Payments has increased 377% in the last five years. The company reported good earnings in the last quarter, and Cramer interviewed CEO Jeff Sloan to understand more deeply the fast growing digital payment business.
"What we're most proud of and probably one of the secrets about Global Payments is that a quarter of the business is outside the United States," said Sloan on double-digit growth last quarter. More than 40% of the company's business is tech-based and they serve more than 100K restaurants and 40K schools across the US.
Asia is growing strong at 15%, where the Philippines is growing faster than China. They don't cover Europe wholesale, but smaller business functions in countries like Austria, the Czech Republic and Romania. The company provides B2B services and is not well known to consumers.
The market has turned its back on the homebuilding sector. The stock of Toll Brothers (NYSE:TOL) went down on tepid earnings as their costs rose in some markets. This led to negative pin action for the entire group. Cramer thinks the stock did not deserve to erase all its gains for the year in a single session.
Analysts are negative on the homebuilders due to rising interest rates. Cramer said the analysts have got it wrong as employment remains strong which will boost the housing market.
Viewer calls taken by Cramer
Activision Blizzard (NASDAQ:ATVI): The new game launch makes them a winner.
W&T Offshore (NYSE:WTI): Book partial profits as the stock has run up considerably.
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