Market Needs More Leaders - Cramer's Mad Money (6/5/18)

by: SA Editor Mohit Manghnani

Twitter's addition to S&P 500 shows where it's headed.

Interview with incoming Palo Alto CEO Nikesh Arora.

Pan American Silver is the best play on silver.

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

Even though the market was up on Tuesday, Cramer was concerned. That's because only 1-2 groups have been leaders while the others lag behind. This isn't a good sign. Tuesday was led by the usual FANG stocks and some cloud names. Coupa Software (NASDAQ:COUP) gained 8.7% on good earnings and some retails stocks were up too.

Apart from these 2 groups there wasn't any other group leading. If this continues, the bull rally will run out of steam. The financials are an important group and Cramer expected the group to lead after a strong employment report. As it turns out, investors are waiting for higher interest rates. JPMorgan (NYSE:JPM) trades at just 11 times earnings while Goldman Sachs (NYSE:GS) trades at just 9.5 times. The transport, insurers and healthcare stocks are all lagging behind.

"The bulls can claim it's a work in progress, but the bears just say it ain't working. We need to see more leadership, and while I think it can emerge, right now it's just nowhere in sight," concluded Cramer.

Twitter (NYSE:TWTR)

Standard & Poor's announced that Twitter will be replacing Monsanto in the S&P 500 (NYSE:MON) as the latter is being acquired. "We're right on the precipice of the first generational change in the S&P 500 in ages and I can't help but feel that this is a metaphor for the way these companies are headed," said Cramer.

Acquirer Bayer (OTCPK:BAYRY) has chosen to scrap the name Monsanto as millennials believe that Monsanto has taken it too far and that natural and organic is the way to go. On the flip side, Twitter has become the best way to communicate in an unfiltered way. "Think of Twitter as the natural and organic way to communicate. It's gotten to the point where it's large enough and relevant enough and representative enough of the new economy," said Cramer.

Twitter has turned into a fast growing company with profitability. Monsanto has turned into a seed company with biotech trappings. "So, it's out with the once-thought-of-as-new GMO makers and in with social media," concluded Cramer.

CEO interview - Palo Alto Networks (NYSE:PANW)

Cramer interviewed outgoing Palo Alto CEO Mark McLaughlin and incoming CEO Nikesh Arora to find out what lies ahead for Palo Alto.

McLaughlin said that the company is doing well with 30% revenue growth but the future lies in the cloud, analytics, machine learning and predictive security - all of which are Arora's strength. Arora is a former Softbank and Alphabet executive. "The good news is I knew nothing about advertising or ad sales when I joined Google in 2004 and I think that worked out," said Arora who was the highest paid Google exec in 2012.

"I needed something to drag me out of my house and [make me] go back to work. I look at the cloud revolution. It's very, very early on the enterprise space. I look at the fact that we're going to have to secure our digital future in there, and Palo Alto is already an early leader in that space," added Arora.

"I'm hoping that the clients we take in the future are not just from Cisco and Fortinet and Check Point. I'm hoping that we're taking a whole bunch of clients in the cloud space because that's where this industry's going," said Arora.

McLaughlin will be on the company board as a vice-chairman. Arora looks to form partnerships with big players in the cyber-security space.

CEO interview - Wyndham Destinations (NYSE:WYND)

Wyndham Destinations is the time-share arm of Wyndham Worldwide which recently spun off Wyndham Hotels (NYSE:WH). Cramer interviewed Wyndham Destinations CEO Michael Brown to hear about the roadmap.

Brown said that Wyndham Destinations is a pure play on vacation time-share destinations after the spinoff and the industry is strong. "The industry is as strong as ever, with growth every single year. But what's interesting is the growth is really changing in favor of branded hospitality players. Over the last few years, the market share of those branded hospitality players has nearly doubled," he added.

They operate in 110 countries and are uniquely positioned to serve the largest demographic of traveler in US - the everyday traveler. "What we're seeing from consumers today is they love space, they love amenities and they love the confidence and consistency that's always delivered by branded hospitality players," said Brown.

The company will be repaying debt and returning cash to shareholders via buyback and dividends.

CEO interview - Medtronic (NYSE:MDT)

Medtronic is a medical device maker that has led to disruption by innovation. Cramer interviewed CEO Omar Ishrak to hear all about their latest pacemaker device. The company also held its analyst day.

The company's new Micra Pacemaker is one of their most cutting edge technologies. It's a tiny device that can be inserted through a catheter and provides instant recovery for patients in need. Their original pacemaker from 1950 was the size of a Walkman that was worn on the belt. The battery on Micra lasts 10 years and the patient can leave immediately after the procedure.

He also showed the company's latest diabetes management system that automatically adjusts patients' insulin levels and serves as an alternative to an artificial pancreas.

Viewer calls taken by Cramer

KKR (NYSE:KKR): It's a solid buy.

Sunrun (NASDAQ:RUN): The downgrade of solar stocks has crushed Sunrun. Cramer needs to work more on it to opine.

First Majestic Silver (NYSE:AG): It's not as good as Pan American Silver (NASDAQ:PAAS), which is the best way to play silver.


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