Market Keeps Rewarding Growth - Cramer's Mad Money (6/20/18)

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Includes: AIMT, AMC, CMCSA, DIS, FOX, FOXA, FSLR, HRB, I, INTU, PYPL, SPOT, SQ, THO, TWTR, WGO, WSM
by: SA Editor Mohit Manghnani
Summary

GE has not found a bottom yet.

Are H&R Block services in a secular decline?

Wait for Intelsat to come down before buying.

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday, June 20.

Yes, the markets trade on interest rate hike and tariff fears but in reality, they love growth. That's what happened with Twenty First Century Fox (FOX, FOXA), which saw a higher bid from Disney (NYSE:DIS). Comcast (NASDAQ:CMCSA) can still up the bid as it has good cash flow. People close to the situation believe that Comcast may raise their bid once more. Both the stocks were up.

"The market is basically saying that to the victor and the loser go the spoils. The victor gets Fox's fabulous international growth; the loser will have enough borrowing capacity to embark on a truly mammoth buyback," said Cramer. The Fox assets include a competitive business in India, franchises like Family Guy and Alien and a large stake in Hulu. It's all about growth and hence the companies are fighting for it.

"Make no mistake about it, Disney and Comcast will keep rallying until the market perceives that they're finally paying too much for growth. Judging by today's extremely positive action in not one, but both stocks, I don't think they've gotten anywhere near those levels with their bids," he added.

When it comes to growth, the market is rewarding the FANG stocks due to their accelerating growth. Thor Industries (NYSE:THO) went up as rival Winnebago (NYSE:WGO) had good earnings and said that inventories have returned to normal levels. Other growth stocks that Cramer likes are Twitter (NYSE:TWTR), Spotify (NYSE:SPOT), Square (NYSE:SQ) and Paypal (NASDAQ:PYPL).

On the opposite side, the market hates stocks with no growth. Oracle (NYSE:ORCL) going down after earnings and Starbucks (NASDAQ:SBUX) declining 9% after reporting slowdown in same-store sales are prime examples.

General Electric (NYSE:GE)

Every time it feels that GE has hit a bottom, it still goes lower. GE has now been booted off the Dow Jones Index. Has the stock found a bottom finally? Cramer gave his theory.

The company still has many pain points. It is spending $6.2B in 2018 and $15B in the next 7 years to stabilize the insurance portfolio. "These charges, which could not really be foretold by anything public, make you feel like it doesn't even matter what the real earnings are here, not that you can tell what they are anyway," said Cramer. Many segments like aerospace, health care, construction and oil and gas are running fruitless. The company's financials have been opaque.

GE is also under investigation by SEC for its accounting practices. The health care costs and in-home care costs are also rising. The company still makes good jet engines and turbines and healthcare equipment but it can be overshadowed by rising healthcare costs.

"When GE finally puts this issue to bed and takes a big charge for its Alstom acquisition, then I think we talk bottom. Until then, irony is not a good reason to buy any stock, least of all this one," concluded Cramer.

CEO interview - Williams-Sonoma (NYSE:WSM)

Williams-Sonoma reported a good last quarter and their stock is up 21% in the last three months. Cramer interviewed CEO Laura Alber to hear what lies ahead.

Alber said that when she started with the company 21 years ago, almost 40% of their sales were from catalog. As they knew how to ship directly to customers, that quickly evolved into e-commerce and they derive 54% of their revenue from online sales. Commenting on physical stores, "Even Amazon believes that they should have some real spaces. When you go in a store and it's wonderful, it helps you make the purchase."

Williams-Sonoma was a multi-channel retailer always. "We see our best customers cross-channel. There's a lot of people just online, there's a lot of people just focused on big stores. We are focused on both because we know that's how you shop," said Alber.

The company has some big projects underway. They are using data to predict what the customer would buy next and they are investing in 3D AR technology that will help consumers design their room. There are investments in store remodeling and advertising.

The company is investing in video. "We're testing all sorts of things including partnering with bloggers, emailing videos to customers and hopping aboard the wildly popular recipe-video trend using Williams-Sonoma appliances. Customers love the movement. They love learning how to do things," said Alber.

She added that video advertising on YouTube, Facebook and even their own websites really work.

Intuit (NASDAQ:INTU) vs. H&R Block (NYSE:HRB)

Fundamentally, both Intuit and H&R Block help consumers file taxes easily and provide other services, but day after day, these companies are becoming less comparable.

Traditionally, H&R Block is a player having 10,000 locations where customers can visit to get their taxes done. However, their recent earnings showed that they are less relevant to customers and are closing 400 locations. Their guidance for 2019 was disappointing.

Intuit, on the other hand, had a good quarter and is a software company that allows both consumers and small businesses to file taxes online. Their software Turbo Tax Live allows users to speak to a tax professional if they need help. The company makes money all year round.

Cramer said these two companies are not comparable anymore as in-person tax preparation is in a secular decline versus digital.

CEO interview - Aimmune Therapeutics (NASDAQ:AIMT)

Aimmune Therapeutics is getting a new CEO. Cramer interviewed retiring CEO Dr. Stephen Dilly to find out about their food allergy drug.

Dilly said that more than 20M in the US suffer from food allergies and 3M from peanut allergies. These patients need to stay away from anything that contains peanuts. "Peanut allergy is very interesting, but another allergy you might not have thought about is egg allergy," he added.

Aimmune's drug aims to introduce patients to proteins they are allergic to and build their tolerance so they can be protected from accidental exposure. The company's aim is to allow kids to get milk and eggs back in their diet. "They're not getting a proper diet, they don't thrive, they don't grow as well as they should. And so with Nestle, what we're doing is looking at all the sort of gamut of different food allergies that we could treat and thinking about the ones where, like peanut allergy, it's about prevent and avoid. But there are the ones like milk and egg where the objective is to reintroduce into the diet," he concluded.

Viewer calls taken by Cramer

Intelsat (NYSE:I): This stock has taken off. Let it come down before buying and Cramer admitted he has missed the bus.

AMC Entertainment (NYSE:AMC): It's going to work.

First Solar (NASDAQ:FSLR): It's a cheap stock but there is a lot of politics involved in the stock and it has been upgraded and downgraded many times.

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