No one knows who is safe from tariffs.
"We get a tailwind from the tariffs" - Nucor CEO John Ferriola.
Iron Mountain is undervalued.
Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday, July 19.
"Beauty lies in the eye of the investor," said Cramer after seeing Thursday's session - the market either loves a stock or hates it. Case in point is the fintech group which is growing and the market keeps rewarding them. As the world is moving from paper to plastic, the payment processors see huge opportunities. That's why the stocks of Visa (NYSE:V), Mastercard (NYSE:MA), PayPal (NASDAQ:PYPL) and Square (NYSE:SQ) are up big in 2018.
Conversely, when the market doesn't like a sector, it doesn't reward the stock no matter how good the future looks. As Comcast (CMSCA) dropped its bid for Fox's (NASDAQ:FOX) assets, Cramer thinks market should have shown love to Disney (NYSE:DIS), which will become a media powerhouse with the assets of Fox. "I think these two stocks aren’t up nearly enough on today's news and they’ll be rewarded over the coming months with a total revaluation that sends them a lot higher," said Cramer.
As Comcast looks to broaden its European exposure and build out more current distribution methods, it raised its offer for Sky. Cramer thinks the market is not giving these stocks enough credit. Disney is doing well with theme parks and hit movie franchises but market still wishes to focus on subscriber losses for ESPN. Addition of Fox's assets will make Disney a powerhouse. Comcast on the other hand will do well with Sky which has 22M paying subscribers. "Their love can seem irrational at times, but to portfolio managers, loving these stocks — especially growing media giants," said Cramer.
Lastly, IBM (NYSE:IBM) has also been suffering with the wrath of investors until the last quarter. Its cloud business is seeing good growth.
Who is safe from tariff? Who is not? These are the questions running through minds of all analysts as they try to figure out the impact of tariffs. On most conference calls, analysts raised the questions on impact of tariffs.
Alcoa (NYSE:AA), which had welcomed the tariff move on expectation of exemption for Canada, saw its stock go down 11% as the exemption never came. The company will continue to see the impact. Even domestic retailers like Five Below (NASDAQ:FIVE) will not be safe as they import from China. When tariffs can derail the stock of Union Pacific (NYSE:UNP) which saw a decline in agricultural shipments, it means that no stock is safe.
CEO interview - Domino's Pizza (NYSE:DPZ)
Domino's Pizza reported earnings and the stock went down by 5% on sales growth worries. Cramer interviewed new CEO Ritch Allison to know more about the quarter and their initiatives.
Allison said their growth was in the expected range and they still continue to deliver and forecast 6-8% unit growth. He also spoke about their new initiative "Domino's Hotspots" which lets customers order food to places without traditional addresses like beaches or parks. There are more than 200K hotspots available.
"Through this fortressing process, we’re bringing these delivery areas tighter and closer together. What that’s doing is getting us closer to the customer, so as soon as that pizza comes out of the oven, we want it in a car, with a driver and on its way to the customer. Our franchisees have really embraced this. And customers have really embraced this. We’ve gotten a lot of excitement around it," added Allison.
Their customer loyalty program continues to grow and the company's buyback continues to grow as well. They keep investing in technology and returning cash to shareholders.
CEO interview - Nucor (NYSE:NUE)
Ever since the talks of tariffs began, the stock of Nucor has been trading sideways. They reported a good quarter with 25% revenue growth and see sustainable steel use in end markets. Cramer interviewed CEO John Ferriola to know more about the quarter.
Ferriola said the tariffs on steel and aluminum led to their second-best quarter in history. Higher selling prices and shipments were at record levels and the impact of tariffs was still limited. "Certainly, we get a tailwind from the tariffs. But the tariffs really only have gone into effect, full effect, in June. So we’re just beginning to see the impact of that," he added.
The US steel imports have gone down by 1M tons from 1H17 to 1H18, which is marginal by industry standards. "If Nucor had a level playing field on which we could compete, we would be very successful? And we are. And you’ve heard me also say that we’ve spent lots of money during the downturn preparing for the inevitable upturn in the steel market. Well, it’s here. We are capitalizing on it. There should be no surprise that we had a very strong quarter," said Ferriola.
The company is investing $1.5B is eight strategic projects that will launch in 2019-2020 and create good jobs from American workers.
Cramer did his homework on stocks he could not opine on.
Senseonics (NYSEMKT:SENS): It's a small medical device company that just received FDA approval. All the gains have been eroded after the company's secondary offering. Cramer said he would stick with the big guns like Dexcom (NASDAQ:DXCM) and Abbott Labs (NYSE:ABT).
AtriCure (NASDAQ:ATRC): It's another small biotech company in the business of treatment of atrial fibrillation and left atrial appendage. Cramer is willing to speculate on it.
Live Oak Bank (NASDAQ:LOB): Live Oak Bank operates an established national online platform for small business lending. The company is fast growing but it trades at 19 times earnings. Cramer suggested waiting for the stock to report next week.
Viewer calls taken by Cramer
Entercom Communications (NYSE:ETM): The business is slower than usual but Cramer thinks it will come back.
Iron Mountain (NYSE:IRM): Cramer thinks the stock is highly undervalued and it's a winner.
Wendy's (NASDAQ:WEN): Hold the stock.
Shopify (NYSE:SHOP): It's a fantastic growth stock. Book partial profits.
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