Be On Your Guard - Cramer's Mad Money (7/23/18)

by: SA Editor Mohit Manghnani

'Dungeons & Dragons' strong performance led to a good quarter for Hasbro.

It's time to buy Abbott Labs.

The iron and steel business is in bull mode.

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday, July 23.

The earnings season has kicked in and it has "been more good and little bad." The economic trade policy and tariffs have kept an upper lid on the market and tensions between the US, Canada, EU and China keep building up. "Automobiles are the crux of global commerce and if we started seeing higher tariffs on cars, that’s bad for the whole market," said Cramer. However, the EU is considering a zero-for-zero tariff policy with the US which could benefit the whole market.

However, as long as the president is trade-focused and Twitter-happy, investors should be on their guard. "We know the president’s willing to pull the trigger, and someone always gets hurt when you change trade policy," said Cramer.

About earnings, Alphabet (GOOG, GOOGL) blew the numbers as did Microsoft (NASDAQ:MSFT) with their cloud revenue growth. The tech sector has done well, including Skyworks Solutions (NASDAQ:SWKS) which reported a strong quarter, although it is levered to China. The bank stocks are also rallying on a spike in interest rates and healthcare stocks rallied on pin action from Abbott Labs' (NYSE:ABT) earnings. The industrial stocks have been a mixed bag and Cramer is less optimistic about General Electric (NYSE:GE) as the stock remains a work-in-progress.

CEO interview - Hasbro (NASDAQ:HAS)

The stock of Hasbro rallied after a big earnings beat. Cramer interviewed Brian Goldner to hear what went into posting a monster quarter.

Goldner said that the liquidation of Toys R Us is complete and the company has navigated through it. They are now focusing on getting innovative products to the market and adding new retailers along with omni-channel programs.

Commenting on tariffs, Goldner said the company has strategically moved 30% production out of China for risk and cost mitigation into other countries like India, Vietnam and Brazil. They are also expanding their US production.

Fantasy game "Dungeons & Dragons" is seeing the best year for Hasbro. Their recent acquisition of the Power Rangers franchise will lead to new products in 2019 and movies later. "People are more into 'Dungeons & Dragons' today than ever before. People are re-engaged with that brand because it’s a face-to-face game, it’s immersive and it’s a game that people really enjoy playing with one another. We just announced this afternoon that there’ll be a crossover between 'Dungeons & Dragons' and 'Magic: The Gathering' in the fall, and I think our fans and gamers are going to be very excited about what’s coming," added Goldner.

They will get mobile and online games for the franchise as well.

Abbott Labs (ABT)

Cramer was impressed with Abbott Labs' earnings beat and the company's conference call which he termed as "perfect". "The reason why Abbott’s stock shot to an all-time high last Wednesday before pulling back a couple of points was the conference call. CEO Miles White literally "put on a clinic in how to orchestrate a conference call," he added.

The management responded to analyst questions by talking about the strategy and company's philosophy which is shaped to operate and execute well organically and deliver 7% growth. They laid out a well-structured plan of growth for each segment.

"White exuded a quiet confidence as he laid out all of the reasons why he believes in the company’s growth targets. If you don’t own Abbott already, I’d be a buyer right here," concluded Cramer.

CEO interview - McCormick (NYSE:MKC)

McCormick had a good last quarter. Cramer interviewed CEO Lawrence Kurzius to hear more about the performance of the acquired food division of Reckitt Benckiser's business.

"One of the things we said when we bought these brands was that these were fantastic food brands that were trapped at a non-food company. You put them into our business; we’re the experts in flavor, we’ve gotten tremendous placement in restaurants, we’ve been able to expand at the shelf. It’s really been good for us," said Kurzius.

The Frank's RedHot and French's mustard has been a reason for strength in sales growth. It resonates well with millennials. Kurzius believes it can be the No. 1 hot sauce in the world. "Frank’s hot sauce actually hasn’t been on television in over seven years. But with its prevalence in the digital world and on social media, it's already become something of a lifestyle," he added.

Commenting on tariffs, Kurzius said that the growth drivers of the company will stay intact despite the trade disputes. "French’s ketchup, for the Canadian market, we actually make it in Canada with Canadian tomatoes, so it doesn’t have a tariff. Now, in the U.S., we make it here in the U.S. as well. That goes to our philosophy of producing in the markets where we sell the product, which I think is going to help us out as we go through this whole uncertainty around tariffs," he concluded.

Viewer calls taken by Cramer

Broadcom (NASDAQ:AVGO): The stock is coming back on the merger with CA and they do not need Chinese approval for that. It's not great but it's better than most.

Cleveland-Cliffs (NYSE:CLF): The stock rallied after the analyst upgrade. The iron and steel business is in bull mode and Cramer likes Nucor (NYSE:NUE) too.


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