This Sell-Off Isn't Special - Cramer's Mad Money (8/15/18)

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Includes: AMD, GM, HAIN, KMB, M, NVDA, NXPI, POST, QCOM
by: SA Editor Mohit Manghnani
Summary

Sen. Elizabeth Warren talks about the proposed Accountable Capitalism Act.

Post Holdings has started to look attractive again.

There are better semiconductor stocks than NXP.

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday, August 15.

As the global markets sell off, Cramer said it's not as special as it seems. He listed the reasons for which the market is worried and almost all of them are not long-term concerns.

The issue with Turkey isn't settling down, as they put retaliation tariffs on U.S. goods and the Lira has recovered 7%. Cramer called their debt crisis a man-made issue which is easy to resolve. European banks are on the lookout as they have lent money to debt-ridden Turkey, but the U.S. banks have no exposure.

Next concern in the market is China, which according to many is playing the long-term game for trade and tariffs. The sell-off in China's stocks was due to their relationship with Europe and Turkey's crisis which is not related to the U.S. economy.

The market is also concerned about inflation, citing price increases by Kimberly-Clark (NYSE:KMB). Cramer said that other commodities like oil, metals and lumber are falling which is good news for all but 8% of the economy. Lastly, the plunge in Macy's (NYSE:M) stock has investors worried. Cramer said the numbers were great and the retailer is turning itself around.

Stick to high-flying stocks that are available at a discount. "Should we just buy everything then? No. The charts are bad and the technicians are losing it. Lots of stocks are held by weak hands, people who don't know what they own," he concluded.

Interview - Sen. Elizabeth Warren

Cramer interviewed Sen. Elizabeth Warren to hear her reading on the U.S. economy, U.S. policies and the tariffs.

Warren believes that U.S. companies should be accountable to reward more than just shareholders. There are other stakeholders like employees, customers and society. Before the 1980s the entire country grew rich, but since then, wages have flattened out and the focus has just been on rewarding shareholders.

Since the 1980s, almost $7T worth investments have left the public companies and the recent increase in stock buybacks are a sign of that, along with short-term thinking to juice up earnings rather than invest in America for the long term. She has proposed a bill called the Accountable Capitalism Act under which employees would elect at least 40% of the board of directors and at least 75% of the board would need to approve any political spending by the company. This will apply to companies with more than $1B in revenue so that the companies will have incentives to do better for all.

"Does it bother you that you're basically on the same side as someone who's the chief trade advisor to the president?" asked Cramer. Warren said that she is an advocate of free markets due to the wealth they produce but is also in favor of a level playing field for everyone who participates in the wealth created as a nation.

Post Holdings (NYSE:POST)

The stock of Post is up more than 20% for the year with most of the move coming in the last 2 weeks. "It's taken a while for them to get the credit they deserve, but now that the company has shown that it knows how to unlock value by selling pieces of its subsidiary brands, the stock has taken off," said Cramer.

The company's last quarter was not up to the mark but it has found a way to monetize its private label business by spinning off the business as its own entity along with partnership with private equity. Post will own 60% of the business. This move was cheered by analysts and this move lets the company focus on dominating certain aisles of the grocery store.

"The thing about the packaged food business is that scale really matters here. You need bargaining power to strong-arm the supermarkets into giving you the best shelf space and the best prices," said Cramer.

The stock is trading at 17.6 times earnings and it looks attractive to Cramer. They also have a juicy buyback program. "I love this idea that Post is more like a private equity outfit that specializes in food than a food company, and I think the stock has a lot more room to run," concluded Cramer.

CEO interview - Twilio (NYSE:TWLO)

Twilio reported a solid quarter and the stock rallied. Cramer interviewed CEO Jeff Lawson to find out the strength behind the quarter.

Lawson said that Twilio is all about the platform. They are successful when the developers become successful and they now have more than 2M developers on their platform. He also added that Twilio has diversified its revenue base substantially in the last year.

"Our top ten accounts, which used to be about 31% of revenue, we've brought them down to 17% of revenue while growing the top line of the company substantially. In the past, Twilio's revenue outlook has suffered when large clients decide to take their business elsewhere," said Lawson.

Earlier this month, Twilio announced a partnership with WhatsApp. This opens the doors for Twilio to 1.5B users worldwide. Lawson is excited to see what applications will get built.

Viewer calls taken by Cramer

NXP Semiconductor (NASDAQ:NXPI): Cramer is not a fan of NXPI after the scrapped Qualcomm (NASDAQ:QCOM) deal. There are better semiconductor stocks like AMD (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA) for the long term.

General Mills (NYSE:GIS): The stock has started to bounce. Hold on to it for the dividend and the stock is expected to grow.

Hain Celestial (NASDAQ:HAIN): Cramer thinks the fundamentals are not good.

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