Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday, September 4.
Amazon (NASDAQ:AMZN) was the second company after Apple (NASDAQ:AAPL) to hit the $1T mark. "Here's a perfect example of what happens when Wall Street views a company not as an earnings-per-share situation, but as what's known as a total addressable market," said Cramer.
Facebook (NASDAQ:FB), which is another part of FANG, is undergoing a painful transition and its shareholder base is changing. As the users move to less profitable Instagram, the company's shareholders are changing from growth to value ones.
Unlike Facebook, Amazon is valued on total addressable market in which analysts estimate what would happen if the company performed incrementally better. The company is not only a growing e-retailer, it's a price-conscious and a digital advertiser which has 100M users signed up already.
"When you judge Amazon by its total addressable market, that trillion-dollar valuation seems too low as long as the company can keep executing. And look, I'm not even talking about Amazon's opportunities in entertainment or distribution," said Cramer. Unlike Apple (AAPL), which is a cyclical growth company based on iPhone releases, Amazon has a huge cushion thanks to its reach and revenue.
"Amazon's a secular growth company that spends a fortune to expand its business; they could turn off that spending tomorrow and show much higher earnings-per-share numbers. But that would be a poor use of Amazon's capital. We want them to keep chasing revenue growth all over the place," concluded Cramer.
The analyst community has been stumped by the move in retail stocks. They have been burned before when the companies failed to deliver and hence they cannot describe the current move.
The earnings from retail companies are strong across various categories. Be it apparel from Lululemon Athletica (NASDAQ:LULU) or jewelry from Signet (NYSE:SIG) or growth from Walmart (NYSE:WMT), each of these had good quarters.
Even companies like Dick's Sporting Goods (NYSE:DKS) and Children's Place (NASDAQ:PLCE), that fell on their earnings are seeing their stocks rise as investors are buying them. The real risk in retail is not from being burned but from missing the move.
When there is a market-induced selloff, keep the cloud kings on the shopping list. It's a secular growth theme that is still in early stages as companies adopt cloud technology. Be it fears of trade and tariffs or issues in Turkey, the cloud stocks remain unaffected.
"These days, everybody's embracing the cloud to cut costs, improve customer relations, mine insights from data and generally make their business more competitive. These are exactly the kind of stocks that should bounce the hardest after a big sell-off," said Cramer.
Cramer likes Workday (NYSE:WDAY) and said there was nothing wrong with their earnings along with high growth stocks like Adobe (NASDAQ:ADBE). Red Hat (NYSE:RHT) is also good though it is up just 24% for the year compared to others.
Salesforce (NYSE:CRM) has been Cramer's favorite and is a good pick ahead of the company's annual Dreamforce conference. Splunk (NASDAQ:SPLK) is good and VMware (NYSE:VMW) has the best growth prospects. "I think, incorrect belief that eventually Dell will cram down the company's shares. That's why I consider VMware a buy — I don't think that's going to happen," added Cramer.
CEO interview - Clean Harbors (NYSE:CLH)
Clean Harbors went up after reporting good Q2 numbers and raised guidance. Cramer interviewed CEO Alan McKim to find out what lies ahead for the company.
McKim said that the company remains focused on sustainability with their 'Safety Clean' service that refines and reuses 250M gallons of waste oil in a total market of 1.2B gallons a year.
McKim said that the company has left the weakness from the drop in oil prices behind them. "We're seeing a lot of new opportunities. The economy is really strong. We're seeing new chemical plants being built in the Gulf and our incineration utilization is running very strong. The volumes of hazardous waste being collected and handled by us are at record amounts right now. So we're really excited about the economy right now," he added.
Their seven incinerators operate in an environmentally friendly way to dispose of waste generated from the chemical industry. They are also prepared for emergencies and handle 7,000 calls a year from 450 locations in the US, where the workforce of 15,000 people are ready to go where needed.
Cramer issued a mea culpa for Autodesk, in which he had lost faith earlier this year and not stuck to his thesis. Throughout 2017, Cramer recommended Autodesk as "the best cloud software company you've probably never heard of."
The company had moved from selling packaged software to subscriptions in the cloud. Subscriptions were good until they reported in November 2017 where the stock fell to $106 from $130. Their subscriptions slowed down and the company was restructuring their workforce by 13%. He put the company in the penalty box for another quarter.
In hindsight, selling the stock when it dropped was a mistake and it has rallied 43% since. Cramer said that the number of subscriptions was the wrong metric to look at as the company was selling more software to fewer clients. Companies got on the subscription model and bought more licenses for their employees. Annual recurring revenues was the correct metric to look at.
Viewer calls taken by Cramer
Snap (NYSE:SNAP): Cramer is not a fan and he doesn't recommend selling stocks at their low. There can be an exit once it bounces.
Dropbox (NASDAQ:DBX): It's a buy despite the stock cooling off.
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