Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday, September 24.
The two dreaded words on the Wall Street are "long" and "term". No one is interested in long-term plans of companies but all are eager to capitalize on short-term returns. Case in point - JPMorgan (NYSE:JPM) and Comcast (NASDAQ:CMCSA).
When JPMorgan announced plans to expand in the Philadelphia region, CEO Jamie Dimon admitted that the branches will not be money makers in the short term, but in the future. As a result, the stock closed lower.
The same applies to Comcast which won the bid for Sky (OTCPK:SKYAY), giving Comcast a piece of the growing assets, stemming from heavily watched programs like the European soccer Premier League. The textbook example of Wall Street's aversion to long-term thinking is really the stock of Comcast, down 6% today. "Because many investors despise long-term investments, the stock had its worst day in nearly three years," said Cramer.
Every time Comcast has made a major acquisition, be it AT&T Broadband in 2001 or NBCUniversal in 2009, the stock closed lower as the street found the deals too expensive or risky. But, the stock has out-performed the S&P500 since both these deals.
"CEO Roberts told us directly that the cable business is enjoying a renaissance from new connectivity and technology initiatives and a voracious desire for more bandwidth. This renaissance has given Comcast so much cash flow that the company can quickly pay down the massive amount of debt it's taking on to purchase Sky. In other words, this deal is much less risky than the market seems to believe," added Cramer.
CEO interview - JPMorgan (JPM)
Cramer interviewed JPMorgan Chairman and CEO Jamie Dimon to find out his view on policy and him contesting in 2020's Presidential elections.
JPMorgan has announced a plan to invest $20B in the next five years across the country. They also plan to open 50 branches in the Philadelphia region committing $3B for mortgage and small business lending. Dimon said their retail banking arm Chase is a leader by more than 60M households, and more than 1M people visit their branches every day, with millennials visiting 3 times a quarter on average.
He added the investments in neighborhoods take time and the branches will not see profits for the next 5-6 years, but eventually they will as they offer credit cards, mortgages, auto loans, private banking and small business services.
Commenting on his political aspirations, Dimon said, "It was on my mind because people mentioned it, but it's not what I want to do. I don't think I would be good at it. I'm not a political person, per se. I think it's probably too soon for a banker."
He said there are key policy issues around infrastructure, taxation, regulation, education, neighborhood development, affordable housing, opioids and income inequality. Businesses should step up when the policy is faltering. "Remember, 85% of people work for business. If we don't have the strongest economy on the planet, we won't have the strongest military on the planet. If we don't have the strongest economy, we won't have jobs, wages, any of that or innovation," added Dimon.
He also said there should be income tax credit for people below a certain income range. "That's why you see all the populism today, too, because people are saying, 'Well, it worked for the big companies, but it didn't work for us.' And there's some truth to that. There's segments that it didn't work for and I think business working with government and civic society, because you need people on the ground, local not-for-profits, could fix these issues that government can't alone do and business can't alone do," he added.
Cramer has been an advocate of the humanization of pets theme. Animal health company Elanco debuted on the market at $24/share and Cramer reviewed the company to find out if it's worth buying.
Elanco is a spinoff of Eli Lilly (NYSE:LLY). It's a drug and vaccine developer and a leader in medicinal feed additives, with 63% of its sales coming from food animals like chicken. The stock spiked 50% on the first day. "As much as I like corporate breakups and the humanization of pets and the rising popularity of chicken and other proteins, I can't recommend Elanco right here, versus, say, Zoetis (NYSE:ZTS) for value or Idexx (NASDAQ:IDXX) for growth," said Cramer.
He thinks that Elanco isn't a pet play as 63% of sales come from livestock health. The revenue has also been flat for the last three years and Eli Lilly still owns 80% of Elanco. This is problematic, according to Cramer.
The company trades at 68 times earnings which is way higher compared to its peers. "In comparison, Zoetis has high-single-digit sales growth, and Idexx has consistently delivered low-double-digit growth," added Cramer.
Stay away from Elanco till their valuation reaches normal levels.
Adam Schefter interview
Cramer interviewed Adam Schefter, ESPN commentator and author of the new book "The Man I Never Met". It's a tribute to a Joe Maio, Director of Equity Derivatives at Cantor Fitzgerald who died in the 9/11 attacks.
People wanted to learn more about Maio, who left behind his wife and 15-month son to deal with the tragedy. The book is a memoir of Joe and the fact that life goes on and there is hope after grief.
Viewer calls taken by Cramer
Alphabet (GOOG, GOOGL) and Facebook (NASDAQ:FB): Cramer said one should start worrying about the politics surrounding tech giants when their costs are going up due to regulations. That is what is happening with the likes of Facebook. Cramer has trimmed his position for his trust.
Wynn Resorts (NASDAQ:WYNN): Buy the domestic casino stocks as long as the tariff war is not resolved.
PetIq (NASDAQ:PETQ): It's a good company and it's a high growth stock.
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Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.