Monday Was A Day Of Surprises - Cramer's Mad Money (10/1/18)

by: SA Editor Mohit Manghnani

Competition from Amazon did not end up disrupting industries.

Survey Monkey is not worth buying.

World Wrestling Entertainment is too high to be bought.

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday, October 1.

Monday was a great day for the bulls as there were many unexpected winners.

First and foremost, the U.S. and Canada reached a new trade deal replacing NAFTA. This eased tensions about global trade and gave a positive boost to sentiment. A deal with the nation's biggest partner has things looking good for the auto and dairy industries. Even Boeing (NYSE:BA) went higher on positive sentiment although there were no signs of development with China.

The other positive, out-of-the-blue factor was the SEC's settlement with Tesla (NASDAQ:TSLA) which led to the stock rallying 18%. The sentiment that Musk and Tesla dodged a bullet could be seen when the stock was rallying.

Lastly, there was a sudden announcement from General Electric (NYSE:GE) replacing its CEO of only 13 months. It was unexpected and the stock rallied 8% as the market realized the company is serious about a turnaround. There was news of dividend cuts as well. "When you boot a CEO after just 13 months, the presumption is that the company's doing far worse than you think. Otherwise, why not let Flannery muddle through, right?" said Cramer.

"We learned, once again, that GE is doing far worse than we thought, that the power division is even more of a disaster, and there's no easy fix whatsoever," added Cramer. He thinks that the former Danaher manager is a brilliant guy and right for the job. "I do feel bad for John. He was trying to deal with the hand that Jeff Immelt left him. The hand was too hard," he concluded.

Competition with Amazon (NASDAQ:AMZN)

For quite some time, there was fear in the market of competing with Amazon. Any industry that the tech giant touched led to a decline in stocks of that sector. However, Cramer took a look at those stocks and sectors again and it doesn't look bad after all.

Since the time Amazon acquired Whole Foods, the grocery stocks went down. However most stocks have rallied 20-40% from their lows. In the 15 months since Whole Foods became a part of Amazon, shares of Costco (NASDAQ:COST) and Sprout's Farmers Market (NASDAQ:SFM) have climbed 56%.

"My view? I like Costco because it's got something the others don't have: a membership model where you pay them for fantastic deals. The rest of the supermarkets? They've run up too dramatically and there's nothing wrong with ringing the register," said Cramer.

The auto stocks had taken a beating on the news of Amazon entering the industry. However, Advance Auto Parts (NYSE:AAP) which had fallen 52% on fears, has rebounded 70%. O'Reilly Automotive (NASDAQ:ORLY) has rallied 43% too. "Amazon clearly hasn't wrecked their business model. I think Advance Auto and O'Reilly are both good, cheap growth stocks, but AutoZone (NYSE:AZO) impresses me as an absurdly cheap value play, and we know they're fighting back against online competition with their own next-day home delivery service," said Cramer.

Lastly, Etsy (NASDAQ:ETSY) keeps on rallying big time as they dominate the handmade goods space. CVS Health (NYSE:CVS) is showing strength in the drugstore space too.

"So the next time you hear about them entering a new market and you see a group of stocks get eviscerated, think twice before you sell," concluded Cramer.

Survey Monkey IPO (NASDAQ:SVMK)

Survey Monkey had a good debut where the stock rallied from its initial offer price range of $9-11. Is the stock worth buying?

Cramer said in theory, the stock is worth a buy, as in the era of data Survey Monkey is a perfect opportunity to give companies data on what their customers want or what are they dissatisfied about. In reality, the company is growing revenue at 14% per year and that is not hot property at all.

The company is turning 20 years old and is still not profitable. Investors pay up big bucks for money-losing startups as they are new companies. "If Survey Monkey were a person, it would be old enough to vote, so the fact that it's not yet profitable is less than ideal," said Cramer.

The company plans to ignite its growth by upselling, corporate penetration and international expansion but it's not enough when there are other cloud stocks with high growth. There are a lot of financial red flags from its lukewarm paid user growth to its balance sheet to its widening profit losses.

"Look, I like Survey Monkey the product, but I can't justify buying Survey Monkey the stock," concluded Cramer.

Cramer does his homework

Cramer worked on stocks that he could not opine on in earlier shows.

Switch (NYSE:SWCH): Switch specializes in the development of digital platforms for digital media companies, cloud and managed service providers, financial institutions, and telecommunications providers. They have some of the best data centers but the stock trades at 51 times earnings. Cramer would take a pass.

Grand Canyon Education (NASDAQ:LOPE): The company offers graduate and undergraduate degree programs and certificates across colleges. The stock is up 26% in 2018 and still trades at 22 times earnings. Cramer said one can take a small position in the stock as long as they are aware of the upcoming election risk in November.

Green Sky (NASDAQ:GSKY): It's a new IPO that powers commerce at the point of sale and is off 20% from its IPO price. It's worthy of a small position.

Viewer calls taken by Cramer

World Wrestling Entertainment (NYSE:WWE): It's up 200% for the year. Cramer likes the stock but it's too high to buy.

Cintas (NASDAQ:CTAS): Cramer thinks their quarter and guidance was fine. The decline is an opportunity to buy.

Kraft Heinz Company (NASDAQ:KHC): Hold till it gets to $60 and sell it. The growth has slowed down.

Copart (NASDAQ:CPRT): Their last quarter was not good and Cramer cannot recommend it.

Pivotal Software (NYSE:PVTL): Their quarter was not great and it has got expensive. Buy VMware (NYSE:VMW) instead.


Jim Cramer's Action Alerts PLUS: Check out Cramer's multi-million dollar charitable trust portfolio and uncover the stocks he thinks could be HUGE winners. Start your FREE 14-day trial now!

Get Cramer's Picks by email - it's free and takes only a few seconds to sign up