Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday, November 9.
The market is reading the decline in oil as an economic weakness. "I read the decline in oil as an issue of supply overwhelming demand, not demand waning. When that happens, it's terrific for both consumers and for business. You're paying less at the pump; industry's paying less on the big bill," said Cramer. With oil entering into bear market territory, he could make a case for $40 oil prices.
"I think lower oil actually creates a virtuous circle and that people are too negative. And it happened just like last time, where we learned that cheaper fuel is actually good for 90% of the S&P 500 as long as it's caused by excess supply," said Cramer. With that, he discussed the game plan for the week.
Earnings: Autohome (NYSE:ATHM)
Cramer will be watching the earnings to get a read on the Chinese economy which is said to be hurt by the U.S.-China trade war. "When China slows, that tends to freak out lots of global money managers, so it's important to know how the People's Republic is doing. The last time Autohome reported, it painted a grim picture of auto sales in China. You know what? I think it's gotten even worse. I'm regarding this company as giving us a key piece of data we need to understand the world mosaic of commerce," said Cramer.
Home Depot's shares are 30% off its highs which is unusual for the high quality company. "Most investors have come to the conclusion that Home Depot should trade not with the soaring retail contingent, but with the sinking housing sector. I don't know what they can do to change the narrative. Sometimes, you just can't fight city hall," said Cramer.
Tilray is the world's largest publicly traded cannabis company. They will give an idea on what happened in Canada after the legalization of cannabis. Cramer thinks the stock is expensive at current levels.
Macy's stock has recovered slightly from its last report. "I'm going to listen to commentary about how the Chinese are lowering prices for the goods Macy's buys that are subject to tariffs in order to keep their business in China," said Cramer.
Winter wear apparel maker Canada Goose has been one of Cramer's favorite stocks and the company is developing a worldwide business model. Cramer thinks it's worth speculating.
Cisco is expected to report strong earnings due to the fall in prices of components they buy. "I think that this internet-of-things tech titan is really starting to hit its stride as a safe, secure connector to all sorts of networks including the cloud," said Cramer. If the stock goes down after earnings, it's worth buying.
Walmart is expected to report another good quarter due to a rise in online sales. The company will give 'tariff talk' on their conference call too.
On the other hand, Applied Materials has struggled due to weakness in the tech space. "You could argue that the sell-off began when Applied Materials told us about a pause in demand. I'm not going to give you that green light," said Cramer.
Cramer's favorite Nvidia will report earnings and he is worried about the company giving a difficult narrative. "I am concerned that Nvidia might flag that they could be facing a difficult product transition to a new set of chips that may be too advanced for today's markets. Well, that's a high-quality problem, but it's a problem nonetheless," he added.
Nordstrom could report mixed results and its stock has run up 20% going into earnings. It's a wait and watch.
Earnings: Viacom (NYSE:VIA)
"I like what Viacom's been doing to monetize its intellectual property. Its cable offerings are actually doing much better than I think people realize and they are giving you Paramount, the fabulous one-time king of movies, for free," said Cramer.
The bottom line is, "We should get a pretty good snapshot of whether the consumer is still as strong as she's been, but, of course, hopefully not so strong that the Fed feels the need to reiterate that it needs to burn down the economic village in order to save it," he concluded.
Crocs reported good earnings and its stock rallied. The company's turnaround began in 2015 after an activist investor spurred a turnaround. The company streamlined their operations, closed under-performing locations and improved their online and direct to consumer business.
Their outlook and margins started to improve and the company began beating expectations and raising guidance. 2019 guidance by the company calls for a good year. "Helped by the rise of athleisure and celebrity promotions, Crocs' store count reduction, e-commerce initiatives and new product development has helped the company get back on its feet," said Cramer.
In a recent Piper Jaffray survey tracking 8,600 teenagers' shopping preferences, Crocs hit the highest level. "It's not crazy to speculate on Crocs even up here, although, ideally, sure, you'd like to wait for a pullback before you pull the trigger. And don't even think about owning Crocs, please, with your retirement money, this is the kind of thing you only buy with funds that you can afford to lose," he concluded.
CEO interview - Funko (NASDAQ:FNKO)
Funko reported good earnings and raised guidance but their stock went down. Cramer interviewed CEO Brian Mariotti to hear what lies ahead.
Mariotti called Funko an index fund of pop culture. They license over 550 unique properties ranging from sports, to music, video games and more. "We're the first one to grab a license, we're the first one to have the product in the marketplace and our category, so we think we have a competitive advantage there. Early sell-throughs seem very, very positive. I think this is going to be a great property for us," he added.
Fortnite has become a popular game and has toymakers racing to create products on the brand. Hasbro has partnered with them to create a Fornite-themed Monopoly game.
"We're in a great position inventory-wise with our retail partners, sell-through-wise with our retail partners. The appetite for our product is amazing on a global basis. We're in great position for Q4 and we love what 2019 looks like," said Mariotti.
He added that tariffs are not their prime concern for decision making and "they are looking for the best factories that move the fastest, the highest quality, the best price, the most consistent production." By end of next year, 70% of their manufacturing will be outside China.
In an environment of rising interest rates, investors look for good defensive stocks that are not affected by the economy. Amgen is one such company. The stock is up 11% for the year and Cramer's trust holds it as well.
"What makes Amgen so attractive here? Part of it is the slowdown thesis. If you believe the Fed is going to tighten too aggressively and really put the kybosh on the economy, as I do, Amgen's exactly the kind of company that can keep putting up good numbers even in a slowing economy," said Cramer.
The company has $42B in cash and a good buyback program that has retired 7% of their outstanding stock. Apart from this, the company has two other wins. Their leading migraine drug Aimovig has already logged 100,000 patients and their price cuts for cholesterol treatment drug Repatha are leading to a gain in market share.
The stock trades at 13 times earnings and Cramer recommended buying it.
Viewer calls taken by Cramer
CenturyLink (NYSE:CTL): Their dividend could be in question. Don't buy.
TJX Companies (NYSE:TJX): It's going up and is the one to own.
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