Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday, December 11.
With the volatility in the market and mixed messages on the U.S.-China trade war, the average investor is confused. "We've got to call a spade a spade. This market isn't just volatile, it's treacherous. I don't want the treachery, which is not going to go away, to get to you. Use it to your advantage," said Cramer. The best way to take advantage is to ignore the noise and pay attention to secular-growth themes that have nothing to do with China.
Cloud stocks are growth themes that are not dependent on China. Cramer's favorite picks from the cloud king stocks are Salesforce.com (NYSE:CRM), Splunk (NASDAQ:SPLK), VMware (NYSE:VMW) and Workday (NYSE:WDAY). Parallel to cloud, cybersecurity is an important theme and Cramer likes Palo Alto Networks (NYSE:PANW), which is owned by his trust as well.
The healthcare sector is an important group as they are mostly recession-proof. Stocks of managed healthcare providers like UnitedHealth Group (NYSE:UNH) and Centene (NYSE:CNC), and large drug makers like Merck (NYSE:MRK) and Johnson & Johnson (NYSE:JNJ) are good picks.
"Now that the market's come down so much, I'm also looking for stocks with ridiculously high dividend yields and strong balance sheets. You might consider AT&T (NYSE:T), which sports a 6.7% yield here and has enough cash flow to even raise the dividend if they feel like it," said Cramer.
Use the wide-scale strategy to buy these stocks. This means the stocks should be bought in parts as they go lower. "If you do it my way, what's the worst-case scenario? The stock goes higher and you've got a profitable position that's smaller than you might like," he added.
Stay away from sectors connected to China like industrial and the oil patch. Those who cannot take volatility, stick to a low cost index fund. "Better to pick individual stocks and forgo the 'group' risk you're exposing yourself to with most of these ETFs," he said.
Cannabis stocks are in limelight again after Altria (NYSE:MO) bought a stake in Cronos (NASDAQ:CRON). Even with this investment from Altria, Canopy Growth (NYSE:CGC) remains the best stock in the cannabis industry with Constellation Brands (NYSE:STZ) as its partner.
There is no doubt that Altria is a great partner to have as they know the art of selling highly-regulated and morally-dubious products. However, Canopy Growth is already leading Cronos in 12 out of 13 cannabis product categories, according to Canopy's founder and co-CEO, Bruce Linton. "Cronos leads in one out of those 13. That's because Canopy sells many more types of products: flowers, oil, pre-rolls, soft gels, and vapes. Cronos only sells flowers, oil and pre-rolls and they already have patents on 137 types of products," said Cramer.
Canopy's last quarter revenue was $23.8M compared to $3.8M for Cronos. The backers matter too. "To me, it seems like Constellation took its time [and] thoughtfully picked the best player to invest in, whereas Altria's move feels a little rushed, maybe even intemperate and impulsive. When I say Canopy has a head-start, we're talking about a big lead over the competition," said Cramer.
Cronos is a good stock but Canopy is better.
Off the charts
When will the market volatility end? Cramer took a technical view with the help of technician Rob Moreno.
Moreno looked at the logarithmic monthly chart of NASDAQ. "Moreno points out that in 2010, 2011 and 2015, there were periods of consolidation that had even wider ranges than the one we're experiencing now. Even though the NASDAQ's lost 16% from its October highs to its November lows, it is smaller than 2010, 2011 or 2015, and each of those times, the market ultimately rebounded phenomenally," said Cramer.
The weekly chart of S&P 500 shows a ceiling of resistance at 2,800 and a floor of support at 2,550-2,600. The index has been in this range all year. The DJIA has a ceiling of resistance at 26,000 and a floor at 23,500-24,000. Dow is trading slightly below the current floor of support.
"If you have conviction, you might want to do some buying, seeing as the major averages are all pretty close to their floors of support, and even if these floors are violated, Moreno doesn't think we'll have a whole lot more downside. This all sounds a little too sanguine for me given everything that's going on, but you know what? I think it's heartening to put these declines in a more constructive perspective," concluded Cramer.
CEO interview - Masimo (NASDAQ:MASI)
Medical device maker Masimo helps curb opioid-related deaths, which is one of the leading causes in the U.S. The company's last quarter was good and the stock is up 30% YTD and 286% in the last five years. Cramer interviewed CEO How Kiani to hear what lies ahead.
"We hope to have a solution for patients at home that are prescribed opioids, even those with illicit use. They can connect our device before they go to bed after they've taken their opioid, and if something's gone wrong, hopefully they'll either be revived by our alarms, or a loved one, or a caregiver, or even maybe the nearest police car with Narcan can be called and be dispatched to save that patient's life," said Kiani.
The company's device not only saves a life but also saves millions of dollars in the process. Their equipment is being used in 9 out of the top 10 hospitals. "This system we have here, called the Patient Safety Net, along with either the tethered or untethered version of our product, has been used in Dartmouth-Hitchcock's health-care system for, now, 10 years," added Kiani.
Is the tech sector close to a bottom? The weakness in tech began with a fall in Apple (NASDAQ:AAPL) followed by semiconductor stocks. It then rolled over to the rest of the sector.
Viewer calls taken by Cramer
Morgan Stanley (NYSE:MS): It's a good financial stock. It's in a bear market and the selling has to end sometime. Hold on to it.
Shopify (NYSE:SHOP): It's a cloud-based platform that's good.
Is dividend re-investing good? Cramer is a fan of dividend re-investing.
Editor's note: Effective tomorrow, Dec. 13, we will suspend coverage of Cramer's Picks. Thank you.
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