Bull And Bear Markets Within S&P 500 – Cramer's Mad Money (9/12/18)

Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Wednesday, September 12.

Don’t look at the entire market from the perspective of the S&P 500 and instead look at it sector by sector. There are many bull and bear markets within the S&P 500 and Cramer gave his take on which sector belongs to which camp.

Oil prices have been rising steadily and the US is not the largest oil producer in the world. Cramer added that there are a lot of problems when it comes to the Permian Basin in West Texas as many oil producers are discovering large quantities of oil but it is landlocked. There are not enough pipelines to take it to the Gulf Coast where it can be refined. “That’s why this kind of crude, from the Permian, trades at a big discount to the global price,” he said. As the oil prices rise, the discount will be covered.

Hence, oil and gas stocks are in the bull camp. Cramer likes Diamondback Energy (NASDAQ:FANG) and BP (NYSE:BP) which yields 5.7% and is also held by his trust. “Not many people are betting on oil these days, and recommending these stocks is such a contrary call that I bet some analyst comes out tomorrow and calls a bottom in the whole sector. If the oils start getting some sponsorship, I bet their stocks can go up substantially and big from here,” he said.

Other sectors in the bull camp are soft goods with stocks like Kraft Heinz (NASDAQ:KHC), Procter & Gamble (NYSE:PG), Kimberly-Clark (NYSE:KMB) and Estee Lauder (NYSE:EL); and telcos with stocks like Verizon (NYSE:VZ), AT&T (NYSE:T) and T-Mobile US (NASDAQ:TMUS). These have good yields.

In the bear camp, semiconductor stocks are leading. After the fall in Micron Technologies (NASDAQ:MU), other stocks like Applied Materials (NASDAQ:AMAT) and Lam Research (NASDAQ:LRCX) are struggling. Advanced Micro Devices (NASDAQ:AMD) is the only exception to this.

Social media is in the bear camp as well. Snap (NYSE:SNAP) dropped on a downgrade and Facebook (NASDAQ:FB) has dropped since the data scandal broke out. Cramer thinks it will spill over to Alphabet (GOOG, GOOGL) too. He suggested staying clear of regional banks and emerging market stocks as well.

Historically, September has been tough on stocks. Stay the course and remain diversified.

CEO interview – Five Below (NASDAQ:FIVE)

Discount retail is bouncing back strongly. Five Below reported great earnings and the stock reached an all-time high. Cramer interviewed Joel Anderson to find out what led to a great turnaround.

Anderson said that opening new stores has never been better. “I’ve been in retail a long time and this is the best new-store economics I’ve ever seen. Less than a one-year payback. Incredible, right,” he added. The company has 700 stores and aims to expand to 2,500 locations around the country.

Anderson said the secret of doing well in retail is to provide value and a good shopping experience and Five Below has been doing that consistently.

Commenting on pressure on retailers from the ongoing trade dispute, Anderson said that the issue with China won’t affect them. “We’ve got a lot of product here. Obviously, we have some product from China. All our t-shirts are made in Honduras. Some amazing apparel here comes from India. So we’re really not hostage to any one country,” he concluded.

Cloud Princes

It’s no secret that the “cloud kings” have outperformed the S&P 500 and Cramer still remains a fan of Adobe (NASDAQ:ADBE), ServiceNOW (NYSE:NOW) and Splunk (NASDAQ:SPLK). However, investors who want fast growth with a little extra risk should consider “cloud princes” as well. These are the fast growing cloud stocks that are more speculative.

They are Coupa Software (NASDAQ:COUP), Tableau Software (NYSE:DATA) and Hubspot (NYSE:HUBS). All these stocks have grown in 2018 and do not seem to stop. Other stocks that have grown and are on Cramer’s radar are New Relic (NYSE:NEWR), Okta (NASDAQ:OKTA) and Atlassian (NASDAQ:TEAM).

“These cloud princes are more speculative than the kings. They’re faster growing, though, but they’re also a lot more expensive. Of course, at lower levels, I’d like all of these stocks even more,” he concluded.

Cramer’s homework

Cramer did his homework on stocks he could not opine on earlier.

ShotSpotter (NASDAQ:SSTI): This company provides gunshot detection solutions that help law enforcement officials and security personnel identify, locate and respond to gun violence. The company is profitable and doing well but it trades at 19 times sales. Cramer would avoid the stock due to the lofty valuation.

Turtle Beach (NASDAQ:HEAR): Turtle Beach manufactures high end Headsets and HyperSound systems. It provides an immersive experience especially to gamers. With the rise in eSports, the stock has risen 1,100% in 2018. Cramer said he cannot recommend a stock that has run up 1,000% even though it trades at 11.5 times earnings. He would stick to the traditional Logitech International (NASDAQ:LOGI) as a play on the rise of eSports.

Both these stocks are speculative and should not form a part of your IRA or college savings plan.

Viewer calls taken by Cramer

Tilray (NASDAQ:TLRY): The stock is overvalued and is still going up due to a big short squeeze. Still, Cramer cannot recommend selling pot stocks as they have momentum.

Phillips 66 (NYSE:PSX): Take some profits off the table but it’s a good stock to stay invested in.

Fortive (NYSE:FTV): It’s one of the great companies. They know how to make money.

Mylan (NASDAQ:MYL): The generic drugs business is too hard.

Integrated Devices Technology (NASDAQ:IDTI): Book profits and run.

Arista Networks (NYSE:ANET): Stay invested as it’s a winner.

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Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

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