Don't Take Cues From The Daily Stock Action – Cramer's Mad Money (11/15/17)

Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Wednesday, November 15.

“I see stupid things happening all over the place, so I’m urging you not to jump to any conclusions based on the tape. Remember, the big money managers who control the day-to-day gyrations in stocks get things wrong all the time,” said Cramer as he cautioned investors to not judge stocks based on the day’s actions.

Consider Home Depot (NYSE:HD) which opened $2 lower ahead of the earnings report. Not only did HD have a great quarter, their same-stores sales beat consensus estimates by a big margin. As the company called out e-commerce outperforming other categories, the stock rose 2% on the news. “It was right there, at $163, down $2, and a lot of people sold. It’s just that the sellers turned out to be wrong, and you really don’t want to be wrong in this business; it’s too expensive,” added Cramer.

Same goes for IBM (NYSE:IBM) as the market embraced IBM despite an average quarter as they thought this would be the last of the company’s bad quarters. The stock went up from $146 to $162 only to fall to $147 later as Warren Buffett has cut his stake in the company. “For starters, we have no idea when Buffett will be done selling, and few investors like to own a stock that he’s given up on,” said Cramer. He added that the stock looks intriguing with a 4% dividend yield.

The market also got it wrong on Disney (NYSE:DIS), Procter & Gamble (NYSE:PG) and Cisco (NASDAQ:CSCO). “But here’s the bottom line: do not take your cue from the action. In this business, stocks are often wrong. Instead, you need to do your own homework, pick your prices, and then patiently wait for the names you like to pull back for a bad reason, something that happens with alarming frequency,” he concluded.

CFO interview – Square (NYSE:SQ)

Square had a good last quarter and the stock has tripled in 2017. The company has started to accept bitcoins and Cramer interviewed CFO Sarah Friar to find out more about the move.

“We’re a payment innovator. And therefore I think it behooves us to always know, where are our payments going? When we develop products at Square, we spend a lot of time listening to what our customers want, and what we heard from individuals – so this isn’t sellers asking to accept bitcoin, this is individuals using Square Cash to make payments saying, ‘We want an easy way to buy and sell bitcoin’,” said Friar.

She added that the fastest way for them to understand new trends is to build products around them. For Square, accepting bitcoin was not about making a flash but more about seizing on the next big thing. “Ultimately, you have to be out there taking some risk and being able to go where innovation is going. It feels like the early days of the internet or the early days of the shift to the cloud. How many people said, ‘We’ll never take data outside our data center, that’s not safe’?” she added.

Square is about commerce and even the smallest companies having tools that big ones have so they never miss a sale. They see a $26B market opportunity in the US and more than 8x globally. She summed up her stance on Bitcoin by saying, “I look at digital currency like that. I don’t think we know yet what it’s going to be, but I think, absolutely, as an innovator, Square has to be there to let a customer do what they want to do.”

Cramer thinks Square is a powerful story.

CEO interview – Welbilt (NYSE:WBT)

Welbilt is a restaurant equipment designer and manufacturer which was spun off from Manitowoc. The stock of Welbilt is up 10% in the year and the company had an in-line quarter with revenues missing by a narrow margin. Cramer interviewed Hubertus Muehlhaeuser to hear what lies ahead.

Muehlhaeuser said that the company is executing plans to outperform the industry. The restaurant business in the US is growing slowly compared to the past. As Welbilt services major chains like McDonald’s, Starbucks and Pizza Hut, they have their finger on the pulse and latest trends.

Muehlhaeuser was excited about the Internet of Things. “What we’re doing right now is we’re connecting our equipment not only in order to be able to automate, but also to be able to upload information into the cloud that is very, very important for those operators,” he said. This data is used by operators to analyze shelf life, inspect processes and find out efficient ways for things like using fryer oil.

Welbilt also uses that data. “At the same time, it’s, for us, very important because we do predictive, preventive maintenance, so we would like to know which spare part is going to fail before it fails in order to guarantee up-time. That is the exciting development with IoT and we’re investing a lot of money into that,” added Muehlhaeuser. They are making kitchens efficient with less labor and waste.

Millennials

Knowing what the millennials want could be the key to success for every business. “I’ve spent a huge amount of time on this show trying to figure out how millennials tick because they hold the key to growth for so many industries. You can’t run a consumer business without appealing to the younger generation, and I tire of all the so-called experts who find kids these days to be unfathomable. In truth, they’re anything but,” said Cramer.

Millennials are willing to pay a premium for efficient companies which are green but at the same time not pay for things like cars if they don’t find them a necessity. Be it smartphones from Apple (NASDAQ:AAPL) or makeup from Estee Lauder (NYSE:EL), these are the obvious stocks that cater to the millennials’ needs.

However, old brands like ConAgra (NYSE:CAG) and Tyson (NYSE:TSN) are spending money on re-inventing themselves and acquiring other brands that are organic. They are changing to paper from plastic and using all clean labels and ingredients. Convenience, lower prices and the ability to stay at home draw millennials to frozen foods.

The focus for these companies is moving from the older generation to the millennials. “You need to know what the younger generation wants if you’re going to pick winners in this stock market,” concluded Cramer.

Viewer calls taken by Cramer

Devon Energy (NYSE:DVN): It trades with the rest of the members of the group. Oil will go higher eventually and Cramer blessed it for buying.

Crown Castle International (NYSE:CCI): Don’t buy all at once but the stock is fine.

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