FANG Stocks Are Not Dead – Cramer's Mad Money (5/15/18)

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

If you hear FANG is dead, respond by saying, “Long live FANG.” FANG stocks continued yet another down day and that could continue into Wednesday. “Here’s how I see today’s pullback: this entire market is getting a well-deserved breather, led by FANG, after a gigantic rally,” said Cramer. He reviewed each stock.

Facebook (NASDAQ:FB) has put the Cambridge Analytica scandal behind them. Advertisers who had stayed away from Facebook all this time have started to adapt to the platform. It is also way ahead of its rival Snap (NYSE:SNAP). Amazon (NASDAQ:AMZN), on the other hand, is seeing huge growth and margin expansion across its business and is finding new businesses to enter. Its recent earnings were good and the company boasts 100M paid prime subscribers.

Alphabet (formerly Google) (NASDAQ:GOOG)(GGOGL) is growing consistently. The company’s self-driving car unit Waymo got lots of attention in the annual developers conference. They also have other assets like YouTube to monetize.

Netflix (NASDAQ:NFLX) has put up a lot of original content in the last two years and it enjoys brand loyalty. A survey by Piper Jaffray shows that the majority of the domestic customers would be ready to pay more if Netflix raises its prices.

The selloffs in these stocks started after the 10-year Treasury yield crossed 3%. “Many of the sell-offs in the last five years start like this. The next day we tend to get a further down-leg that encompasses other growth stocks and also brings down the healthcares, which drop when people are concerned about inflation, a natural inference from higher interest rates,” said Cramer.

Home Depot (NYSE:HD)

Home Depot reported mixed Q1 results and the stock went down. Cramer thinks the stock deserves the benefit of the doubt. On the conference call, the company mentioned that weakness was not due to consumer demand but due to weather anomaly.

This has pushed sales into Q2. The company’s May comparable-store sales were up double-digits. After these comments, the stock reversed losses. Cramer said investors should not be quick to judge and should wait to hear management conference calls.

Disney (NYSE:DIS)

After recent weakness in the stock of Disney, Cramer went to the charts with the help of technician Tim Collins to get a technical view on the stock.

The stock of Disney has been stagnant for a year and the charts have formed a bearish head-and-shoulders pattern. “Basically, this head-and-shoulders pattern means that if you buy Disney, he thinks your risk is well-defined. And given that the stock is currently just under $103, your potential losses could be contained if you take Collins’ advice,” said Cramer.

However at $99, the stock just needs to gain $1 to invalidate the pattern and the stochastic oscillator has made a bullish crossover. When this happens, there is a 5-10% rally in stocks.

“Put it all together and Collins’ near-term target for Disney is $108, with a probable retest of the stock’s $112 high before the end of the year, possibly even before autumn,” said Cramer. It is a well-defined risk-reward.

CEO interview – CBRE Group (NYSE:CBRE)

The stock of property management company CBRE is up 8% for the year after a 40% gain in 2017. The company had a good last quarter. Cramer interviewed CEO Bob Sulentic to find out what lies ahead.

Sulentic said CBRE has been growing double-digits for the last 8 years and it continues to expect the same for 2018. They manage 5B square feet of office space occupied by 9M people. They are the largest commercial REIT investment firm in the world.

“In my entire career, which is approaching 35 years now, we’ve never been this deep into an expansion and had so little vacancy in markets around the world,” said Sulentic. He added that many of the new buildings in New York are going up with buyers in hand.

“That doesn’t mean there aren’t pockets where there’s some vacancy, but when you look at New York, you see all this new space that’s been added. Well, much of it’s been spoken for before it’s ever been built. The amount of office space that’s planned to come online in New York over the next several years will only add 2-3% to the basis of office space. And, of course, you have some becoming antiquated along the way. So I think things are generally in good shape,” he concluded.

Viewer calls taken by Cramer

Palo Alto Networks (NYSE:PANW): It is a good cybersecurity stock. Cramer likes Proofpoint (NASDAQ:PFPT) as well.

McDermott International (NYSE:MDR): Cramer is not a fan of engineering restructuring companies as it did not work for a company like GE.

The Trade Desk (NASDAQ:TTD): Book profits on half the position. It’s a good stock but no stock is bulletproof.

MGM Resorts (NYSE:MGM): The stock should not be down. Cramer would buy more on weakness.

CBS Corp. (NYSE:CBS): There will be a hearing to get a temporary restraining order. Don’t buy till there is more clarity.

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