Game Plan For The Week – Cramer's Mad Money (2/9/18)

Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Friday, February 9.

The worst week for the market in two years is finally over but the market is not out of the woods yet. There could still be volatility in the coming week. With that, Cramer discussed the game plan for the week.

Monday

Cramer will be watching the volatility funds closely that started all the madness. “These funds led the market down today and when they started to rebound, they took the market with them. These trades need to be unwound in full, and you can watch the process play out by following these three toxic volatility instruments: the UVXY, the VXX and the TVIX,” said Cramer.

Tuesday

PepsiCo (NYSE:PEP) and Under Armour (NYSE:UA) will report earnings.

“PepsiCo has a history of meeting and beating its numbers and raising forecasts, as CEO Indra Nooyi has done such an amazing job stabilizing the soda business while unleashing all sorts of good and good-for-you snacks. If the numbers are good and PepsiCo opens higher and the VIX cools, then we’re going to have a real nice day,” said Cramer.

Under Armour stock has been down for a while. Cramer will watch to see if CEO Kevin Plank can get the inventories under control.

Wednesday

Cisco (NASDAQ:CSCO), Marriott International (NYSE:MAR) and Applied Materials (NASDAQ:AMAT) will report earnings.

Cisco is transforming into a software play and it will benefit from the tax code as well. “CEO Chuck Robbins is well on his way to making this one of the best ways to invest in the internet of things, and who can resist that juicy 3% yield,” said Cramer.

Cramer recommended buying Marriott International going into earnings as the stock hardly went down during the selloff. He was bullish on Applied Materials too as their earnings could do well for the semiconductor group.

Thursday

Waste Management (NYSE:WM) reports on Thursday and Cramer expects a strong quarter from them thanks to the tax code and share buyback program.

Friday

Coca-Cola (NYSE:KO), Kraft Heinz (NASDAQ:KHC), Deere (NYSE:DE) and Newell Brands (NYSE:NWL) will report earnings.

Cramer finds that Coca-Cola and Kraft-Heinz have steady management and dividends.

Deere is down from its highs but Cramer is still optimistic about it. “The agriculture feed-the-world trade is very much game on. After years of pain management, Deere’s become quite adept at telling its story. I really like it ahead of the quarter,” said Cramer.

Newell has become complicated with the proxy fight. “Polk’s tried his best, but he’s really dropped the ball and he’s cost shareholders fortunes in doing so. If the company can report a good quarter on Friday, maybe he keeps his job. A bad one? I think Franklin unseats the whole lot of them. And that’s how much pain’s been inflicted here,” said Cramer.

The bottom line is that as long as the VIX doesn’t stop, no common stock is safe.

Hedge funds

Cramer said that when hedge funds go wild, they are in control of the market. The market will continue to decline as long as the VIX instruments stabilize. Once that is done, the 10-year treasury yield and inflation still remain a concern for the market.

The rising rates started the volatility in the first place and inflation is not good for future earnings. Cramer still remains optimistic as he thinks that inflation will be kept in check on falling commodity prices.

To understand where stocks are headed, one needs to keep an eye on the VIX products and the 10-year treasury yields.

Losers of the selloff

The selloff has led to a bargain sale in quality stocks. Cramer reviewed the top 10 losers in the Dow from the current selloff to find out which stock is a bargain:

  • General Electric (NYSE:GE): “The new GE is heavily levered to oil. Not only does it own Baker Hughes, but its locomotives, turbines and airplane engines all sell better when energy is much higher,. But I’m not that sanguine about oil, so for now, I say you’ve got to stay away from GE. You don’t need the agita,” said Cramer.
  • Chevron (NYSE:CVX): With oil prices going down, Chevron is still not attractive.
  • Intel (NASDAQ:INTC): Intel has many positive drivers for it. It’s a buy along with Nvidia (NASDAQ:NVDA). “Nvidia is king; Intel’s bishop,” said Cramer.
  • Caterpillar (NYSE:CAT): The stock has run up too fast in the last two years and is in no-man’s land currently. Cramer passed.
  • Exxon-Mobil (NYSE:XOM): Like Chevron, Cramer took a pass on Exxon too.
  • Johnson & Johnson (NYSE:JNJ) and Pfizer (NYSE:PFE): The sixth and seventh names were classic healthcare stocks. Cramer will be a buyer of JNJ but not Pfizer until it boosts growth by making acquisitions.
  • Merck (NYSE:MRK): There is nothing enthusiastic about this stock.
  • 3M (NYSE:MMM): “I think the world of the company, but the stock had gotten a little too high versus where I’d like to buy it for my charitable trust. I bless a starting position at these levels. Maybe get more as it goes lower,” said Cramer.
  • Apple (NASDAQ:AAPL): The growth drivers for this company are intact. Buy some now and some if the stock is crushed by futures to $140.

CEO interview – 3M (MMM)

3M had a good last quarter and the company raised its guidance range. Cramer interviewed chairman, president and CEO Inge Thulin to find out what lies ahead.

Thulin said that the company always has a long-term playbook in place thanks to their focus on innovation, portfolio management, and business transformation. They take innovation seriously and 30% of their business comes from products that did not exist five years ago. They employ 8,100 scientists to develop new products driven by customer needs and that tends to have a higher rate of success.

3M is a 115-year-old company that has been associated with Scotch Tape and Post-It notes but they serve other industries like health care, transportation and auto electrification. They are at the center of the electric car trend by serving automotive, electronic and energy, and traffic safety industries. “We can capitalize on what we know in traffic safety, which is a very strong position for us not only in vertical signage, but in license plates and also pavement marking. That is where you need to regulate things going forward,” said Thulin.

He added that the company is not afraid to let go of businesses that are not doing as well as the company’s average and not afraid to make smart acquisitions either.

CEO interview – Proofpoint (NASDAQ:PFPT)

Proofpoint reported a strong quarter with earnings and revenue growth. Cramer interviewed CEO Gary Steele to hear more about the quarter.

Steele explained to Cramer that cyber-attacks happen daily and not only on infrastructure but people as well. Their automation systems can simulate attacks against employees to see which are vulnerable and need awareness training. The entire process is automated and needs fewer resources.

As many businesses move to the cloud, cyber-security is required. This is a good growth driver for Proofpoint. The rise in crypto-currencies has generated new threats where hackers install malware to use the target’s computing power to mine the currencies on their behalf.

Viewer calls taken by Cramer

Honda Motor Company (NYSE:HMC): Cramer is not a big fan as the auto stocks are not doing well.

Digital Realty Trust (NYSE:DLR): All REITs are going down as rates are going higher.

Shopify (NYSE:SHOP): This stock barely went down during the selloff which is a sign of strength. It has a big short-squeeze though.

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