Game Plan For The Week – Cramer's Mad Money (3/9/18)

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

“If you sold stocks when everyone was panicking on Monday, you made a big mistake. The fears turned out to be overblown. I’m proud of the fact that I predicted this and I told you, please don’t freak out ahead of time,” said Cramer. The market was under pressure due to Trump’s tariff on steel and aluminum. As the policy loosened, allowing for exceptions to Canada and Mexico, the stocks climbed again. With that, Cramer discussed the game plan for the week.

Monday

Equifax (NYSE:EFX) will hold its analyst meeting on Monday. The stock was hit and went to $91 from $142 after the massive data breach. “But it turns out people have short memories. I wouldn’t be surprised if it can get back all the way to where it was from $125, where it is right now if the company talks about a steady business,” said Cramer.

Tuesday

Dick’s Sporting Goods (NYSE:DKS) and HD Supply (NASDAQ:HDS) will report earnings.

Earnings from Dick’s Sporting Goods will tell a lot about Nike (NYSE:NKE) and Under Armour’s (NYSE:UAA) performance. The same goes for HD Supply which will give insight on thousands of industrial businesses. “I have found HD to give you a fantastic read,” added Cramer.

Wednesday

Signet Jewelers (NYSE:SIG) and Williams-Sonoma (NYSE:WSM) will report earnings on Wednesday.

Signet Jewelers has been a troubled company due to in-store credit practices and employee harassment reports. “They’ve brought in a new management team to clean up the place. So far we haven’t seen even the barest glimmer of a financial turn. Accessories are selling well in America, though,” said Cramer.

The once-upon-a-time high growth company Williams-Sonoma is expected to have a good report. “Housewares have been selling incredibly strong at all the companies that I follow,” he added.

Thursday

Dollar General (NYSE:DG), Adobe (NASDAQ:ADBE), Ulta Beauty (NASDAQ:ULTA) and Broadcom (NASDAQ:AVGO) will report on Wednesday.

Cramer expects Dollar General to report better earnings than its peers. “I actually have more conviction in Dollar General and the stock has come down a lot. If its stock comes down before Thursday, we’ve got to take another look,” said Cramer. Adobe, on the other hand, is an exciting company and Cramer thinks it is benefiting from its role in e-commerce.

Ulta’s last few quarters haven’t been convincing for investors. People are just using Amazon’s competition as an excuse to dump the stock and hence investors should be careful.

Broadcom has been in focus lately for its takeover of Qualcomm (NASDAQ:QCOM) and not for its earnings. “I’d like to think Broadcom’s shareholders win either way. The rest of the semis are furiously rallying and I’m sure getting tired of this Broadcom-Qualcomm clash of titans when I see all of the other semis do so well. I just wish they’d get this thing over with, frankly,” said Cramer.

Friday

Tiffany (NYSE:TIF) will report earnings on Friday and the company can benefit from a weak US dollar.

United Technologies will hold its analyst meeting on Friday and it is expected to show strength across all its businesses.

Supermarkets

The stock of Kroger (NYSE:KR) went up from $21 in October to $31 in January on no news. However, when the company reported earnings, the stock fell 11.9%. This reminded investors that Kroger is competing with the likes of Amazon.

In the last quarter, the company’s gross margins went down sharply as they wouldn’t want to lose market share on price. This will lead to a price war in an industry that is already competitive and they are likely to go down before the management decisions start yielding results.

Cramer reminded investors that Kroger has a unionized workforce whereas Amazon does not. He cautioned investors about trading on supermarket stocks.

Axon Enterprises (NASDAQ:AAXN)

The stock of Axon Enterprises which was formerly known as Taser International, went up 16% on stronger than expected earnings.

The company started with Taser stun guns and later entered into law enforcement technology, body cameras, audio recorders along with its software and services. The company benefited from their move where they wanted to give every police officer free body cameras. Once the police used their hardware, they would have to take their software and services to go with it. “The company basically traded its lumpy hardware sales for higher margin, recurring subscription revenue from the software side,” said Cramer.

Both the political sides agree that body cameras make for an efficient force and the data backs it up. “Police departments with body cameras get fewer excessive force complaints and fewer lawsuits,” said Cramer.

The CEO’s pay is also beneficial for shareholders. “Smith’s not getting a salary or a cash bonus or stock options that vest automatically. He’s getting a performance award where his options will not vest unless he hits specific targets tied to Axon’s market capitalization, as well as its revenue and profitability,” said Cramer.

Smith’s first target was a 6-month average market cap of $2.5B. His other milestones are increasing the company’s market cap by a billion dollars. “In short, if the CEO creates actual shareholder value for you, the shareholder, he will be richly rewarded, but if he fails to create shareholder value, he gets next to nothing. Don’t you wish more companies were like this?” said Cramer.

The stock is expensive at 100 times next year’s earnings but taking its growth until 2020 into account, it is trading at 29 times 2020 earnings and it will get cheaper as the company keeps beating estimates. “I can’t tell you to pull the trigger right here, though, because I hate to chase, but if Axon gets slammed the next [time] we have a market-wide sell-off, its stock definitely belongs on your shopping list,” concluded Cramer.

CEO interview – GTT Communications (NYSE:GTT)

GTT Communications just had a good quarter with 80% revenue growth. They also acquired Interoute for €1.9B. Cramer interviewed president and CEO Rick Calder to find out what lies ahead for the company.

Calder said that they are a broadband player in a $400B market with just 1% market share which means they have a lot of room for growth. They are acquiring businesses to grow as GTT is focused on connecting businesses via private internet networks to their data centers and to the cloud.

They help connect businesses to the cloud seamlessly which other big players cannot match. As their network is leased from other providers, they do not require big capital expenditures but have big cash flows.

“IT organizations, CIOs, are beset by a core challenge. They’re saying, ‘I want to take my IT ops out of my office and move them to Amazon, to Azure, to Google Cloud, to SAP, to Oracle.’ What they’re saying is ‘I need bigger pipes. The bandwidth into my office is not big enough. It has to be secure. It has to be diverse. I need someone who understands how to get multiple access lines into each and every one of my offices.’ That’s what we do. And we do it significantly better than the incumbent telcos and we think we have a tremendous opportunity to take their share,” he concluded.

Viewer calls taken by Cramer

Venator Materials (NYSE:VNTR): Cramer does not like the industry as it’s too cyclical. He prefers DowDupont (NYSE:DWDP).

CRISPR Therapeutics (NASDAQ:CRSP): The stock has run up and it’s time to book profits.

Raytheon (NYSE:RTN): It’s fine with the steel tariffs but bad on peace treaty with North Korea. Cramer’s trust owns the stock.

Okta (NASDAQ:OKTA): It’s fine for a long-term hold. It doesn’t make money in the short run and there are better companies. It’s a speculative buy.

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