Game Plan For The Week – Cramer's Mad Money (6/22/18)

Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Friday, June 22.

“Here’s the thing: the president believes we’ve seen remarkable job creation thanks to his steel and aluminum tariffs, so in his view, this policy’s working,” said Cramer. Trump will be aggressive on trade going further. “You need to prepare yourself for more combative tweets. Be prepared for him to try to tear up NAFTA. Dismiss the notion that there are two camps in this administration — a hard line and a soft line. In truth, there are only hardliners,” he added.

If you can’t handle this, then it’s time to raise cash. With that, Cramer discussed the game plan for the week.

Monday

Earnings: Carnival (NYSE:CCL)

Cramer hoped this quarter will bring more clarity on Carnival’s future, as many believe there are too many ships and fewer passengers along with rising fuel costs.

Tuesday

Earnings: Lennar (NYSE:LEN)

Cramer has become bearish on homebuilders due to rising interest rates and raw costs. At some point, Lennar will get too cheap to ignore. “With Lennar, we need to see the reaction to the conference call, not the headlines. I’m betting that they find a way to spin the story positively on the call and it could have an impact. However, with two more rate hikes in the cards this year and no end to the Canadian tariffs, I think any bounce will be short-lived,” said Cramer.

Wednesday

Earnings: General Mills (NYSE:GIS), Paychex (NASDAQ:PAYX) and Bed Bath & Beyond (NASDAQ:BBBY)

General Mills is down 24% YTD but the risk-reward in the stock seems good. Cramer expects to hear positive things from them.

Paychex has been lagging behind their payroll processing rivals. “The fact is that this payroll processor should thrive in an environment with ultra-low unemployment and rising short-term interest rates and job creation,” said Cramer.

“Bed Bath better have some real good things to say or this one’s going right back to $16.50,” he said.

Thursday

Earnings: Walgreens Boots Alliance (NASDAQ:WBA), Nike (NYSE:NKE), Accenture (NYSE:ACN), ConAgra Foods (NYSE:CAG) and McCormick (NYSE:MKC)

“Walgreens and CVS have been moving up of late and there’s been talk that both drugstores are taking action to protect themselves from Amazon. I’ll believe it when I see it. That said, Walgreens is way off its highs and it’s only $6 bucks off its lows,” said Cramer.

It’s fascinating that Nike never comes up as a target of trade war or tariffs. Cramer finds Nike to be a good apparel investment.

Cramer feels good about ConAgra and McCromick. Accenture usually sells off after earnings.

The bank stress test results will be out from the Fed on Thursday. Good results will allow banks to boost their dividends and buybacks. “I would buy Citi (NYSE:C) on Wednesday, and I’d buy it aggressively, as we will for my charitable trust if we get a chance,” added Cramer.

Friday

Earnings: Constellation Brands (NYSE:STZ)

Investors are worried about slowing beer sales. “I’m actually more concerned about the wine sales. That category’s been challenged, too,” said Cramer.

“Keep that in mind before you buy anything, and if you fear the president’s bellicose tweets, you should use Monday to do some selling into what might be some very strong carry-over action,” he concluded.

July Earnings

Cramer is not excited about the upcoming earnings in July. There are three things that worry him. “One, slowing revenues from the end of the synchronized global economic expansion, the strong dollar and the rising costs for tariffs and oil prices,” he said.

  • End of expansion: Cramer urged the Trump administration to speed up its fair-trade fight with the rest of the world. “You just need it be done within the next three to six months because the world economy is slowing too quickly,” said Cramer. The world economy is coming towards the end of its synchronized expansion cycle.
  • Strong dollar: The strength of the dollar is concerning to Cramer. Companies that do business overseas will have to squeeze their margins and trim their outlooks.
  • Oil: OPEC decided to boost the oil production by a scant 600,000 barrels a day. “Somehow, the stock market bulls were cheered by higher oil, which is just plain stupid. I shouldn’t have to spell this stuff out, but higher oil prices are bad for the economy and bad for the stock market long term,” said Cramer. As investors are fretting about rising raw costs, the rising oil price makes the problem worse.

“If you’re a bull here, you should want to see oil down, some conciliatory attitude toward tariffs, and less incendiary language from the White House. Until we get these things, I simply can’t be as sanguine as I’d like about the market,” concluded Cramer.

CEO interview – Red Hat (NYSE:RHT)

The stock of Red Hat went down by 14% on reporting weaker than expected guidance. Cramer interviewed CEO Jim Whitehurst to find out more about the last quarter.

Whitehurst admitted that Red Hat earnings can be volatile quarter to quarter. “If I could change anything about the post-earnings conference call, I would encourage investors to look long-term,” he said. The company beat estimates in the last quarter though.

He added that the company doesn’t manage their billings for the quarter and this can cause a disconnect in analyst expectations. The business of the company is well and the deals over $1M were up by 65% Y/Y. Their newer middleware offerings are good but some legacy offerings offset that growth.

Red Hat is also excited about the 5G wireless rollout and expects a pickup in the telecom business. Cramer thinks this was a hiccup in a good long-term growth story.

Chairman interview – Green Thumb Industries (OTCPK:GTBIF)

Green Thumb Industries is the Chicago-based retailer and wholesaler of cannabis that trades on the Canadian exchange. Cramer interviewed founder and Chairman Ben Kolver to hear what lies ahead for the cannabis seller.

Kolver said that Green Thumb has the first mover advantage in the US and cannabis is a $75B opportunity in the country. In the long-term, brands operating at scale will command the pricing power. They are looking to open locations across Florida and are looking forward to legalization in Ohio and New Jersey.

Cramer called Green Thumb an opportunity to play for the cannabis exposure.

CEO interview – Entergy (NYSE:ETR)

Entergy is a good utility stock with a 4.4% yield. Cramer interviewed CEO Leo DeNault to discover what lies ahead for them.

DeNault said the company is focused on its plan to be the low-cost power producer for consumers. Thanks to the expanding industrial base since the financial crisis, they can spread their cost to more megawatts.

DeNault also spoke about the decommissioning of their nuclear facilities. “The natural gas plants we’re building, the big ones are so efficient and so low-cost that coal can’t compete with those. They’re also a much better environmental outcome, so if you look at our fleet, we are one of the cleanest fleets in the United States from an emissions standpoint.”

“Out of the investor-owned utility sector, we have been the lowest-cost for a couple of years in a row. That’s a combination of the new assets that we’re putting in place, all run more efficiently so they burn a lot less natural gas. They have less emissions, so that’s a lower production cost for our customers. We’ve been very good about keeping a lid on our costs,” he added.

Viewer calls taken by Cramer

Raytheon (NYSE:RTN): It’s down big. It’s one of the best defense stocks.

HollyFrontier (NYSE:HFC): It’s still a good time for the refiners.

Marathon Oil (NYSE:MRO): It’s a fine company and it will go higher.

Transocean (NYSE:RIG): Cramer prefers Schlumberger (NYSE:SLB) which is the best in the oil services business.

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