Intel Will Not Buy Broadcom- Cramer's Mad Money (3/12/18)

Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Monday, March 12.

The major averages slipped from their highs on Monday as industrial stocks plunged on concerns that Trump will not stop at just steel tariffs. Cramer advised sticking to what’s working. “One word: tech. Tech is what’s working. The truth is, tech has been on fire for a long time. This is now the seventh straight week of gains for this group,” he said.

The tech rally was driven by a research report on Micron Technology (NASDAQ:MU), which gave the $55-trading stock a $100 price target. Micron had been a commodity chip maker for a long while but things are different this time. “Micron’s the backbone of everything from the personal computer, which has gotten a second wind, to the data center, which is the strongest part of the entire food chain,” added Cramer. Their chips are not just a commodity but are specialized and proprietary, harder to copy. It is a key player and at the center of the hottest themes of the economy. The stocks of Western Digital (NYSE:WDC) and Intel (NASDAQ:INTC) also rallied on pin action.

Cramer also said that rumors of Intel (INTC) looking to acquire Broadcom (NASDAQ:AVGO) are “total poppycock”. Intel is at a discount. “It’s foolhardy to wager that this deal will come to fruition, which leads me to the one Micron-related stock that’s at a discount that I would buy tomorrow, and that’s Intel,” he concluded.

Economic adviser for the White House

After the resignation of former economic adviser Gary Cohn, Cramer thinks his former co-host Larry Kudlow will be a good choice for economic adviser.

Not only is he an advocate of free trade, he will bring the institutional knowledge which is urgently required for the White House. He is a patriot and capable of dealing with China’s illegal dumping.

King of the cloud

Cramer has been recommending owning cloud stocks as it’s a powerful theme which is leading in the current market. He gave his picks of the seven best cloud stocks, all of which are up between 17-30% since their lows on Feb 9. These companies are changing the way customers are doing business. They are Adobe (NASDAQ:ADBE), (NYSE:CRM), ServiceNow (NYSE:NOW), Red Hat (NYSE:RHT), VMware (NYSE:VMW), Splunk (SPLNK and Workday (NYSE:WDAY).

“In many cases, their stocks are indeed expensive up here. The kings come at a cost. Regular viewers know I do hate to chase. But on the rare occasions when these names give you a dip, they have been fabulous outright buys,” said Cramer. Software giant Adobe is in a league of its own when it comes to digital media and marketing software. It is seeing 25% revenue growth after its new subscription based pricing model. He said that if Adobe slips slightly on earnings which are due on Thursday, the stock will go down and it will be a good opportunity to buy.

Salesforce is the fastest company to $10B revenue. “I wouldn’t be surprised if the future looks just as bright now that Salesforce is using artificial intelligence to better predict consumer behavior,” added Cramer. He said the stock has run up a lot and it will be a buy only on a big pullback. ServiceNow, on the other hand, is making companies efficient by building cloud-based applications for them which enable them to automate jobs, saving big on labor costs.

Red Hat, on the other hand, is the top open-source enterprise software provider in the world. It helps companies transition to the cloud. “Red Hat reports in two weeks and Wall Street has a history of misunderstanding this company’s results, causing the stock to get hit. It got hit really badly last time. Let’s hope that happens again. These dips have made for excellent buying opportunities,” said Cramer.

VMware is a good cloud play involved in deal talks with Dell, while Workday is just like ServiceNow that helps companies with HR and legal processes. Splunk allows companies to analyze and use their data in the best way.

“When you identify a powerful theme that’s revolutionizing the way we do business, find the biggest winners, wait for a good entry point and then hang on for the ride,” concluded Cramer.

CEO interview – Splunk (NASDAQ:SPLK)

The stock of Splunk is up 30% in 2018. Cramer interviewed president and CEO Doug Merritt to hear what lies ahead.

Merritt said that more companies are aiming to be data-driven everyday. In fact, he thinks that retail companies are struggling as they are choosing to sell items without customer data backing it up. “If you’re doing it that way, it’s going to be harder and harder to be successful. That is not the way that Amazon’s doing it. That’s not the way that Mercadolibre’s doing it. That’s not the way Alibaba’s doing it,” he added.

Splunk has partnered with Amazon web-services and has clients like Coca-Cola, Nordstrom and Groupon. They also help companies with data compliance, telling them what data they need to monitor, building dashboards and metrics to manage operations better.

“Every company has got to become a data-driven company or they just won’t compete going forward. And Splunk is the best solution out there to help companies understand this multitude of data that is coming in every single day and turn it into a business outcome, a true competitive advantage,” he concluded.

Splunk has made 4 acquisitions in the last year to keep improving their cloud services and cybersecurity.

CEO interview – Workday (WDAY)

Workday reported a good quarter and also got an upgrade from analysts. Cramer interviewed co-founder and CEO Aneel Bhusri to find out more about the last quarter.

While Workday has been a human capital management provider traditionally, this quarter saw a sea of change with more Fortune 500 companies adopting their cloud finance software. They just acquired Netflix as a client. “Reed Hastings, their CEO, would send me emails at all hours of the night with things I could fix in the product. He’s very good with products, as you know, and they worked with us over time to really build a terrific global platform. It’s just a great partnership,” said Bhusri.

They don’t have just banks as clients, but government, education and healthcare clients as well. Their Prism Analytics allows healthcare companies to integrate third-party data like patient outcomes and accounting systems.

Many companies are moving away from legacy systems as they realize the benefits of the modern cloud architecture.

Viewer calls taken by Cramer

Shutterfly (SLFY): People love the stock as the company has momentum. It can still go higher as the market loves the stock, whether or not one loves the company.

Walmart (NYSE:WMT): They are an amazing sourcer. Their e-commerce business has to grow.


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