It's Not All Negative News – Cramer's Mad Money (9/18/18)

Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Tuesday, September 18.

The Dow (NYSEARCA:DIA) gained despite the new tariffs, and the short-sellers got burned. “Many of these fund managers are kind of paranoid. They see systemic risk all over the place where it doesn’t exist. Every time a country in Europe or Asia struggles with its currency or its banking system or its finances, these guys decide it’s an opportunity to short stocks,” said Cramer.

Investors were expecting 25% tariffs, and hence, the 10% tariffs did not bother them. They don’t seem eager to sell their holdings. On top of that, there is new money coming into stocks via index funds and new retirement portfolios from strong employment.

The FANG stocks are going up as well, with Facebook (NASDAQ:FB) showing weakness which is unrelated to China.

Short-selling has become difficult, as investors are viewing the market as glass half-full. “The glass-all-full gang just can’t stop buying, and unless there’s a specific piece of negative news, a real shortfall, this market simply isn’t delivering the kind of declines that used to make being a short-seller so darned lucrative,” he observed.

CEO interview – Tilray (NASDAQ:TLRY)

The stock of Tilray rallied 28% on the news of approval to import a cannabinoid study drug into the U.S. from Canada for a clinical trial. Cramer interviewed CEO Brendan Kennedy to find out what lies ahead for the company.

Kennedy said Tilray was approved to import to other countries, and the addition of the U.S. to the list makes him thrilled. Medical cannabis is a $100 billion industry globally, and it’s a huge opportunity for the company to expand.

“Cannabis is a substitute for prescription painkillers, prescription opioids, and so, if you’re an investor in a pharmaceutical company or you’re a pharmaceutical company, you have to hedge the offset from cannabis substitution. I think all the alcohol companies need to enter this industry. It’s a great hedge for them. Whether you’re an alcohol [company] or an investor in an alcohol company, this is a global opportunity,” he added.

Commenting on capital, Kennedy admitted that the company would need to raise capital to finance its expansion plans, and that it continues to evaluate new sources.

Splunk (NASDAQ:SPLK)

The stock of Splunk has fallen from $128 to $116 in two weeks. The company had a good last quarter, and Cramer thinks the weakness in the stock is an opportunity to buy.

Splunk is in a transition phase from charging one-time license fees to a subscription model with recurring revenues. Analysts have gotten the revenue growth wrong, as they feel it’s slowing. Cloud is still one of the biggest secular growth themes, and other cloud kings like Adobe (NASDAQ:ADBE) and Autodesk (NASDAQ:ADSK) went through a similar phase.

Splunk is an important tool for companies that are mining data, making it a must-have for cybersecurity and fraud detection. “The recent pullback is giving you a terrific buying opportunity, because I bet Splunk has more room to run after a quarter that both explains and cries out for a higher valuation,” concluded Cramer.

CFO interview – Square (NYSE:SQ)

The stock of Square is up 150% in 2018. Cramer interviewed CFO Sarah Friar to talk about the company’s next leg of growth.

Friar said that Square’s growth has been accelerating five quarters in a row. It is now developing products to be at the merchants whenever there is a sale, and the company’s approach is omni-channel and not just restricted to online or peer-to-peer. It is expanding internationally in the U.K. and Canada.

Square is making inroads in the restaurant industry. “What we want to make sure of with Caviar and with the broader Square platform as we integrate it into things like Square for Restaurants is that a restaurant can now fully serve their customer regardless of where the customer shows up,” said Friar. “Our strategy there is to be a food ordering platform. So, it’s different from the delivery companies,” she elaborated.

The company also makes loans for small business. “We know the data of your business, so with that we’re able to do things like underwrite you for Square Capital to facilitate a loan. Elsewhere in the system, we can take something like time cards, so where someone’s clocking in and clocking out, and then we can automate the payroll. So everything we do is about how do we save that business time?” Friar noted.

“No one else has pulled it all together. Others talk about integrated this and integrated that, but there’s no integration if it’s actually built seamlessly from the get-go,” she concluded.

Viewer calls taken by Cramer

First Data Corp. (NYSE:FDC): It’s a good story.

Macy’s (NYSE:M): It’s doing well and yields 4.2%. Cramer recommended averaging when it comes down to $32-33.

Twenty-First Century Fox (NASDAQ:FOXA): Book profits.

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