Market Is Taking Tariffs Well – Cramer's Mad Money (9/17/18)

Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Monday, September 17.

The markets are surrounded by tariff talk, but the action in stocks tells a different story. “Our economy may be doing just fine, and so’s our stock market, but China? I see real problems and real worries. The Chinese stock market has fallen to its lowest level since November of 2014. In fact, it’s now down 20% year to date, and I don’t think it’s found a bottom yet,” the Mad Money host said. “If the tariffs so far are supposed to be hurting our economy, how is that possible?” he asked.

The stocks that you’d expect to go down are, in fact, holding their ground well. Emerson Electric (NYSE:EMR) has built a new research center in China, and Honeywell (NYSE:HON) is seeing double-digit growth in the country. United Technologies (NYSE:UTX) is buying Rockwell Collins (NYSE:COL). Yet, all these stocks were not affected on Monday.

The effects can’t be seen at the consumer level either. Even retail stocks are at their 52-week highs, and cars are selling at discounts. The lumber prices are falling, and there are no job losses so far.

“The pundits can fret about all they want about the trade war saber-rattling, but the action in the stock market tells me that it’s not cut-and-dried how much these issues do hurt business, especially not when you consider the red-hot state of our economy,” concluded Cramer.

Focus on the winners that have nothing to do with China’s tariff – payment stocks like Mastercard (NYSE:MA) and Visa (NYSE:V). Avoid oil and bank stocks, as they cannot hold a rally.

CEO interview – Camping World Holdings (NYSE:CWH)

Analysts have upgraded Camping World on rise of RV demand. Cramer interviewed CEO Marcus Lemonis to find out what lies ahead for the company.

Lemonis said he recently bought the company’s stock. “I set up the bid and I ended up only with 25,000 shares. I was kind of disappointed,” he added. He said that the company is confident of achieving its long-term goals.

Camping World plans to double its RV dealerships in the next five years to increase its footprint across the nation. Its 2017 acquisition of Gander Mountain has boosted the company’s Good Sam program. “Our No. 1 asset are our customers that sit in our Good Sam file. That’s the most important part of our business. But in order to grow that file and to grow the annuity part of our business, which is Good Sam, we have to really grow our platform,” the CEO noted.

The company is focusing on millennial customers with entry-level towable campers that will enable them with a lifetime of camping experience. “They want to go in a smaller unit, a lighter unit. They want to pull it with their Prius. And we’ve made a concerted effort, through Gander, to enter that market,” added Lemonis.

He also said that the motor home market has not recovered fully after the 2008 financial crisis. He expects the rising rates to have minimal impact as long as there is availability of credit.

Lifestyle brands

In a crowded retail market, building a lifestyle brand pays. “In an increasingly fragmented society, lifestyle brands make you feel like you’re part of something, maybe something larger than yourself. And people are willing to pay up for that sense of group identity,” Cramer observed.

Lululemon (NASDAQ:LULU) is a classic example of that in how it has made products around yoga. It’s not just a pair of pants, but an entire athleisure brand that consumer identifies with. Boot Barn (NASDAQ:BOOT) is another company that has built a lifestyle brand.

To show the strength of a lifestyle brand, Cramer spoke about V.F. Corp. (NYSE:VFC), which plans to spin off its Vans business. Since 2004, Vans has gone from $360 million in revenue to $3 billion, with gross margins of 48-60%. A lot of the growth has come from making its products available online and focusing on customers. V.F. Corp’s brands president Kevin Bailey said, “As we talked to skaters, artists, musicians and street culture icons, we learned that they really just wanted to celebrate and share their self-expression.”

Vans could become the third-largest lifestyle sports brand in the world, behind Nike (NYSE:NKE) and Adidas (OTCQX:ADDYY). “That’s why I think V.F. Corp. is still a buy, even up here. They’re not getting nearly enough credit for Vans, but once they spin off that jeans business, I think the remaining company will look a lot more attractive to growth-oriented money managers, particularly those who thought all of it was V.F. Corp,” concluded Cramer.

CEO interview – Bausch Health Companies (NYSE:BHC)

Cramer interviewed CEO Joe Papa of Bausch Health, which was formerly known as Valeant Pharmaceuticals. The company is undergoing a transition, and Cramer checks what the future holds for them.

“We’re two years in to a multi-year plan, but importantly, in the last two quarters, we’ve shown organic growth for the first time since 2015. Right now, we do not feel compelled to sell any divisions, which puts us in a much stronger position,” said Papa.

After settling the lawsuit over Xifaxan, the company has 10 years of patent protection. It is now focusing on innovation, with R&D spends rising 15% Y/Y. The company’s new products include everything from contact lenses to red-eye relief share-taker Lumify.

“We’re really excited about what this means for our future and the excitement that we’re starting to turn the company around,” the CEO concluded.

Viewer calls taken by Cramer

Anheuser-Busch (NYSE:BUD): If one believes in the theory of marijuana picking up, Constellation Brands (NYSE:STZ) is a better pick.

Stanley Black & Decker (NYSE:SWK): The hurricane is going to help the company, and its business is getting better too. Cramer likes the stock.

Western Digital Corp. (NYSE:WDC): Flash pricing has been volatile. If the company guides down, the stock will go down. Wait and watch.

Canada Goose Holdings (NYSE:GOOS): The stock went up a lot, and it was hit for no good reason after last quarter’s earnings. It’s a buy at $57. If it goes under $50, buy more.

Planet Fitness (NYSE:PLNT): The stock has had a big move since the last quarter. At $45-46, it’s a good buy.


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