Positive News From China Eased Markets – Cramer's Mad Money (4/10/18)

Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Tuesday, April 10.

Tuesday belonged to China and the trade war theme. “Last night when President Xi Jinping spoke in favor of a more open market with lower tariffs on imported cars and better intellectual property protection, it was as though he gave us a green light to roar higher,” said Cramer.

President Trump then tweeted, thanking the Chinese leader for his speech which led to stocks with China exposure rallying. “As long as the two presidents make nice, I think we could have a couple days of peace until we get to earnings season, which starts on Friday with the banks,” said Cramer. That’s not it. There should be no bad news coming from Washington till the earnings season kicks off or the bad news will hit the volatile markets again.

Beyond that, the shares of Facebook (NASDAQ:FB) rallied after CEO Mark Zuckerberg faced Senate panels. This allowed other FANG stocks to rally.

The bottom line is that the market does not want any more trade war-related volatility and investors want to focus on earnings and interest rates again.

Market darlings

What has happened with the market darlings – Facebook, Amazon (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA)? “With all three names rebounding nicely today along with the rest of the market, I think we need to conduct a damage assessment. Can these three titans keep bouncing or should you be afraid that they’re going to get clobbered all over again?” asked Cramer. He dug deeper to find out.

Facebook has been affected by the Cambridge Analytica scandal which led to CEO Mark Zuckerberg testifying before Congress. “The question here is how much any of this will actually impact the numbers. Because at the end of the day, Facebook’s a good earner,” said Cramer. It has 26% long-term growth rate and trades at 22 times earnings, which is a cheap valuation. If lawmakers place regulations on the way Facebook sells its data, it could put a lid on Facebook’s growth. Cramer said the stock is a bargain if one can handle the pain Zuckerberg has to face from scrutiny.

Tesla, on the other hand, is down 15% since January highs after the fatal accident involving autopilot. “But the crisis called more than just the autopilot feature into question, raising concerns among investors about the company’s financials, ability to meet production goals and need for capital,” said Cramer. Elon Musk had said that they would not need to raise capital, but if the need arises, which according to Goldman Sachs will happen, then the stock will get slammed. Although the long-term story of the company is intact, there is short-term pain in the stock.

Lastly, Trump hates Amazon. He tweeted against the e-commerce giant which led to its stock going down. Trump believes that Amazon has an unfair deal with the U.S. Post Office and he doesn’t like the fact that the Washington Post is owned by Jeff Bezos. Cramer said the company pays its fair share of taxes and gives small retailers a global platform. According to him, Trump should fire whoever is giving him the misinformation about Amazon. “Even though the company’s facing intense criticism from the leader of the free world, I think the stock’s a buy, plain and simple. At the end of the day, it’s hard to see how this will impact Amazon’s earnings,” concluded Cramer.

Remember the basics of investing

Cramer reminded investors that investing should be about the fundamentals. It’s easy to get swayed by news and hot stocks, but the reality underneath should not be ignored. One should pick stocks that outperform the markets.

In the current environment, cybersecurity is an important theme as can be seen in the shares of Proofpoint (NASDAQ:PFPT) that have rallied 35.9% in 2018. Cramer also likes Netflix (NASDAQ:NFLX) which got an analyst upgrade. Some other stocks that got analyst upgrades on fundamentals are Ulta Beauty (NASDAQ:ULTA), ExxonMobil (NYSE:XOM) and PayPal (NASDAQ:PYPL).

All these are fundamentally strong stocks and they should be bought on weakness.

Off the charts

Cramer went to the charts to get a read on oil and alternative energy stocks with the help of technician Bob Lang. He looked at the charts of Anadarko (NYSE:APC) and ConocoPhillips (NYSE:COP).

The chart of Anadarko shows a series of higher highs and higher lows since February and the move has been backed by high volume of investing. The MACD is about to make a bullish crossover and it could push the stock to $70. ConocoPhillips, on the other hand, has made a W-shaped bottom and is retesting it. During this, the MACD is sending a buy signal and the stock has taken off. Lang and Cramer like both stocks.

In the alternative energy space, they reviewed First Solar (NASDAQ:FSLR) and SolarEdge (NASDAQ:SEDG). “When oil’s expensive, there’s a lot more demand for alternative energy sources, hence why the solar stocks broke down when oil collapsed in 2014 and why they’ve been making a monster comeback of late,” said Cramer.

First Solar jumped higher in March and the solar energy play has been consolidating on low volume, a sign that big money managers are staying in the stock. The stock of SolarEdge has been consolidating on low volume as well. Both names are poised to head higher.

“Anadarko, ConocoPhillips, First Solar and SolarEdge all managed to at least partially defy the gravitational pull of the averages – Lang’s betting these winners will keep on winning,” concluded Cramer.

Viewer calls taken by Cramer

Finisar (NASDAQ:FNSR): They are doing a lot of things right but optical components are not doing well generally. If Apple (NASDAQ:AAPL) gives them a big order, buy Apple.


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