Stay The Course – Cramer's Mad Money (4/12/18)

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

Good things can still happen, as seen on Thursday, and a lack of tweets from the President helped the cause. “We didn’t see a threat to Russia. We didn’t get a tweet about an attack on the FBI or special prosecutor Robert Mueller, other than a riposte against the New York Times about what the president called fake reporting,” said Cramer.

Talks of President re-entering the Trans-Pacific Partnership and reigniting multi-lateral trade talks helped the market too. “Anything that makes it seem like Trump is not a total protectionist is considered good for worldwide commerce,” Cramer explained. “Even the whiff of a possibility of trade cooperation with anyone was enough to send the industrials flying,” the Mad Money host added.

Good earnings news from BlackRock (NYSE:BLK) and Delta Air Lines (NYSE:DAL) were offset by negative guidance from Bed Bath & Beyond (NASDAQ:BBBY). As oil prices traded lower, it eased inflation fears among investors. Industrial stocks like Boeing (NYSE:BA) and Caterpillar (NYSE:CAT) also went up on softening of US-China trade tensions. “If we know one thing about 2018, it’s that this market can’t really get a full head of steam going without running into contrary data points. That said, days like today are a powerful reminder that good things can still happen and you need to stay the course,” Cramer concluded.

Be prepared

Be it the firing of Special Counsel Robert Mueller or taking military action against Syria’s chemical weapon attack or the trade war, there are uncertainties looming in the market at all times.

If the President fires Robert Muller, the market will take a hit – if history is any indicator. Likewise, a military action against Syria could affect stocks that are dependent on the price of oil. Currently, no one can say what the President is going to do, and hence, it is best not to do additional buying and stay the course.

If the uncertainty arises, there will always be a better entry point, as less-informed people will panic on the news. That will be the time to buy.

Caterpillar and United Rentals (NYSE:URI)

The recent trade war tension with China has impacted stocks that depend on China’s exposure for growth. While positive comments from Chinese President Xi Jinping eased trade war fears, investors are still worried. Cramer has the answer.

“You should swap out of CAT and swap into United Rentals, the big domestic machinery rental play. United Rentals gives you the same great earth-moving and construction equipment exposure that Caterpillar does, without any of the China-related risk,” he said.

Caterpillar has 41% revenue from domestic sales and the rest from overseas, with China being 5%. Though the revenue share for China isn’t high, it’s a big part of the company’s growth strategy. United Rentals, on the other hand, gets 91% revenue from domestic exposure.

Even apart from trade disputes, United Rentals has a better mix of end markets. About 50% of its business comes from industrial and non-construction rentals, and 46% comes from commercial construction, which is improving now. On the other hand, 40% of the company’s revenue comes from construction, and more than 50% is tied to energy, transportation and natural resources industries. “Caterpillar has a lot more exposure to commodities, and while commodities have been trending higher of late, these resource-related industries are much more boom and bust,” adds Cramer.

Renting equipment is far easier than manufacturing, and it has better margins too. URI trades at 12 times earnings with an 18% growth rate, and Caterpillar trades at 16 times and is a riskier stock in the current environment.

CEO interview – Talend (NASDAQ:TLND)

Data analytics is the trend nowadays. Talend is one such data analytics company that is doing well. It had a great last quarter, and Cramer interviewed CEO Mike Tuchen to find out what lies ahead.

Tuchen said as more companies move to the cloud, it is important to unify the data. Most big companies are chasing yesterday’s market, but Talend is pulling data together, cleaning it up and making it ready for Big Data applications.

Europe’s General Data Protection Regulation is boosting business for Talend. A company providing a service using consumer data, like Facebook (NASDAQ:FB), doesn’t own the data of European citizens. The regulation goes into effect in one month. “So if a European citizen says, ‘I want to see all the data that you have about me,’ they have to show it to them. We solve exactly that set of problems for companies in Europe. And so what we do is, we allow them to pull together all the information they have about their customers in one place,” said Tuchen.

“What’s funny is, we’re seeing companies are really just now getting to the meat of their GDPR phase. For a regulation that goes into force in one month, you’d think that this big push would’ve happened a year ago. Not really so much. But it is really in full stream right now,” he concluded.

Viewer calls taken by Cramer

CME Group (NASDAQ:CME): It’s a good stock, and Cramer likes Intercontinental Exchange (NYSE:ICE) as well.

Is a trade war bad for the market? Cramer suggested staying the course, as the fundamentals remain strong.

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