Thursday Was About Wal-Mart And Cisco – Cramer's Mad Money (11/16/17)

Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Thursday, November 16.

The market rally on Thursday was not due to the tax reform but due to incredible turnaround of 2 large cap stocks – Wal-Mart (NYSE:WMT) and Cisco (NASDAQ:CSCO).

CEO Doug McMillon took over as CEO of Wal-Mart four years ago. He told he was willing to spend to compete with Amazon (NASDAQ:AMZN). He lowered profit expectations but created incentives for employees to give better service. Moreover, the acquisition boosted their online presence. Wal-Mart went to an all-time high on earnings which is a huge deal for a large cap stock.

The same goes for CEO Chuck Robbins from Cisco, the revenue of which had come to a halt and the stock had become a value play rather than a growth play. After taking the helm in 2015, Robbins’ strategy was to add and improve cloud, security systems and analytics and make strategic acquisitions. Fast forward to Thursday, Cisco reported better than expected earnings and guidance and the stock rallied 6%. “Cisco may once again become a must-buy for businesses trying to build out their internet presence,” said Cramer. The stock yields 4% and the company has $70B in cash.

“These turns can occur, as Cisco’s Chuck Robbins and Wal-Mart’s Doug McMillon showed us today. And when you find these stories, they are incredibly lucrative long term, as long as you can get into them right and stay in them for the long haul,” concluded Cramer.

CEO interview – PPG Industries (NYSE:PPG)

The stock of PPG Industries is up 20% for the year. Cramer interviewed CEO Michael McGarry to know what lies ahead for the company.

McGarry said environmental regulations in China are helping PPG take share in water-based coatings business as they are the leader in water-based technology. The business is growing and it’s better for the environment at the same time. The growth in traffic in US leads to car collisions, and this means more coatings required for repainting cars.

PPG is also benefiting from the rise in EV. “We’re working with all the battery companies. Without getting into particular customers, there’s actually more coatings on a battery than there are on the car because what they try to do is try to insulate the battery from the rest of the car from a cooling perspective and also for prevention of thermal events or fires,” said McGarry.

PPG is the leading supplier of battery coatings used in EV. They will be the biggest beneficiary from the rise in output of EV by 2020. “We’re going to be well-positioned regardless of who’s winning, whether it’s electric or whether it’s hybrids or whether it’s traditional gas-powered,” he added.

PPG has $2.3B cash on their balance sheet and they are using it for buying back shares and acquiring companies.

Abbott Labs (NYSE:ABT)

Continuing to appreciate great CEOs, Cramer spoke about Miles White, the CEO of Abbott Labs who took the role in 1999. Since then, the company has delivered 623% gains taking into account the spinoffs.

White has the talent of anticipating what people’s medical needs will be. He spun off AbbVie (NYSE:ABBV) in 2013 to create value and has acquired medical device maker St. Jude anticipating the boom in medical devices. The company also released Humira, its best-selling drug doing $16.1B in sales last year.

“White’s ability to take Humira and turn it into [the] blockbuster drug that it is today transformed Abbott Labs from a laggard into a leader. It’s the kind of story business schools will write case studies about for years and years,” said Cramer.

White also had the foresight of spinning off its pharma arm before the drug pricing debate started. “Miles White has done an amazing job for his shareholders at Abbott, so the next time you see him do some insider buying, I suggest you pick this terrific stock up right along with him,” concluded Cramer.

CEO interview – DexCom (NASDAQ:DXCM)

The stock of glucose monitoring company DexCom fell when rival Abbott Labs received FDA approval for a new monitoring system that doesn’t require a finger prick. Cramer interviewed DexCom CEO Kevin Sayer to know his take on the competition.

“One of the hidden assets of DexCom is this investment we’ve made in technology. Our system offers features that competitors don’t. We connect to phones. We share data with people who watch patients. We offer performance and accuracy that others don’t. We’ve been competing with Abbott’s Libre in Europe for three years now, and you’ve seen our international growth up 80% in the third quarter. So it’s not like we’re getting killed,” said Sayer.

DexCom is investing in technology and will release their own blood-free glucose motoring device by end of 2018 and also offers benefits in convenience and cost. Their devices will talk to Apple Watch sensors soon and send data to the cloud.

Viewer calls taken by Cramer

Freeport-McMoRan (NYSE:FCX): Cramer said it’s better to be in FMC for exposure to growth of batteries.

How does Senate tax proposal impact investors? Buying and holding stocks will be more beneficial now.

Church & Dwight (NYSE:CHD): This stock will do better when the economy is not good.

Acorda Therapeutics (NASDAQ:ACOR): Don’t buy as it has lost on its principal drug.

McKesson (NYSE:MCK): It is bottoming but it doesn’t have good gross margins.


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