Use Trump Tweets To Buy Stocks – Cramer's Mad Money (3/7/17)

Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Wednesday, March 7.

The pharmaceutical stocks had started to gain steam and President Trump wrecked it with just one tweet on Tuesday. “Every time the president has singled out an industry or a company to make a deal, the stocks get hammered and you have to hold your nose and buy. That has been the right move every time because the call-out is really just the opening bid in the negotiation,” said Cramer.

This is not the first time Trump blasted the drug stocks. If he wants to lower the drug pricing, he’d need help from Congress. The best way to govern the drug prices is a single payer healthcare system where the government mandates pricing.

“Anything that would really impact drug prices would need to go through Congress, and I am telling you right now that Trump simply will not get his way on this issue. The drug lobbyists have too much sway and the GOP is too committed to free markets,” added Cramer.

“If I were president, I would be going after other countries for routinely ripping off our drug companies by jamming them with lower prices, which then causes them to charge more here,” said Cramer. He also said that whenever the President tweets about an industry, instead of panicking, one should wait for the prices to come down as it becomes a buying opportunity.

Use the opportunity to buy good drug stocks. Cramer also commented on Trump’s power to lower drug pricing by saying, “The only real power the President has domestically at this moment is to deregulate, and he is using that power with a vengeance to help the autos and the airlines and the banks and the oil companies. I bet they stay winners.”

Snap (NYSE:SNAP) IPO

Snap’s stocks dropped another 10% on Tuesday. Cramer was sad to hear about stories of millennials buying Snap. He believes investors should buy stocks only after homework on them. “I just feel terrible about what the younger, new to the market buyers must think right now: that the process is a rip-off, that they were gaffed,” said Cramer.

The fact is that Snap has no plan of turning a profit soon and they have $400M per year in expenses already. When Cramer spoke to Snap users, he learned that they never click on the ads and advertisers don’t know that. Cramer suggested waiting until investors walk away from Snap’s stock and it plummets.

In Cramer’s opinion, there are only 2 scenarios that can turn Snap into a buy. First, it could reinvent itself as a place to watch short videos which can be advertised against; second, if Snap were the beneficiary of a gigantic amount of advertising money that moved online.

Cramer also said that he knows how the IPO process works and the stock was expected to pop up and then fall down. Once the stock hit $28, the funds would have sold as Snap was overvalued against other media stocks. When the IPO is restricted to 200M shares for the public it was forced to be red hot as institutional buyers pledged not to sell it.

“Only after an IPO is seasoned, which takes months and months and often doesn’t happen until insider stock is released from a lock-up, can the valuation stand up to close scrutiny,” concluded Cramer.

CEO interview – Logitech (NASDAQ:LOGI)

The stock of Logitech is up 27% since last November. They reported strong earnings and better than expected outlook. Cramer interviewed CEO Bracken Darrell to find out more about the quarter.

Cramer asked Darrell how can they deliver 367% return over the last four years and dramatically outperform the market. “At the end of the day we are just a humble device company trying to make great things that people love. And we have really got a good run now of continually putting out products that people really love the experience,” said Darrell.

The company’s keyboards and mice are loved by gamers all over the globe for whom every millisecond matters. The company’s products are sold internationally in stores and online. Darrell said the cloud platform is the new growth engine and it has opened many opportunities for the company.

Tesla (NASDAQ:TSLA)

Cramer went to the charts of Tesla to get a technical view after it fell in the last few weeks. Technician Bob Moreno told Cramer that the charts suggested that Tesla outperformance is coming to an end and other auto stocks like Ford (NYSE:F) and General Motors (NYSE:GM) are ready to break out above key levels.

There is a pattern for Tesla which tends to repeat. It has 43-week-long cycles where it fails to break out past old highs, falls down and then rallies back up. This process keeps repeating. Every time the stock reaches the $285 level, it doesn’t hold as it’s the ceiling. Moreno thinks the stock has to hit $160 again before it can work its way up to $285 again.

Cramer thinks the recent decline is the beginning of a selloff. “I would love it if Tesla trades down below $200,” he said. Moreno also thinks that Ford and GM are ready to break out again.

The charts of Ford have made a golden cross pattern, where its short-term 50-day moving average crossed above the long-term 200-day moving average. This is a bullish sign. GM is ready to break out as well, as its MACD line made a bullish crossover last month and the Chaikin money flow oscillator is moving in the positive category.

“Given that GM is selling its money-losing Opel division, I couldn’t agree with Moreno more,” said Cramer.

Viewer calls taken by Cramer

Alexion Pharma (NASDAQ:ALXN): It’s a takeover target but Cramer doesn’t want to recommend it on takeover basis. He’s not sure about the fundamentals.

Lowe’s Corp (NYSE:LOW): It’s a buy and it’s as good as Home Depot (NYSE:HD).

Oracle (NYSE:ORCL): It’s an inexpensive stock. Cramer likes Salesforce (NYSE:CRM) too.

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