Wall Street’s recent distaste with the retail sector is evidence that the economic layout is changing for public retail companies, CNBC’s Jim Cramer said Thursday as the group slid on holiday sales disappointments.
“Welcome to the new economy,” Cramer said. “Going forward, you need to understand that not all retailers are created equal anymore, and that [SPDR S&P Retail] ETF doesn’t work. And when you’re a mall-based chain, Wall Street has no patience for anything disappointing.”
The “Mad Money” host spoke on the heels of a difficult few weeks for some storied U.S. retailers: Sears has been teetering on the brink of liquidation, J.C. Penney announced more store closures and Macy’s caught a downgrade from Bank of America analysts Thursday after missing holiday sales expectations.
“When you look at the pockets of strength and weakness, it leads you to a simple conclusion,” Cramer said. “If you’re a mall-based retailer offering relatively full-price goods — like Macy’s — and you don’t have a phenomenal online business, your stock is getting hammered, often much worse than the actual company is being hammered.”
“I think all three can safely be bought at this point as value plays,” he said, adding that “they may work better as trades than investments because their stocks are very oversold.”
The stock market’s recent resilience is creating a very favorable environment for investors, Cramer said Thursday after stocks held their gains despite negative action in parts of the market.
“Make no mistake: a market that can rally even when two signature leadership groups, the retailers and the airlines, get slammed? Well, that’s some kind of bull,” he told investors.
Stocks initially fell in Thursday’s trading session following a plunge in shares of Macy’s, which reported weaker-than-expected holiday sales results. American Airlines added to the pain after it cut its guidance, citing lower fares.
Both stocks’ declines dragged their respective sectors lower and raised questions on Wall Street about how weak the economy really is, Cramer said.
“With all of this bad news, … it would’ve been natural for stocks to get destroyed,” he said. “However, that’s not what happened. Not at all. Sure, investors fled from the airlines and the retailers — that’s natural — but they didn’t flee from the stock market.”
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Intel’s total addressable market has grown significantly as the company has diversified away from the personal computer business and made strategic acquisitions in areas like autonomous driving, interim CEO Bob Swan told CNBC on Thursday.
“This is the biggest served market this company has had in its history,” Swan, the company’s permanent CFO, told Cramer in a “Mad Money” interview.
Swan, who took over for former CEO Brian Krzanich after he left the company for a policy violation, said that Intel used to think it had 90 percent market share “in a market that had relatively slow growth,” the PC space.
“In that world, the opportunities to expand and bring our technologies to new places gets somewhat constrained by the way we define ourselves,” he said, adding that now, things are different.
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The race to the symbolic $1 trillion market cap is back on between some of tech’s most valuable companies, Cramer said Thursday as stocks climbed into the close.
But since then, all four major contenders — Apple, Amazon, Alphabet and Microsoft — have lost traction, particularly during the sell-offs U.S. stocks endured in the fourth quarter of 2018. In those three months, Apple’s stock lost 30 percent of its value, Amazon’s shed 25 percent, Alphabet’s fell 13 percent and Microsoft’s sank 11 percent.
“This time, … the odds are very different,” Cramer said. “Now that many of these mega-cap tech stocks seem to have found a bottom here, I think it’s time for us to start handicapping the race back to $1 trillion.”
Click here for his predictions.
Salesforce.com has both witnessed and pioneered “revolutionary changes in technology” in its 20-year existence, and now, embracing technology is more important than ever, the company’s co-CEO, Keith Block, told Cramer on Thursday.
“We live in a world with these technologies where it is disrupt or be disrupted,” Block said in a “Mad Money” interview. “If the CEO of a company is not the Chief Transformation Officer, they need to come up with a strategy. They need to make a move. They need to embrace these technologies. And no industry is really immune from this level of disruption.”
Block, who shares the CEO role with Salesforce founder Marc Benioff, also told Cramer that the two have struck a strong balance in their dual responsibilities.
With Benioff focusing on Salesforce’s longer-term strategy, its products and the company culture, Block takes on the day-to-day operations and focuses on customer success and innovation.
“It seems to be a great winning formula for us,” Block said. “This is just a natural extension of what we’ve been doing for the last five or six years, so it’s a great time to be at Salesforce, it’s a great time in the industry and I couldn’t be happier with the way things are going right now.”
In Cramer’s lightning round, he flew through his responses to callers’ stock questions:
Take-Two Interactive Software Inc.: “Buy. Buy. I think, of the ones that are out there, it’s got the better momentum, better than EA. I’ve got to tell you — I never thought I’d say this — but it’s much better than Activision. And I think that Grand Theft Auto’s still terrific. Red Dead is really good. I’m saying buy, buy, buy. Buy some and then buy some after they report.”
Annaly Capital Management: “Annaly did another equity offering. That’s what they do, they do these equity offerings and then they give you a good dividend. I like growth and dividend. I’m going to say no to Annaly.”
Disclosure: Cramer’s charitable trust owns shares of Kohl’s, Apple, Amazon, Alphabet, Microsoft and Salesforce.
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