Target’s surprisingly positive preannouncement may have lifted retail stocks as investors wondered if their fears about the sector were overblown, but Jim Cramer remained skeptical.
“While Target’s news flash is certainly good for Target and for its long-suffering shareholders, it’s not necessarily good enough yet to ignite a sustainable rally in the group – and the emphasis is on the word “sustainable” – especially when it was Target that had set the low bar to begin with,” the “Mad Money” host said.
Despite Target’s forecast, where management predicted positive same-store sales, better traffic and strong numbers for food and fashion, Cramer wondered whether the chain store’s business was actually improving or if management purposely under-promised and over-delivered.
“We want companies in retail to get to better numbers via innovation, excitement, experiential, game-changing acquisitions. But other than Wal-Mart and Amazon, there really aren’t that many that fill that bill. That’s why I remain concerned longer term about retail,” Cramer said. “You’re getting a good trade here, but I think, because of Amazon, that’s all it is: a trade, not an investment.”
On occasion, stock market rallies can be reaffirmed when buyers turn to downtrodden sectors for trades or investments, and Cramer witnessed that on Thursday.
“You can always tell you have a decent market when, after a big run, investors take a breather from buying the stocks people love and instead decide to scrutinize and snap up the stocks that have been left behind,” the “Mad Money” host said.
The first example of these left-behind stocks was the retail sector, helped by Target’s positive forecast. While Cramer did not believe Target’s outlook marked a full-fledged turn in retail, he did endorse three of the group’s stocks for their “Amazon defenses:” Home Depot, Wal-Mart and TJX.
NBC’s “The Office” may have been a big hit, but Cramer sees offices today undergoing a style reformation, ditching their shabby cubicles for new-age moving walls and standing desks.
That is why the “Mad Money” host decided to compare two of the biggest players in the office furniture space, Herman Miller and Steelcase, to see which one is excelling in the workplace.
Both companies deal in high-end office furniture. Herman Miller is known for its posh, ergonomic office chairs created by high-profile designers; Steelcase is known as the world’s top creator of office environments, using deep analytics of work patterns to inform its upscale products.
Herman Miller and Steelcase are also both benefiting from secular trends, mainly a pickup in the U.S. economy and the rise of technology like the internet, social media and the cloud.
But from a financial standpoint, the two are quite different.
The decline was only accelerated on Wednesday when the small-capitalization company announced a huge secondary offering and the stock lost almost 20 percent of its value.
The stock recovered slightly when the offering was priced at $10 a share, which made Cramer wonder if the worst is finally behind the development-stage biotechnology name.
In Cramer’s lightning round, he sped through his take on some callers’ favorite stocks, including:
Arena Pharmaceuticals: “Arena is back from the dead. I can’t believe it. They got that positive news about pulmonary and they did a secondary, they raised the money. Pulmonary arterial hypertension, that is a huge market and I’ve got to tell you – I cannot believe this – it’s still a buy.”
Kinder Morgan: “Nope, I’m not going back there after what they did. Listen it takes the entire group to move up. That’s going to trade with the group. I prefer Magellan Midstream. They’ve been on the show. MMP. It’s a cheaper, better stock.”
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Source: Tech CNBC
Cramer Remix: Target’s news flash is good for shareholders, but it may not be enough for all retail