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Investment

Cramer Remix: The one earnings report that can save one of the market’s most important sectors

Just when Jim Cramer expects the transports to be rallying, they roll over, raising concerns about weakness in one of the market’s most important sectors.

“I can’t do enough to stress just how important this sector is to any rally. Transports equal commerce,” the “Mad Money” host said.

But one of the transport stocks could reveal boosts in its shipping business when it reports on Wednesday, and Cramer said it could be enough to lift the sector out of its rut.

“As long as the transports are in trouble, we need to be at least a little worried about the whole market. So what’s the best hope for a reversal in this super important cohort? I’d say it comes from United Parcel,” Cramer said. “People are expecting a very good quarter given the incredibly fast shift to e-commerce in this country. UPS should be a huge winner now that online is totally ascendant, but how many times has this company managed to snatch defeat from the jaws of victory? FedEx did a great job when it reported, but the stock’s been stuck in neutral. Perhaps UPS can get it going again. My fingers are crossed.”

Several recent upside surprises from formerly struggling stocks made Cramer more open to the idea that maybe old dogs can, indeed, learn new tricks.

“Every day in this market it seems like some old-line company surprises us with good news, causing investors to buy their stocks hand over fist. The resuscitation of these falling stars is what’s behind a lot of the strength here,” the “Mad Money” host said.

From AT&T to McDonald’s, Cramer proceeded to review how five unloved stocks are bouncing back into Wall Street’s favor thanks to earnings-positive changes their companies are making.

Then, in a wide-ranging interview, CEO Michael Corbat told Cramer that his bank has been primarily focused on positioning itself to take advantage of a changing industry.

“We’ve repaired a lot of relationships,” Corbat said on Wednesday. “From a credit perspective, from an earnings perspective, from a business model perspective, we put the company through a massive restructuring, and now we’re showing what the company can do.”

Corbat said the goal has been to bring Citi back to its roots as a bank, done in part by exiting dozens of secondary businesses and scaling back some $800 million in core assets.

Corbat also touched on Citigroup’s partnership with Costco. It may be old news, but the CEO still considers the deal, which the big bank took from competitor American Express, a huge success.

Corbat said the deal with Costco to issue the retailer’s branded credit cards was much larger than it may have initially seemed.

“If I came in and said, ‘Jim, let me tell you about a deal that we’re gonna do. And that deal is going to be with a terrific partner, one of the best retailers in the world. And in that deal we’re going to bring in $10, $11 billion of receivables. We’re gonna bring in new cardholders. And those cardholders, in a single year, are going to spend $100 billion on that card,’ think about it,” Corbat said.

Finally, Cramer grudgingly reviewed Polaris Industries, a manufacturer of snowmobiles, all-terrain vehicles and motorcycles that has had a wild ride over the last several years.

From 2012 to 2015, shares of Polaris rallied 150 percent. But starting in 2015, the company’s earnings, revenue and growth all slowed due to mishaps in costs, shipping and inventory that drove customers away and dramatically lowered the product prices.

Following that, the company went through a series of recalls for its products over the next several years, even as earnings were improving.

“Put it all together, and while I do think Polaris is turning things around, the story is just too risky for this guy. The recalls simply make this stock too dangerous,” Cramer said. “I have to give CEO Scott Wine and his team credit for getting Polaris out of a really bad situation, but as long as these product recalls keep coming, I think now the stock is just too risky to own because execution matters. And the execution here? Well, you fill in the blank.”

In Cramer’s lightning round, he shared his take on some callers’ favorite stocks, including:

General Electric: “Well, if you buy it down here, it’s OK. I mean, it’s just been a terrible stock. I mean, talk about a place – the address is the House of Pain. That said, they’ve got a new CEO coming in. Let’s sit down with him, with [CEO John] Flannery, and see what he has to say and then we’ll make a judgment.”

SAP SE: “I like SAP very much. I think they had a good quarter. Not as good as Oracle, and not as good as Salesforce, but it was good.”

Disclosure: Cramer’s charitable trust owns shares of Citigroup and General Electric.

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Cramer Remix: The one earnings report that can save one of the market’s most important sectors

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