It’s not breaking news to say retailers, especially those with exposure to the shopping mall, have been hurting of late. But CNBC’s Jim Cramer discovered one group that stood out after earnings.
“I’m calling it the BTF club — BTF stands for Better Than Feared,” the “Mad Money” host said. “These companies didn’t necessarily report quarters that were actually any good at all. They’re companies that had gotten to the point where the expectations were so low … that anything better than truly devastating numbers was considered a big win, causing all these stocks to soar.”
American Eagle Outfitters, Abercrombie & Fitch, Express and Signet Jewelers made up Cramer’s BTF club. And while Cramer didn’t find the first three companies’ stocks particularly compelling (except if you own them and are looking to sell into strength), Signet intrigued him.
The parent company of Kay, Jared and Zales beat earnings estimates, which managed to not only stabilize its free-falling stock, but send it soaring.
With a new CEO in place, Cramer thinks Signet, which struggled with declining earnings for some time on top of a class-action lawsuit, could have a chance at a turnaround.
“I know it’s risky, but it could be prime for a longer term turn here,” the “Mad Money” host said. “Of the four, it’s one I might consider owning.”
As news continues to emerge from Texas after Hurricane Harvey, Cramer noticed investors shifting their focus to several other stock market themes.
“First feature of the new normal? America’s not the world’s policeman anymore,” Cramer said. “Sure, an attack on Japan is like an attack on us. But if North Korea ever sends a missile at Japan instead of over it, that missile needs to be headed off. The question here is who pays for the Patriot missiles … to shoot North Korea’s nukes out of the sky?”
The answer is Japan, and the seller will be Raytheon, Cramer said. Shares of defense stocks like Raytheon, Lockheed Martin and Kratos surged at Tuesday’s open after North Korea fired a ballistic missile that flew over Japan’s airspace before breaking apart and falling into the sea.
Beyond North Korea, Cramer also examined the effects of a weaker dollar, Apple’s rumored iPhone launch and flooding in Houston.
With commodity watchers concerned about the fate of Texas’ oil refineries after Hurricane Harvey, Cramer wanted to nail down the condition of oil itself.
So Cramer went off the charts with technician Carley Garner, the co-founder of DeCarley Trading and Cramer’s colleague at RealMoney.com with a nearly spotless record on calling oil’s moves.
“The trouble with the oil market right now, in Garner’s view, is that the buyers all feel like eternal optimists and they won’t let multiple failed rallies stand in the way of their conviction,” Cramer said.
But since West Texas Intermediate Crude, the market’s general barometer for crude oil prices, peaked in January, oil prices have been sliding, making a series of lower highs. Since then, each time oil has climbed significantly higher, speculators have gotten more bullish, and each time, Cramer has seen them let down because oil has been stuck in a trading range.
“We’ve made this point before, but Garner thinks … it’s worth stressing now, because we’re currently approaching what’s historically been a bearish time of year … for the oil markets and she wouldn’t be surprised if the bulls just get blown out here,” the “Mad Money” host said.
Rising avocado costs might be squeezing Chipotle’s margins, but John Cappasola, the president and CEO of West Coast chain Del Taco, said his Mexican fast-food chain isn’t feeling the heat.
“This is actually a structural advantage for us, the fact that we do it fresh in our restaurants,” Cappasola told CNBC on Tuesday in an interview with Cramer.
In response to Cramer’s question about handling the spike in avocado prices, Cappasola said that his business benefits from being more hands-on with food preparation than other chains.
“From a food cost standpoint, we are cutting out the middleman,” Cappasola said. “When you think about the value add you pay to have someone else chop it and slice it and put it in a bag and ship it in, we don’t do that. We take it inside and we do the chopping and the slicing and the grating and the grilling, and we feel really confident that that’s what delivers a great food experience for us.”
Finally, Cramer erred his grievances about Monday’s after-hours trading, when panicked sellers made some trades that truly astonished the “Mad Money” host.
First, traders fled the stock of Alibaba, the Chinese e-commerce giant that many have compared with Amazon.
“I can’t believe I even need to spell this one out, but Alibaba’s a Chinese company, and China is North Korea’s only real ally. Although they keep saying they’ll help us negotiate, the [People’s Republic] is fine with a nuclear-armed North Korea,” Cramer said. “Given how well this company’s doing, this stock should’ve been a buy, not a sell.”
People also took to selling the stock of Apple, which hit an all-time high on Tuesday.
“Honestly, if you want to take a really grim, really cynical view here, the traders should’ve been buying Apple on the news and selling its main competitor, the South Korea-based Samsung, because if a conflict does break out, Samsung’s headquarters would be right at the epicenter,” Cramer said.
Frustrated by the panic, Cramer had a final piece of advice for the traders who sold the stocks without good reason: “Take a deep breath, chill out, and for heaven’s sake, learn from your mistakes!”
In Cramer’s lightning round, he shared his take on some callers’ favorite stocks:
Advanced Micro Devices Inc.: “Look, the stock has moved up very big. I know it’s churning and people are getting very nervous about it. I am not concerned. Intel does have a rival product, a lot of people feel Bitcoin’s peaking, but AMD’s churning. It is not falling apart. OK? It’s churning.”
Cognizant Technology Solutions Corp.: “I love this company. OK? I think it’s absolutely terrific. You know, sometimes you think it’s going to come back and haunt you because the stock’s already up 24 percent, but they’ve done so many things right.”
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Source: Tech CNBC
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