Schlumberger’s third-quarter earnings results shed more light on the state of the oil and gas industry than Wall Street realized, CNBC’s Jim Cramer said on Monday.
“The long-term commentary here was a lot more bullish than some people seem to realize. After spending years in purgatory, Schlumberger now says that the oil industry’s about to get back on track,” the “Mad Money” host said.
On Schlumberger’s conference call, CEO Paal Kibsgaard said that, as supply and demand for oil fall into balance, producers will start spending again, giving oilfield services giants like Schlumberger an eventual boost to their numbers.
“The best thing that could happen to Schlumberger long term is a healthy oil market where crude can go higher. The company believes we’re getting there, but the oil service industry might need to experience some near-term pain first,” Cramer said. “At these levels, with oil possibly making a major comeback next year … I think you’re getting an excellent buying opportunity in the best stock of the best company in the entire industry, Schlumberger.”
As the record-hitting market charges into one of the biggest earnings weeks of 2017, Cramer highlighted a unique group stocks that have proved to be major winners.
“The biggest winners so far of the earnings season ahead of what’s going to be an amazing week? It’s the stocks of companies that were supposed to report sub-par earnings. These are the stocks that are really exploding higher,” Cramer said on Monday.
First, Cramer turned to the stock of Seagate. Wall Street expected the company, which makes data storage technology, to issue a weak earnings report and give dismal forward-looking guidance; most of the analyst coverage suggested investors hold or sell its stock.
Cramer said the negativity made sense. Seagate’s last two quarters were disappointing for the market and the disk drive maker was seen as being too commoditized.
“But this quarter, Seagate gave you some encouraging signs about its data center business levered to its biggest disk drives,” Cramer said. “No one saw that coming. That’s why this stock rallied so big. It was hated, so it got a monster 12.6 percent move.”
Toys R Us’ Chapter 11 bankruptcy filing won’t stop Hasbro from selling its toys at Toys R Us stores this holiday season, Hasbro CEO Brian Goldner told CNBC on Monday.
“We didn’t know that it was going to happen, and obviously when you first hear about this you take a few days off. We wanted to understand exactly what the impact might be,” Goldner told Cramer after earnings.
While Hasbro’s quarterly report beat Wall Street estimates, shares of the toy maker fell over 8 percent intraday on muted guidance for holiday sales related to Toys R Us’ bankruptcy filing.
But with less than two months left until the rush of holiday season, Goldner said that Hasbro’s relationship with Toys R Us will remain intact, if slightly re-formulated.
While the chances of lawmakers drastically cutting 401(k) contribution limits are slim, Cramer still doubled down on why the cuts would be especially harmful to the middle class.
“The whole point of a 401(k) plan is that your contributions are tax-deductible up to $18,000 a year. They want to slash that to $2,400? It’s hard to imagine a less popular way to pay for the massive tax cuts that President [Donald] Trump assures us [will] make our companies more competitive while helping the middle class,” he said.
“But if you neuter 401(k)s, then really, you’re just punishing individuals who save in order to give corporations a tax break. Well, that’s just crazy,” he added.
After The Wall Street Journal reported that GOP lawmakers considered slashing 401(k) contributions as a part of tax reform, Cramer went on NBC’s “TODAY” on Monday to explain why the cuts would negatively affect consumers.
Shortly thereafter, Trump tweeted that the 401(k) change would not be put in place.
Finally, Cramer spoke with Garo Armen, the chairman and CEO of small-cap biotech Agenus, about his company’s pipeline.
Agenus’ shingles vaccine received FDA approval on Friday, but Armen told Cramer that his company had not yet tapped into the drug’s highly lucrative prospects.
“We sold a part of our royalties early on, about two and a half years ago,” Armen said on Monday. “However, it was a very, very smart transaction because these royalties are re-purchasable, and our conviction is that this is a multi-billion-dollar product opportunity. So it’s possible that we will restructure that arrangement in order to be able to capture the cash flow.”
Agenus’ pipeline is also replete with cell therapy treatments, a new kind of cancer therapy that uses tumor tissue to create personalized vaccines for patients.
Armen said that because industry giants like Gilead are growing increasingly interested in cell therapies, the treatments could hit the market sooner than traditional drugs.
“Cell therapy has moved very rapidly. So it’s very conceivable that, first of all, we’ll be in the clinic next year. And it’s conceivable that, within two years or so of being in the clinic, you can have a filing for commercialization, whereas with other immuno-oncology products, for example, our antibodies, we expect to do our first filing in 2019,” the CEO said.
In Cramer’s lightning round, he rattled off his take on some callers’ favorite stocks:
MGM Resorts International: “I do think that there could be some lawsuits here. I do prefer, right now, to buy Wynn [Resorts]. I just want things to be a little bit more clear. I do prefer the MGM REIT, because of the 5 percent yield, to the MGM common [stock].”
Pilgrims Pride Corporation: “You know what? I’m a huge believer in protein, and I think protein is a winner here. And that’s one of the reasons why I think that Tyson’s been good. I think, on any discount, I like Pilgrims Pride.”
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Source: Investment Cnbc
Cramer Remix: The oil market is alive and may be ready to start kicking