While the fatal effects of Hurricane Harvey continue to dominate headlines, CNBC’s Jim Cramer pointed out that the storm’s financial impact was not top-of-mind for Wall Street traders.
“If you want to talk about the themes that dominated today’s session before this North Korean missile, Harvey’s just not one of them,” the “Mad Money” host said.
But if the market pays little attention to natural disasters, situations like North Korea’s failed missile launch do tend to rattle whole swaths of stocks, Cramer said.
“I think that this news coming out of North Korea … would certainly produce a much higher price for this stock” on Tuesday, Cramer said of Kratos Defense, a government defense contractor. “Now, the missile is in the water, but it doesn’t matter. I think that there’ll be another spurt in all of the defense stocks, and Kratos will figure prominently in that.”
Six Flags’ stock may have gotten hit after a weaker-than-expected earnings report in July, but CEO Jim Reid-Anderson told CNBC that he has since only reaffirmed his faith in the company.
“Last Friday, I spent $3 million buying the company’s shares because I believe that the stock price, where it is today, doesn’t reflect the true value of this company,” Reid-Anderson told Cramer on Monday. “A 5.1 percent yield, Jim. That’s the highest yield in the industry. And so right now, it’s an opportunity.”
While the CEO acknowledged that management was disappointed with the earnings miss, he maintained that revenue and profitability reached record highs in the second quarter.
He also said that in six of the last seven years, Six Flags shares declined during the third-quarter period, making this quarter the prime time to buy the stock.
As federal and local authorities rush to mitigate the devastating effects of Hurricane Harvey, Cramer took to tracking the storm’s impact on industries in its path.
“No two horrendous storms are alike. They’re all terrible, and while it continues, the only thing that matters is that people are dying. Anything else is just much, much less important,” the “Mad Money” host said. “But I know that many of you want to know if Harvey has any impact on investing, specifically on your portfolios, so I’ve got some ideas based on history.”
So Cramer put together a worst-case scenario for those invested in the storm based on the havoc wreaked by Hurricane Katrina, another Category 3 storm that killed 2,000 and caused $100 billion in damage, according to the Federal Emergency Management Agency.
Then, Cramer spoke with Veeva Systems founder and CEO Peter Gassner, who spoke to the cloud company’s new QualityOne product.
The cloud-based quality management program applies to new fields for Veeva that include cosmetics, chemicals, food and industrial manufacturing, Gassner said.
“We have an offering for them now, and we’re just starting to get traction out there,” the CEO told Cramer on Monday. “We’re talking about health and human safety, absolutely, but we’re also talking about quality as it refers to the brand reputation.”
Gassner said the biggest draw for new QualityOne customers was their need to coordinate quality management with suppliers. The best way to reach suppliers is through a cloud-based system, and no programs exist currently that serve that kind of correspondence, Gassner said.
“We’re going to serve this under-served market,” Gassner said. “It reminds me of what ServiceNow did when they really started focusing on IT operations, really bringing a cloud solution … and all of a sudden you’ve got a big market. That’s what we’re trying to do with QualityOne. There’s a big, pent-up demand there, and I think we’re uncovering it.”
Finally, Cramer looked into Esperion Therapeutics, a small-capitalization, development-stage biotechnology company that just issued a large secondary offering.
“When a little company with a red-hot stock does a big equity offering, that tends to be a pretty strong signal that you need to get more cautious,” Cramer warned.
Amid years of wild trading, Esperion, which focuses on treatments for high cholesterol, has issued several stock offerings, usually following promising news about its drugs.
“First, you have to remember, as an early-stage biotech with no drugs on the market, no earnings, and no sales, this stock trades purely on how people feel about its longer-term prospects,” Cramer explained. “The bottom line is that early-stage biotech stories are inherently risky. The last time Esperion did a secondary offering after announcing strong data, its stock ended up losing 90 percent of its value before it bottomed. I’m not saying that’ll happen again. I just think you need to be careful, and while the company has definitely improved and it’s farther along and we love stage 3, stocks like Esperion? Well, I’ve learned my lesson. I think they’re too risky for me to recommend on Mad Money.”
In Cramer’s lightning round, he flew through his take on some callers’ favorite stocks:
KBR Inc.: “OK, that’s a construction company. Could be an interesting play off of what’s happening in Houston, but I am going to say let’s hold off because it has too much energy exposure.”
Corcept Therapeutics: “Oh man, the stock’s up 100 percent. But, you know, look, they have the possibility of something for psychiatric disorders, therefore I’m going to tell you that I think that the company’s a good spec. Because I know that there’s a lot of buzz about what this company’s up to.”
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Source: Tech CNBC
Cramer Remix: Here's how North Korea's missile could impact the stock market