Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Friday, September 29.
September has been a month of selling historically. It brings pre-announcements of slowdowns but it did not happen this time. With that Cramer discussed the game plan for the week.
Customers will know whether Altice (NYSE:ATUS) and ESPN (NYSE:DIS) reach a conclusion about sports network. “Normally I don’t care about these kinds of things, but I believe this might actually crystallize the debate about cord-cutting and the need for certain programming no matter what,” said Cramer.
Lennar (NYSE:LEN) and Paychex (NASDAQ:PAYX) will report earnings. Cramer expects Lennar to report a good quarter as 2017 has been a good year for home-builders.
Paychex earnings may get negative rhetoric from analysts like last quarter. “Be aware that these negativists are still lurking and they will try to knock it down again,” he said.
Pepsi (NYSE:PEP) will report earnings and Cramer has faith that CEO Indra Nooyi will perform yet again. “Just be aware that being the best house in a tough neighborhood, though, which it is by far, is a lot more difficult than being the worst home in a fabulous neighborhood,” he added.
Constellation Brands (NYSE:STZ), Costco (NASDAQ:COST) and Yum China (NYSE:YUMC) will report earnings.
Cramer thinks Constellation Brands will deliver yet again. Buy half before the earnings and half after if there is weakness. Costco, on the other hand, is due to see weakness due to Amazon. “I’d be very skeptical of it going into the quarter,” he said. “You need to be able to withstand some selling pressure if you’re going to own this one through the quarter,” said Cramer.
Yum China is up over 50% for the year and this time will be no different.
Non-farm payroll number is due on Friday and a good number will set up the bank earnings in the following week.
Many think that AI will make human jobs obsolete but Cramer begs to differ. “I get the sense that when it comes to the power of artificial intelligence, we’re thinking way too small. We don’t understand that AI might hold the key to all of sales if we simply learn how to harness it,” he said.
Useful data is generated every day and companies that can interpret the data effectively will end up as winners. As of today, Netflix (NASDAQ:NFLX), Amazon (NASDAQ:AMZN) and Spotify (Private:MUSIC) are the ones that truly reap benefits from the power of AI. However the race to the top won’t be easy as the total addressable market for AI is large and there are many competitive players.
“To use another baseball analogy, it’s like steroids — once somebody starts juicing, anyone who wants to remain competitive has to jump on the bandwagon. Artificial intelligence is like steroids for your business,” said Cramer. Companies would need top of the line semiconductor equipment and data centers to make it big in their business.
“In other words, artificial intelligence isn’t cyclical. It’s not boom-bust. It really is a secular, long-term transformation, which makes owning anything in the big data space in any way, shape or form the place to be. Not for now. Not for next quarter. But for years to come,” concluded Cramer.
The much-anticipated unicorn Roku has priced its offering and the stock has been on fire. Now that the stock has run, is it worth buying? Cramer has the answer.
“Roku’s been growing at a solid clip, and as the maker of the No. 1 streaming platform, this may be the best single play on cord-cutting around,” said Cramer. They stream 4,500 channels including Netflix directly to the television. They also license their operating system to smart TV manufacturers and cable and satellite companies and have a thriving ad business by selling ad spots.
Their business model is good. As consumers opt out from cable and move towards web-based consumption, it benefits Roku. Their user base is growing and the consumers are spending more time on Roku. “I’m a big believer in Apple (NASDAQ:AAPL), but if you’re buying it as a cord-cutting play, you are out of your mind because the Apple TV just isn’t big enough to move the needle,” said Cramer.
For the negative, Roku is competing with the likes of Amazon, Apple and Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL). Competing with these giants is going to be tough for the company. Their profitability also poses a question. Even though their revenue is growing they are losing money for a long time and at the same time competition is increasing. Its hardware business revenue is declining as well.
“So there are a lot of question marks about the company. But as for Roku the stock, well, let me just say I don’t want you to buy it up here,” concluded Cramer.
CEO interview – Pennsylvania REIT (NYSE:PEI)
Pennsylvania REIT yields over 8% and it is down 45% for the year. Cramer interviewed CEO Joseph Coradino to find out what lies ahead for the company.
Coradino said that retail is not dying and the chatter around it is overdone. It is evolving and with that change, there will be winners and losers. The company sold 42% of its underperforming malls and introduced new retailers to its properties. Coradino called it a detox process.
“When you’re done, you feel better, right? And you get stronger. And that’s the way we think about the work that we’re doing at our properties, because we sold off the bad stuff and what we’ve got left is getting stronger,” he added.
Coradino said they are chains, the positive retail trends and getting new clients Zara, experiential outlets like Dave & Buster’s and Whole Foods. “We think, clearly, fast fashion, off-price, discount, dining, entertainment are the direction that we need to head,” he concluded.
Viewer calls taken by Cramer
Synchronoss Technologies (NASDAQ:SNCR): Do not touch the stock.
Hain Celestial (NASDAQ:HAIN): Their EBITDA went down but the company has made a good case of a long-term buy. Cramer said one still has to see what happens with the Amazon-Whole Foods deal.
Best (NYSE:BSTI): Cramer prefers Alibaba (NYSE:BABA).
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