Sell Weak Stock To Raise Cash – Cramer's Mad Money (8/17/17)
Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Thursday, August 17.
Investors need to be prepared for the selloffs like the one that happened on Thursday. Historically, August is a month of selloffs. “For as long as I’ve been in this business, August has been a month where we have unexplained or inexplicable, sudden sell-offs, including nasty ones like today,” said Cramer. There were many reasons for the selloff and Cramer gave his take on them:
- Trump’s CEO council dissolved – This was the most obvious reason for the selloff. “If you’re selling stocks because so many CEOs are getting off the Trump train, I’ve got a news flash for you: you need a better reason,” said Cramer.
- Gary Cohn stepping down rumor – There were rumors of Trump’s top advisor Gary Cohn stepping down. “I certainly can see that Cohn’s important enough to Trump’s economic agenda that his leaving would really hurt the stock market. But then again, the White House issued a statement saying he’s not going anywhere, so it’s not a particularly cogent reason to sell,” said Cramer.
- Earnings – The market did not like earnings from Cisco (NASDAQ:CSCO) and Wal-Mart (NYSE:WMT). Cramer feels that the expectations for Wal-Mart were already high.
- Spain terror attack – The market goes down on every terror attack.
Bottom line is, “It’s August. It’s slow. It’s thin. It’s time for vacation. Stocks have had a big move. Why not sell some? I bet this sell-off isn’t done. It could get uglier. We’re due. I also believe we’ll get a bunch of sell-offs like this one over the next six weeks because that’s what happens every year at this time. I’ve been telling you this. So, if you haven’t done so already, please sell your least favorite stocks tomorrow to raise some cash so that you’ll be ready to pick up your most favorites as they come down and become bargains,” concluded Cramer.
CEO interview – Box (NYSE:BOX)
The stock of cloud computing provider Box is up 35% YTD. Cramer interviewed co-founder, Chairman and CEO Aaron Levie to know what lies ahead for the company.
Box partnered with Google (NASDAQ:GOOG) Cloud Vision to use machine learning to analyze images. Many businesses have a lot of image data that are classified manually. Box helps them do it automatically and makes it searchable as well. The workflows can be built on image content by companies. The machine learning can be applied to all the unstructured data.
This could later be applied to videos and audio files to unlock more value. The same technology is applied for documents as of now which makes them searchable. They store over 30B files for their customers. AI is helping streamline business processes.
They are focused on enterprise so far and have no interest in personal space. Their aim is to help companies provide more value around data and save them money along with speeding up their process.
Box works with the federal government and yet CEO Levie could not keep mum about the Charlottesville violence. “In this case, I think the principles override that. We really need to ensure that our country can be much more unified, that we actually collectively appreciate our culture of diversity, and we need a president that can stand up for that and stand up for what’s right. So in this case, I think that you’ve seen that from other CEOs in the country and CEOs of companies much larger than Box,” he said.
“I think that the business community has reacted in concert with that and recognized that it was a complete travesty of what happened this weekend, and the kind of tone and the rhetoric that’s coming out of the administration is quite horrible to see. I think we really, really need some strong answers and some new responses from this administration if this current administration is going to work out,” he added.
Cramer said there are two kinds of retailers. Those that are being crushed by Amazon (NASDAQ:AMZN) and those that are beating it.
L Brands (NYSE:LB) went down after slashing guidance and joins the likes of Dick’s Sporting Goods (NYSE:DKS), Macy’s (NYSE:M) and Coach (NYSE:COH) that are closing stores due to competition from Amazon. The mall is dying slowly for retail and there are 1,100 Victoria’s Secret stores in malls across the country and another 1,600 Bath & Body Works.
On the other side of this are Target (NYSE:TGT) and Wal-Mart (WMT). Both are giving tough competition to Amazon. The investments made by Target are paying off and the earnings from Wal-Mart shows that it is a two horse race. Their jet.com acquisition has been integrated completely into the Wal-Mart family.
While Amazon is turning to capital market for raising money it needs in place of profits, Wal-Mart has the cushion from its owners. “And there too lies the real Achilles’ Heel of Amazon: the clout Wal-Mart still has over its suppliers,” said Cramer.
Most consumer products companies’ websites are hosted by Amazon Web Services. These companies risk losing business from Wal-Mart by partnering with Amazon for the cloud. “If I’m the chief technology officer of any supplier, I’m going to green-light shifting away from Amazon Web Services to the ultra-competitive Microsoft Azure or Google Web Services,” said Cramer.
Wal-Mart has a bigger physical footprint that works in its favor.
Cramer did his homework on stocks he could not opine earlier.
Insys Therapeutics (NASDAQ:INSY): It’s a speculative small-cap drug delivery play. It just has two products in the market. They have two more compounds in Phase 3 trial. There are negative news on the stock and there are investigations going on. There are too many issues in the company for Cramer to recommend a buy.
2U (NASDAQ:TWOU): It provides cloud-based software-as-a-service solutions for nonprofit colleges and universities to deliver education to qualified students. It’s a one-stop shop for digitizing education. Cramer calls it a good growth story but the stock has run up. It needs to cool off before investors would want to buy.
Pattern Energy (NASDAQ:PEGI): It operates as an independent power company, which focuses on the constructing, owning and operating energy projects with long-term energy sales contracts. It’s a green energy provider which yields 6.9%. Cramer thinks it’s a good stock.
Viewer calls taken by Cramer
Peabody Energy (NYSE:BTU): It’s a good opportunity to sell.
Berkshire Hathaway (NYSE:BRK.B): Wait till it comes down before buying.
Alibaba (NYSE:BABA): It’s still cheap after this quarter.
Wix.com (NASDAQ:WIX): Their quarter was disappointing. It can rally back but there are concerns from Cramer.
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