Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Monday, April 24.
The first round of French elections is out of the way and the market is moving up. “There are so many pundits out there saying that today’s rally is all about these tax cuts that I think I have to call a time out and explain how that’s not the real driver of this fabulous move,” said Cramer. It’s not Trump’s plan that is moving the markets, but the increased M&A activity and good earnings reports.
Becton Dickinson (NYSE:BDX) acquired C. R. Bard (NYSE:BCR) at a 25% premium. “It’s a reminder that while C. R. Bard may have seemed expensive on Friday, as so many pundits tell us about so many stocks, on Monday, you picked up a quick 50 points for doing absolutely nothing other than owning C. R. Bard’s stock,” said Cramer.
Good earnings from Honeywell (NYSE:HON) and KeyCorp (NYSE:KEY) led to their stocks rallying. Hasbro (NASDAQ:HAS) and Illinois Tool Works (NYSE:ITW) reported great numbers too. Apart from earnings, the semiconductor group is on fire and Cramer is still a fan of the sector, believing that it has more room to run.
Cramer said that there is little hope from the tax cut because the Republicans have to get their act together. Cramer thinks that the market is good enough on the basis of M&A activity and earnings to rise. “If Trump gets legislation passed, that would be fantastic for the market, but you really need to stop banking on anything that involves Congress. You’re just setting your portfolio up for failure instead of looking at the main chance: the phenomenal performance of U.S. managements at U.S. companies in the face of tremendous uncertainty both here and abroad,” he concluded.
Cramer has told viewers that the weakness in the market due to the French election was a buying opportunity. Many of them have missed the rally but Cramer said it’s not over yet. It is hard to break away from the herd and buy when everyone else is selling.
The looming fears of a government shutdown later in the week are real. This will bring temporary weakness to the market which will be another opportunity to buy high quality stocks. Cramer suggested that investors should keep their shopping list ready.
CEO interview – Hasbro
Hasbro reported better than expected earnings and its stock rallied. Cramer interviewed CEO Brian Goldner to hear more about the quarter.
“It really starts with customer insight. We spend a lot of time getting proprietary consumer insights, really understanding our audience, and then we are surrounding them with storytelling,” said Goldner. “We are creating social-media-type games that now allow people to play face-to-face, but we’re also creating digital games. And what we’re finding out about our brands is they really resonate in that mobile gaming space,” he added.
The company is innovating in the gaming space and they are launching Hasbro Gaming Crate, which is a pre-paid subscription service at $49.99 per Crate, where Hasbro will send a package of three never-before-played games chosen by gaming experts to subscribers four times a year.
Goldner said that the idea of taking feedback from customers and then rolling out what is successful works for both the company and the consumer. “We are very connected to our consumers and customers all around the world. We take direct feedback. And we’ve really thought about this in a multitude of ways,” he added.
He also commented on inclusion being the core of Hasbro. “Inclusion in our workforce, inclusion in the kinds of people that we portray and the way that we think about our products and diversity. Even our board of directors, we’re thinking about diversity and how we build a board that’s with wonderful capabilities and a diverse background,” he said.
There are many movies coming in 2017 which includes the 40th anniversary of Star Wars. Cramer thinks the stock is not done going up.
CEO interview – T-Mobile (NASDAQ:TMUS)
Once again T-Mobile reported good earnings and its stock went up by 2%. Cramer interviewed CEO John Legere to find out what lies ahead.
“I’ve always told you that both dumb and dumber have been big contributors to the success of T-Mobile,” said Legere referring to Verizon (NYSE:VZ) and AT&T (NYSE:T). He added that 1.1M net additions and higher service revenue is something the wireless industry has not seen in many years.
He said that competitors like Verizon have been playing catch-up with T-Mobile which took 250% of all industry post-paid phone growth in Q1. “We have had consistent growth, and, you know, whether it’s an up quarter or a down quarter, whether it’s highly competitive or not, our growth continues and I’m very, very pleased that we now have over 73M customers,” said Legere.
They have upped their wireless presence in Q1 by winning 600 MHz sold in an auction and expanding coverage in the US. Legere said that as the telecom sector evolves, he does not discount the possibility of the merger as that will bring out both customer and shareholder value. “We will look at the opportunities to even further accelerate that growth or create much more shareholder value, so coming at this exactly the way I dreamt we would at this period, from a position of strength and willing to talk, but not needing to, which is really a difference,” he added.
Legere said that the company’s young customer base is loyal. “The millennials skew to us. But it’s not just the millennials, it’s all customers that want us to solve the pain points of a stupid, broken, arrogant industry that they need to be part of but they hate, and I think we’ve got a long way to go and we’re doing it on behalf of the customers, which is most important,” he concluded.
CEO interview – Illinois Tool Works
Illinois Tool Works beat earnings by a good margin and its stock gained more 3%. Cramer interviewed chairman and CEO Scott Santi, to see how they are growing consistently despite being a niche industrial.
Santi said that the company’s “80-20” operating model that serves to streamline the business is the reason for their success. “It really is built around a phenomenon that we see over and over again in our kinds of companies, our kinds of businesses, which is that typically, 20% of a business’s customers and product lines generate 80% of revenue.” This also helps the company cut costs and other complications.
They are a value add problem solver. They are not only seeing growth in the US, but their European sales grew by 6%. Santi said that the company continues to innovate and as the skilled labor pool for welders is drying up, they are making sophisticated tools that require fewer skills to operate.
Viewer calls taken by Cramer
Regions Financial (NYSE:RF): It’s a good franchise in the south that is growing. Buy more when down.
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