NEW YORK (TheStreet) -- Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- The growing excitement in the gaming world, and
- Cross currents in the markets.
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The Best Stock in Video Gaming
Posted at 1:46 p.m. EST on Friday, July 18, 2014
The excitement in the gaming world is growing by leaps and bounds after the surprising doubling in Xbox sales with the $399 option and the holiday games lineup.
It may not be as good a reason to own Microsoft (MSFT - Get Report), although it sure would be if it were spun off. But people are, correctly, flocking to GamesStop (GME - Get Report) and Electronic Arts (EA) as beneficiaries. GameStop got hurt badly during a transition that was poorly telegraphed by a management. I happen to like Paul Raines, the CEO, who was abject in not getting it right the first time but terrific in coming back on "Mad Money" and saying that the all-clear's been sounded even as it has taken three months since he said that to make some money here.
No matter, the one that's not up enough is the one that I think is going to have a terrific second half of the year: Take-Two Interactive (TTWO). The stock's rallying nice today, putting on almost 3% today and up 30% for the year.
But I think that there's much more in store given that the maker of "Grand Theft Auto" has a title list upcoming that could be chock full of hits, including one, Evolve, that might actually become a major hit although not in the league of GTA, which is the greatest of all time.
When I pulled up with CEO Strauss Zelnick he was unusually sanguine about the fall lineup. He's not a showboat who overpromises, which certainly keeps him from under-delivering, but Evolve's got fantastic word of mouth and in gaming circles that's all that matters.
Now here's what's tricky at TTWO. It is not a loved stock among all analysts and the most vocal ones tend to really put the knock on it, even when it is good. The company reports on August 5 and last time reported a darned good quarter and got hammered anyway. It was a terrific opportunity to buy a company with a boatload of cash and lots of products in the pipe that can be almost an annuity stream for this $2.2 billion company, with almost 30% of that market cap in cash.
I think that given that Evolve still isn't in the stores and we don't know how much Xbox sales fall to the bottom line and how much the company will do in digital, the negative analysts might just crush it again.
If it comes in I would buy half a position and then buy the rest after what could be the usual hostile crowd.
Why buy any ahead of August 5 at all? Simple. The negative analysts have been so wrong that one of them might just have to break ranks just to stay real.
Zelnick's done a masterful job turning the company around and has also learned to harness the power of 1,900 employees and designers who come up with these games. I think this is now the best of the gaming stocks out there given its cash, its management and its low expectations going into the quarter.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the stocks mentioned.
Market Discourages the Best of Us
Posted at 1:10 p.m. EST on Thursday, July 17, 2014
Why is this business so hard? I think it's because there are amazing cross currents everywhere that make fundamental security analysis so hard right now.
We all know the obvious one: interest rate distortion. We have to wonder why rates, the principal competition to stock, remain low despite better economic times.
Some of that is, of course, the Federal Reserve, which is bent on having sustainable economic growth that puts a lot of people to work before it raises rates. I know that some very smart people like Stanley Druckenmiller, a very keen observer of rates, said at "Delivering Alpha," considering all of the strong inputs we have, including the recent employment reports and industrial figures, suggest that the Fed is well behind the curve. But there are bond buyers galore today as there are so many other days, so it isn't all on the Fed.
Some of the cross currents have to do with activism. Put simply, the worst stocks have a tendency to become the best when the heat is on them, as we know from Microsoft (MSFT - Get Report) today, which had underperformed for years and is now a spectacular performer in part because of a boardroom shakeup.
I'm not talk about those seismic events. I am addressing the more difficult anomalies that are peculiar to this market and this economy. Put simply, the patterns that we go by are really messed up.
For example, today we had a housing start number that was incredibly anemic, miserable even. So who gets hurt when we have such weak numbers? Building suppliers. Who are they? I would say the obvious one is paint. Typically I would then bet against the paint makers. Two of them reported today and, while the overall market took a tumble because of Russia-Ukraine tensions, they are among the best performers today. What's going on? Consolidation in the industry? Excellent execution? Maybe both, but the macro to micro pattern sure isn't working.
How about autos? We are getting incredible sales numbers from the automakers. So why not buy the biggest auto sales company out there. Autonation (AN)? How about because the company is investing so much money into the business that it dinged earnings? That's not supposed to happen. But it did.
We have had a remarkable resurgence in the transports, even as oil has climbed relentlessly higher. Again, thrown for a loop.
And today we have oil spiking off of the problems in Russia and which stocks are hit hardest? How about the domestic oils which are the ones that have the most to gain from Russian turmoil.
Finally there's Yum! (YUM). For years this stock has traded on China and how well KFC's doing. I even talk about that in "Get Rich Carefully." But today the stock's been crushed? The reason? How the other two legs of the stool, the normally placid Pizza Hut and Taco Bell. The historical pattern simply didn't hold up this time.
I put all of these together not to say "Don't get involved in the market right here." That's a poor takeaway.
This market's been rewarding, for certain. But as I search for why there is so much antipathy for a rewarding market I come back and say, "Aha, it's because most of what you have learned just isn't making you money" and in the end sometimes that's so discouraging as to amount to disgust, even as we all know that this has been among the most rewarding of markets.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long YUM.