Not every situation is an immediate buying opportunity, Jim Cramer warned his Mad Money viewers Tuesday. Sometimes, investors need to take a pause and reassess the situation before buying, Cramer said, and the smartest thing to do is buy gradually, in stages, as the market declines -- in case there's still more selling to come. As the old saying goes, take your time, do it right.
Today's selloff was partially due to the news that the CEOs of Amazon (AMZN) , JPMorgan Chase (JPM) and Berkshire Hathaway (BRK.B) are teaming up to form a new company for the purpose of tackling the many problems of healthcare in America. Cramer said if he were a a drugmaker or a healthcare provider, he'd be terrified by a company that's "free from profit-making incentives," as this new entity will be. But fortunately, Wall Street tends to think differently.
When Amazon first targeted the grocery business, shares of companies such as Costco (COST) saw big declines. Those declines eventually subsided, however, and shares rebounded in the weeks that followed.
Cramer said in this situation, the healthcare group could get hammered for weeks, keeping the entire group in the penalty box for the foreseeable future. If investors have to buy a healthcare stock, he recommended Centene (CNC) , which should not be in the sights of the new Bezos, Dimon and Buffett company.
Executive Decision: Nucor
For an "Executive Decision" segment, Cramer spoke with John Ferriola, chairman, president and CEO of Nucor (NUE) , the Action Alerts PLUS holding that just posted a 10-cents-a-share earnings beat on a 29% rise in revenues. Shares of Nucor declined 3.2% after the report.
Ferriola said that Nucor's earnings are the highest they've seen since 2008, and their end markets, like autos and energy, continue to be strong. Additionally, the outlook for those end markets is the most optimistic they've seen since 2004.
Ferriola was also upbeat for 2018, saying that they look forward to tax reforms, actions on trade and, hopefully, an infrastructure plan that can help support our booming domestic economy. On the topic of trade, Ferriola reiterated that the U.S. cannot have strong national defense without a robust steel industry.
Finally, when asked about their capital allocation plans, Ferriola explained that they've invested over $8 billion over the past nine years, but have always maintained a balanced allocation plan that includes returning capital to shareholders.
Cramer and the AAP team are telling their investment club members about Nucor's earnings beat and the outlook for 2018. Get in on the conversation with a free trial subscription to Action Alerts PLUS.
A Good Deal
The analysts may have yawned at yesterday's merger news between Keurig Green Mountain and Dr. Pepper Snapple (DPS) , but Cramer said he's a buyer, as the combined entity will be the cheapest consumer packaged goods company out there with a terrific new CEO.
Cramer said he likes this tie up for one reason, and one reason only: Bob Gamgort, who will become the combined entity's CEO. Cramer called Gamgort a genius in the package goods space with a long and proven track record of creating value for shareholders.
So while the analysts couldn't see synergies that would allow the company to compete with the likes of Coca-Cola (KO) and Pepsico (PEP) , Cramer said he sees a company with a terrific CEO and a balance sheet primed for more acquisitions and value creation.
Over on Real Money, Cramer explains in detail why he thinks this is a good deal. Get more of his insights with a free trial subscription to Real Money.
Executive Decision: Trex
In his second "Executive Decision" segment, Cramer also sat down for the first time with Jim Cline, president and CEO of composite decking maker Trex Co. Inc. (TREX) , a stock that's up 66% over the past 12 months but only 3.4% so far in 2018.
Cline explained that the latest generation of their products are made form 95% recycled materials and offer colors, durability and a 25-year warranty that wood products simply cannot offer. The average wooden deck will only last 12 or 13 years, and that's with a lot of maintenance, he said.
Cline was also excited about their stadium railing business, which is now expanding into residential markets.
When asked for details about their business, Cline said that only 5% of sales stem from new home construction. Nearly all of their business comes from repair and remodeling through retailers like Home Depot (HD) , Lowes (LOW) and lumber yards throughout the country. Right now, only 17% of all decking material sold is wood alternatives and every percentage point of market share equates to $50 million for Trex.
Executive Decision: Valley National Bancorp
For his final "Executive Decision" segment, Cramer welcomed Ira Robbins, president and CEO of Valley National Bancorp (VLY) , to the show to the discuss his bank and the current state of regional banking.
Robbins explained that Valley National hasn't had a losing quarter in more than 91 years, and while that level of performance appeals to a certain investor base, now is the time for the bank to do more. Over the past 18 months, they've changed their management team and their culture to be focused on delivering real growth and earnings.
The bank's foray into Florida is one of those growth strategies, as there are no banks like Valley National currently in the state, and that gives them a real opportunity, plus their name recognition from the Northeast.
While Valley National has been built to perform well in any interest rate and economic environment, Robbins said they will certainly benefit from rising interest rates, tax reforms and most importantly, loan growth from an expanding economy.
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