This is “one tough market,” Jim Cramer told his Mad Money audience on Friday evening. It was a volatile and difficult week: Stocks ended lower on the day Friday, but slightly higher for the week even as benchmark 10-year note yields hit all-time lows on fears of a global coronavirus pandemic and its potential economic fallout.
From earnings to the economy and Covid-19, Cramer said it's likely to be volatile next week, as well. Here's his game plan:
On Monday investors will hear the latest about the coronavirus. That includes updates on how rapidly the virus is spreading and where. This issue continues to be a big driver in the markets, as investors weigh the impact and outlook, Cramer said.
On Tuesday, investors will also get earnings from Dick’s Sporting Goods (DKS) . That will give investors a better tell on the U.S. consumer, Cramer said.
Wednesday we'll get data on mortgage applications, telling investors if new home buyers are taking advantage of these historic low rates. A poor number here will likely get investors worrying about a possible recession, he reasoned.
On Thursday, there will be a slew of quarterly reports. Dollar General (DG) , Broadcom (AVGO) , Ulta Beauty (ULTA) , Adobe (ADBE) and Gap (GPS) are all scheduled to report, giving investors an update on various industries.
Cramer used Illinois Tool Works’ (ITW) announcement that it will cancel its analysts' meeting as a way to highlight how the coronavirus is impacting business decisions and events.
The city of Austin on Friday canceled the South by Southwest (SXSW) music, media and technology event -- a week before the conference and festival was set to begin. Right now, Covid-19 is in the driver’s seat, Cramer concluded.
On a brighter note Friday, Cramer and his team at CNBC celebrated 15 terrific years of producing the daily Mad Money TV show.
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Executive Decision: Splunk
On the show’s “Executive Decision” segment, Jim Cramer talked with Doug Merritt, president and CEO of Splunk (SPLK) . The stock slipped after a mixed earnings report and guidance that some found uninspiring, leaving some investors to wonder whether Splunk is a buying opportunity.
“This is a snap decision,” Cramer said of the sellers. This was a great quarter and the guidance was strong, in his view. There will be tough days, but secular growth themes will remain in play.
We’re transitioning from a perpetual licensing company to a renewable services company, Merritt said. It’s a huge shift, but amid that shift, Splunk is also growing a huge business in the cloud.
On an annual renewable revenue (ARR) basis, it was a “spectacular” quarter and year, and a “phenomenal” three-year outlook, Merritt explained. The growth in this unit is really impressive.
Cramer wanted to know, amid the Covid-19 outbreak, does Splunk need to be face-to-face for big deals to get done?
Splunk is putting employees’ health and safety first, Merritt said. He said the company is a customer of Slack (WORK) and Zoom Video (ZM) , but there’s a lot of great technology to lean on that allows for business to go on despite disruptions. As it relates to deals, hopefully current customers will continue to help drive growth for Splunk, he added.
Splunk feeds into the theme of digital transformation for business, so if companies need to avoid physical interaction, Splunk is simply part of using technology to continue operations, Merritt said.
In recognition of Sunday as International Women’s Day, Cramer sat down with Sallie Krawcheck, CEO and co-founder of Ellevest, a digital financial adviser for women launched in 2016.
Ellevest remains mission-driven, she said. On average, women’s wealth is just 32 cents on the dollar compared to men. However, part of that reason is because men tend to invest more than women, and Ellevest is looking to help close that gap.
The company has impact investments, Krawcheck said, noting that Ellevest sits down with clients to find out what missions are important to their clients. They still aim for strong returns, she said.
But that shouldn’t be too hard, given that research shows diverse management teams tend to drive outperformance. Further, companies that don’t treat women right tend to undergo huge negative impacts, she noted.
Lastly, Krawcheck touched on the coronavirus-induced selloff. Given her experience in wealth management, she said long-term investors should view the recent selloff as a buying opportunity and a stock sale. Sure, the decline can go deeper, but that’s just another opportunity for investors who consistently invest to get a better deal.
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The coronavirus is having a huge impact around the world. Taking the brunt of the action includes stocks in the airline, cruise, hospitality and live-event industries, along with energy stocks. But just because people cut back on going out, doesn’t mean they stop spending, Cramer said.
With that in mind, Cramer wanted to look at 20 of what he calls the "stay-at-home" stocks. The stay-at-home thesis has been in play for years, but the coronavirus is like gasoline on the fire, he said.
Starting with FAANG, he believes investors can stick with the group. That’s Facebook (FB) , Apple (AAPL) , Amazon (AMZN) , Netflix (NFLX) and Alphabet (GOOGL) . Apple is admittedly a bit complicated, Cramer acknowledged, because of its supply chain disruptions and slower-than-expected demand in China.
However, he repeated his mantra that investors should own Apple and not trade it. The long-term thesis remains intact, he says.
Cramer also likes video-game plays Take-Two Interactive (TTWO) and Activision Blizzard (ATVI) , as well as chip stocks like Advanced Micro Devices (AMD) and Nvidia (NVDA) . Elsewhere in tech, investors can also consider Shopify (SHOP) , Okta (OKTA) and Zoom Video.
On the food side, McCormick (MKC) , Campbell Soup (CPB) and PepsiCo (PEP) should be considered, as should Domino’s Pizza (DPZ) and Wingstop (WING) . Finally, Cramer also likes Etsy (ETSY) , Costco Wholesale (COST) and ProLogis (PLD) .
Declines Lead to Bargains
On the show’s “No-Huddle Offense,” Cramer said he fears the spread of the coronavirus, even though most people who get it will end up OK. Still, Covid-19 is disrupting and frightening. Two-third of the U.S. economy is service based and if activity dries up, it’s not hard to imagine the impact it could have.
While the jobs report was great, future jobs reports may not be the same going forward. It wouldn’t be surprising for more selling to hit the market, but eventually, that will lead to opportunities, Cramer said.
Some industries will really struggle -- like the cruise lines, airlines and oil businesses -- but eventually, we’ll beat Covid-19, Cramer said. And when we do, the market will come roaring back. Which is why investors shouldn't sell everything, because it would be a sucker’s bet to do that. These declines will lead to bargains, some of which are even available now, he concluded.
Here’s what Jim Cramer had to say about some of the stocks during the Mad Money Lightning Round:
Nio (NIO) : “I like them, but it’s just been a disaster. We’re going to stay away from this one.”
SmileDirectClub (SDC) : “No, I’d rather be in Casper Sleep CSPR in that case.”
First Horizon (FHN) : “It’s doing remarkably well. I like it.”
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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, AMZN, GOOGL, PEP, COST.