The markets had a fabulous run this week, Jim Cramer told his Mad Money viewers Friday, but next week investors need to be more cautious. That's because there's a lot of potential negativity coming next week and the market's rally this week was only fueled by interest-rate optimism.
Cramer's game plan for next week starts on Monday with a preview of the coming Chinese trade talks and more details on Trump's strategy for Iran. Cramer said the markets are not prepared for any negativity so investors should raise some cash.
Next, on Tuesday, we'll get earnings from Lennar (LEN) - Get Report , FedEx (FDX) - Get Report and Micron Technologies (MU) - Get Report , which will offer a read on housing, commerce and the semiconductors. Cramer was not bullish on the outlook for Micron.
Then on Thursday, we hear from Walgreens Boots Alliance (WBA) - Get Report , McCormick (MKC) - Get Report and Nike (NKE) - Get Report . Cramer favored CVS Health (CVS) - Get Report over Walgreens and didn't like the risk reward for Nike, but he was bullish on spice maker McCormick.
Cramer and the AAP team are emphasizing the importance of cash here. Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts Plus.
Opportunities in Dell, VMware
As the trade war lumbers on, some stocks are being held hostage, Cramer told viewers. One of those stocks is Dell Technologies (DELL) - Get Report , which has transformed itself from a PC and printer company into a technology consulting powerhouse.
When Dell reported earnings last month, it delivered solid numbers, but forecast weakness in servers, and yes, China. That news sent shares plunging 22% from their highs. Cramer said China has turned into a minefield for many companies, despite the fact that Dell only derives 10% of its sales from China.
But with shares trading for such low levels, Cramer said the weakness is now baked into the stock. He told viewers that he'd be a buyer of Dell into any additional G20 summit weakness next week. Investors should also consider VMWare (VMW) - Get Report , the virtualization company where Dell owns a large stake. Cramer said VMWare is an even better deal than Dell.
When investors are too focused on the big picture, like trade and interest rates, they can sometimes miss great stories at individual companies, Cramer told viewers. Case in point: Carmax (KMX) - Get Report , which soared 3.1% today on stellar earnings. Shares of Carmax are up 36% for the year and Cramer said there's more upside to come.
Cramer last recommended Carmax in January of 2018 and after a remarkable run to new highs, shares plunged in the fourth quarter of 2018, as interest rates rose and car sales weakened. Same-store sales at Carmax dropped 1.2% in the December quarter.
But since then, shares of Carmax have been coming on strong, as the company's investments into a new digital business are beginning to pay off. Carmax's tests in Atlanta have seen strong results as the new online options are more efficient than their in-store counterparts.
When Carmax reported today, the company delivered same-store sales growth of 9.5%, far above analysts' expectations.
Cramer said at 16 times earnings, Carmax is a bargain and he'd be a buyer into any weakness. If President Trump follows through on tariffs for new cars, it will be a huge win for the used car market.
Stocks Related to Cannabis
Cramer was recently asked about Innovative Industrial Properties (IIPR) - Get Report recently and he said there's a lot to like about this real estate investment trust that focuses exclusively on buildings for medical marijuana facilities. Innovative Industrial is the only REIT in the cannabis space, he said, and the stock sports a 2% dividend yield.
But while the company sound very promising, the stock is another story. Shares have rocketed 160% so far this year and plummeted 12.7% Friday on the Canopy Growth shortfall. Cramer said this stock is simply too risky, too expensive and too volatile, even for speculation.
In his "No-Huddle Offense" segment, Cramer reiterated that he's been warning about too many IPOs all year long and when it comes to software as a service companies, we've now hit the saturation point.
Cramer said Crowdstrike (CRWD) - Get Report has rocketed up 112% since its IPO this week. But while the Crowdstrike claims it's the only cloud-based cybersecurity company, money managers have already invested in rival ZScaler (ZS) - Get Report . Then there's Slack (WORK) - Get Report , which is also an orphan in the portfolios of many money managers.
Add to these names the stocks of Zoom Meetings (ZM) - Get Report , Okta (OKTA) - Get Report and dozens of other cloud names and it's easy to see why the market is oversaturated and why investors need to beware.
On Real Money, Jim Cramer asks if we really have too many new stocks right now. Get more of his insights with a free trial subscription to Real Money.
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At the time of publication, Cramer's Action Alerts PLUS had a position in CVS.