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China Bull Case: Cramer's 'Mad Money' Recap (Tuesday 2/11/20)

Jim Cramer says there is a China/coronavirus bull case to be made. He looks at the tape to see what could rise and what could fall.
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Has the spread of the coronavirus finally peaked? Some Chinese officials, along with some hedge fund managers, seem to think so. But Jim Cramer told his Mad Money viewers Tuesday that until Dr. Tony Fauci, Director of the National Institute of Allergy and Infectious Diseases (NIAID), sounds the all-clear, he's not buying it.

Cramer says it appears likely that the coronavirus will die out in April, along with most other flu viruses. Here in the U.S., travel bans seem to to be holding off the virus. Both of those are good news. But on the flip side, there still is no vaccine or no magic cure for the coronavirus. We're still not exactly sure how it spreads. That's the bad news.

What does this potentially positive picture mean for stocks? Cramer said the cruise ship companies will likely see a bounce, as they did Tuesday. Hotels like Marriott Worldwide  (MAR)  and Wynn Resorts  (WYNN) , which gained 1.4% and 3.2%, respectively today, will also benefit. 

The industrials got a lift Tuesday, with Caterpillar  (CAT)  and PPG Industries  (PPG)  both imagining what the world will look like post-coronavirus. Clorox Co.  (CLX) , as you would expect, fell 1.7% on the good news, as its products could be in less demand.

Cramer and the AAP team are looking at everything from earnings and tariffs to the Federal Reserve. 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.

Off the Charts: S&P 500

In his "Off The Charts" segment, Cramer checked in with colleague Rob Moreno over the general direction of the markets. Watchers of the show will recall that Moreno correctly predicted the market's rally in December 2018, followed by consolidation in June of 2019 and strength again in October. 

For his current read on the markets, Moreno looked at a daily chart of the S&P 500 Equal Weighted Index. Unlike the regular S&P index, which is heavily influenced by its largest members, the equal weight index gives every company equal footing. 

Moreno felt the markets were at an inflection point, trading in a channel between 4,800 and 4,600. A breakout above or below those levels would likely signal where the market is headed next. He saw more negatives in the charts than positives, giving him pause as to what comes next.

Meet You at the Mall?

Are the shopping malls springing back to life? They are according to Simon Property Group  (SPG) , which Tuesday announced a $3.6 billion offer for Taubman Centers  (TCO) . Cramer said this offer of $52.50 a share gives Taubman a hefty premium. Clearly Simon is making a statement that the mall REITs have become grossly undervalued. 

Cramer said Simon is likely right, as they run the finest collection of malls anywhere. While many on Wall Street value the mall REITs based on their weakest tenants, in reality, Simon is happy to lease old space to new tenants at hefty premiums. Retail bankruptcies and downsizing are a good things for these REITs, as they get the opportunities to revitalize their properties. 

Similar statement deals need to happen in the oil and gas industry, Cramer added. While many are abandoning fossil fuels, there is still value to be created if these companies were to merge and take advantage of the synergies that would be created.  

Executive Decision: Columbia Sportswear

For his "Executive Decision" segment, Cramer spoke with Timothy Boyle, president and CEO of Columbia Sportswear  (COLM) , the outdoor apparel maker that's had a rough time with lingering warm weather, a lingering trade war and now the coronavirus in China. Shares of Columbia are down 10% for the year. 

Boyle said no one needs another clothing brand. That's why every brand must have a point of differentiation. That's also why he's pleased to say all of Columbia's brands are going strong.

When asked about the warmer-than-average winter, Boyle responded that they've been making seasonal apparel for 40 years and they're used to seeing changing weather patterns. He said sales look worse than they are when compared to last year, which was colder in many parts of the country. But, he noted, Columbia's balance sheet is strong and they can deal with whatever Mother Nature has in store.

Turning to the topic of China, Boyle said that just about every company sources through China, and at the moment, Columbia's factories are open for business. He said while they don't yet know the impact of coronavirus globally, their business inside of China only accounts for a mid-single-digit percentage of overall sales. 

Cramer said Columbia is a stock that you buy when it's warm and sell when it gets cold and shares soar.

On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.

Executive Decision: Charles River Labs

In his second "Executive Decision" segment, Cramer checked in with Jim Foster, chairman, president and CEO of Charles River Labs  (CRL) , a stock that's up 37% over the past 12 months, including 9.8% Tuesday on strong earnings. 

Foster explained that drug and biotech companies are growing like weeds, and they increasingly need laboratory services to help them bring new drugs and discoveries to market faster. Charles River is honored to have worked on 85% of all drugs brought to market last year and just as important, they've worked on countless others that didn't make it to market. 

Foster added that on average, Charles River helps take a full year off of drug development time, saving billions of dollars every year. He said the amount of innovation coming from the industry is stunning, and while most is focused around oncology, many areas are seeing breakthroughs. 

When asked about China, Foster said that Charles River has a research facility in China and is helping to educate the Chinese on the research-led model that is working so well here in the U.S.

Lightning Round

Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Tuesday evening: 

Facebook  (FB) : "They received a downgrade today but I think of them over the long-term." 

VMware  (VMW) : "I think this stock is a buy." 

Amkor Technology  (AMKR) : "You've got a good one. I don't think it's done. " 

Annaly Capital Management  (NLY) : "No, I like growth and they don't have it." 

Agilent Technologies  (A) : "I've liked this stock for ages. I'm a buyer right here." 

Carnival Corp.  (CCL) : "No, I don't want to be involved with this stock right here." 

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At the time of publication, Cramer's Action Alerts PLUS had a position in CLX, FB.