Sometimes, certain stocks fit a theme so perfectly, they can lift the entire market, Jim Cramer told his Mad Money viewers Monday. Monday's theme was money managers looking for growth in a slowing global economy, Cramer said, and the only sector that fits are the cloud stocks.
Money managers are always looking for signals for where the global economy is headed, Cramer explained. With so much of the world dependent on China, the shuttering of Chinese factories due to the coronavirus will certainly slow the global engine.
Oil prices are also plunging, as are interest rates, all signs that tell money managers it's time to rotate out of cyclical stocks and look for growth.
There's only one group of stocks that has the growth month managers need, Cramer said, and it's the cloud stocks. Everyone assumed that Microsoft's (MSFT) - Get Microsoft Corporation (MSFT) Report strong quarter meant they were taking market share, but that wasn't the case. Amazon (AMZN) - Get Amazon.com, Inc. Report reported strong growth as well, as did other cloud names, such as Okta (OKTA) - Get Okta, Inc. Class A Report. That sent shares of Advanced Micro Devices (AMD) - Get Advanced Micro Devices, Inc. Report up 5% Monday, and Nvidia (NVDA) - Get NVIDIA Corporation Report up 4.5%. Cramer was also bullish on ServiceNow (NOW) - Get ServiceNow, Inc. Report, Adobe Systems (ADBE) - Get Adobe Inc. Report and Workday (WDAY) - Get Workday, Inc. (WDAY) Report.
The cloud stocks will continue working as long as coronavirus is in the news, Cramer concluded. Once it's contained, expect money managers to move right back into other sectors.
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Executive Decision: Take Two Interactive
For his "Executive Decision" segment, Cramer spoke with Strauss Zelnick, chairman and CEO of Take Two Interactive (TTWO) - Get Take-Two Interactive Software, Inc. Report, the videogame maker with shares that plunged 12% last week after what investors deemed was a disappointing quarter.
Zelnick said investors are used to Take Two beating expectations, and this quarter it only met expectations. He said many of its franchises, like Grand Theft Auto, are on track to have record years, but, he admitted, there were two areas of weakness where the company can do better.
The first problem area was NBA 2K, where some in-game changes did not go as well as planned. The second problem was in Take Two's WWE title, where the quality of the game did not live up to gamer expectations. In both areas, Zelnick said, the company has more work to do and is already making changes.
Zelnick continued by saying that while gaming is still the fastest growing part of entertainment, his company still must deliver the results fans and investors expect from the company.
Looking to the future, Zelnick said the new advances in gaming processors represent big steps forward for game makers like Take Two and they can't wait to see what the next generation of consoles ands chips will mean for the industry.
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When Uber came public early last year, the company was unconcerned with profits, choosing instead to lose money to gain market share. This is a common tactic, Cramer explained, but then last summer, money-losing growth stocks fell out of favor on Wall Street and shares of Uber plunged. That's when Uber did something remarkable, it started focusing on profits.
Uber is now a company that cares about profits. It is exiting markets where it is losing too much money, like UberEats in India, and is making its ride sharing services profitable around the globe. Revenues expanded by 37% this quarter and Uber is seeing healthy gross margin expansion.
With better execution, Cramer said Uber could indeed hit its 2020 profitability goals. That means the stock is worth a lot more than $45 a share.
Looking for an Exit
It's getting too hard to invest in the fossil fuel stocks, Cramer told viewers. Georgetown University is just the latest in a string of college endowments that has announced they will no longer be investing in fossil fuels and will divest in their positions in the coming years. Georgetown follows similar announcements form Harvard, University of Pennsylvania and University of California, all of which are feeling financial and student pressures to do so.
Investing in oil and natural gas is also getting difficult due to oversupply, Cramer added, as well as the prospects of increased regulations in future. That's why he recommended using any election-related strength in the oil stocks as a signal to sell your positions.
If President Donald Trump or the Republicans tick up in the polls, it's time to sell. Fossil fuels are just no longer investable for the long term.
Don't Forget the Trade War
In his "No-Huddle Offense" segment, Cramer said it's been a rough few weeks for China, but it could get a whole lot worse come November.
While the coronavirus has been making headlines recently, investors shouldn't forget that we're still in the middle of a trade war. Up until now, China's strategy has been to wait it out with Trump and hope for a moderate Democrat like Joe Biden to take the White House. But with Bernie Sanders projected to win the New Hampshire primary, China could be facing two hardliners come November.
Cramer said Sanders is just as tough on China as Trump and is even harder on human rights issues. If Sanders were to win, things would get a lot worse, not easier, for China.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Monday evening:
Anheuser-Busch InBev (BUD) - Get Anheuser-Busch InBev SA/NV Sponsored ADR Report: "It's not bad, and better than it used to be. I also suggest Constellation Brands (STZ) - Get Constellation Brands, Inc. Class A Report."
Yum! Brands undefined: "That was a bad Pizza Hut quarter. I wasn't encouraged."
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At the time of publication, Cramer's Action Alerts PLUS had a position in MSFT, AMZN, NVDA.