Earnings and Epidemics: Cramer's 'Mad Money' Recap (Thursday 2/13/20)

Jim Cramer says it’s a big problem when Wall Street trades off of coronavirus numbers that are clearly false. It’s a fool’s game.
Author:
Updated:
Original:

Most investors don't like to buy high and sell higher, Jim Cramer told his Mad Money viewers Thursday. But in a market where valuations have become subjective, buying high and selling higher is working, and playing along may be the right way to play.

Stocks continue to be driven by news of the coronavirus, but Cramer cautioned that dictatorships answer to no one and investors shouldn't trust any statistics coming out of China. Wednesday, it appeared the virus was under control. Thursday, it seems out of control. Everything is uncertain, he said, including how we think the virus is spread and how long the virus incubates.  

Stocks are also becoming subjective. Caterpillar (CAT) - Get Report received an analyst upgrade Thursday, despite the company being bound to slowing end markets. Meanwhile, Tesla (TSLA) - Get Report ended the day higher after offering $2 billion worth of stock. Cisco Systems (CSCO) - Get Report continues to see slowing growth, while other tech names like Shopify (SHOP) - Get Report are seeing shares rally on soaring growth. 

In a world where many industries will be impacted by a slowing global economy, money managers are flocking to growth, Cramer concluded. That means stocks that have it will be bought at any price, making "buy high and sell higher" the only strategy that's working.

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.

That's Old School

What's the difference between old-school investing and new-school investing? If you're old school, like Cramer, it means looking at a company like PepsiCo (PEP) - Get Report and remembering when the company added restaurants in the 1980s, then spun them off years later. You'll remember when the company added Quaker and Frito-Lay. PepsiCo is a company that's reinvented itself time and again, Cramer said, and it's consistently delivered, and been a great long-term investment. 

But for new-school investors, and journalists alike, the moment PepsiCo's quarterly results are released, there are line items to scrutinize and concerns to raise. Criticisms happen almost instantaneously, as do the proclamations that the company's best days are behind them.

Fortunately, this time, old-school wisdom prevailed and PepsiCo ended the day up 0.27%, as it should have, on what was another terrific quarter.

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.

Shopping for a Bargain

If you're looking for a bargain in the stock market, look no further that Ollie's Bargain Outlet (OLLI) - Get Report, Cramer told viewers. Shares of Ollie's are down 38% over the past year, due in part to the loss of its CEO, Mark Butler, who died unexpectedly in September. But there's more to Ollie's that meets the eye. 

Ollie's peaked at $103 a share last summer as this discount retailer continued its regional-to-national growth trajectory. But in June, the company posted less-than-stellar same-store sales that turned negative in September. Ollie's began correcting its problems, but Butler's death in September caused investors, including Cramer, to lose confidence.  

Cramer said he's a big fan of the off-price retailers, including TJX Companies  (TJX COMPANIES)  and Ross Stores (ROST) - Get Report. Ollie's is fixing its same-store sales problems and has resumed opening new locations. The company has 349 stores in just 25 states, but plans ultimately for up to 950. Shares trade for just 22 times earnings, down from highs of 45 times earnings.

Executive Decision: Ring Central

For his "Executive Decision" segment, Cramer spoke with Vlad Shmunis, founder, chairman and CEO of RingCentral (RNG) - Get Report, the internet telephony company with shares up 18% in just the past week and 72% over the past six months. 

Shmunis said RingCentral's success stems from having great products in a great market and being at the right place at the right time. Customers love RingCentral's products, he said, and their new partnership with Avaya is "industry defining," giving RingCentral access to another 100 million users. Under the partnership, RingCentral will be Avaya's unified provider of Internet-based services. 

When asked how RingCentral helps companies like Brinker International (EAT) - Get Report, Shmunis explained that the Chili's restaurant chain uses RingCentral for 6,000 users and provides the company with a unified platform that lets them see call volumes for take-out orders at all of their restaurants. But having access to all of the data, staffing decisions can be made to best serve their customers. 

RingCentral offers more than just voice. Shmunis said they empower small business to operate like large ones, with voice, text, messaging, video and more.

Cramer Does His Homework

In his "Homework" segment, Cramer followed up on a few stocks that had stumped him during earlier shows. He said that Cardlytics (CDLX) - Get Report is a great company with a unique business model and tons of growth. Their recent deals with Chase Bank and Wells Fargo (WFC) - Get Report are huge wins for Cardlytics the company, he admitted, but Cardlytics the stock has a big problem.

Shares of Cardlytics are up 173% in just the past six months. They trade at an astronomical 107 times earnings. Given the company has small earnings, Cramer also considered valuing the company based on revenues. But using that metric, Cardlytics still trades for seven times revenue, which is a lot by any standard. 

Cramer said he'd bless buying Cardlytics but only under $70 a share. The stock closed Thursday at $93.07.

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 Thursday evening: 

Align Technology (ALGN) - Get Report: "I've gotten this one wrong, but I still think there's too much competition." 

LCI Industries (LCII) - Get Report: "I think this is too cyclical and I want to stay away." 

OneMain Holdings (OMF) - Get Report: "I don't understand what they own, so I'm gonna say to stay away." 

Veeva Systems (VEEV) - Get Report: "I think the world of this company. They are going incredibly well." 

Exxon Mobil (XOM) - Get Report: "Fossil fuels are a thing of the past. I'd sell into any strength." 

Introducing TheStreet Courses: Financial titans Jim Cramer and Robert Powell are bringing their market savvy and investing strategies to you. Learn how to create tax-efficient income, avoid top mistakes, reduce risk and more. With our courses, you will have the tools and knowledge needed to achieve your financial goals. Learn more about TheStreet Courses on investing and personal finance here.

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.

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