The investing "checklist" seems to get longer as each day goes by, Jim Cramer told his "Mad Money" viewers on Thursday evening. What is this checklist? It's what fund managers and investors are running stocks through to see if they are worth buying.
Unfortunately, many aren't making the cut.
First on the list is China. If a company has revenue from China or production in China, it's likely being pinched to some degree in the trade war. Some -- like Cisco Systems (CSCO) - Get Report and Dollar General (DG) - Get Report -- were smart enough to get out early. But for plenty of others, it's not an option and they're feeling the pain.
On the flip side, some companies are too levered to the U.S. consumer -- reason No. 2 on the checklist. Consumers are starting to feel the pain from the trade war too and that makes these companies susceptible to a slowdown in sales.
Don't forget about problem No. 3 though, which is weather. Plenty of retailers are feeling the pinch from the weather, while others, like homebuilders, are too.
Cramer pointed out other risk factors as well, like the inverting yield curve which is hurting banks. There are also political risks tied to Washington, such as in healthcare. Finally, investors have to be more aware of what younger shoppers are buying and more importantly, what they are avoiding.
That's a tough checklist, he reasoned, knowing that portfolio managers are trying to avoid stocks that will come under further pressure. Remember, it will likely get worse out there before it gets better, Cramer said.
Executive Decision: Pioneer Natural Resources
On the show's first "Executive Decision" segment, Jim Cramer sat down with Scott Sheffield, president and CEO of Pioneer Natural Resources (PXD) - Get Report . The stock has been under serious pressure, following the price of oil lower over the past few months.
Sheffield came out of retirement to help lead the charge at Pioneer, saying he did it for the investors and employees. The company had to make some tough but necessary cost measures, but that's left Pioneer with a very strong balance sheet. "I'm very excited about the future," he said.
The company is sitting on a very generous amount of land in the Permian basin that has an incredibly low cost basis from 20 years ago, Sheffield explained. Pioneer keeping its costs down allows it to maximize its profitability and that should make it attractive going forward.
While the major oil companies -- like Chevron (CVX) - Get Report and Exxon Mobil (XOM) - Get Report -- are upping their production levels, they'll eventually have to turn to M&A to fuel future growth. While major M&A from these companies is probably a few years down the road, it should eventually come, he said.
More broadly speaking, Sheffield says the country needs more liquified natural gas (LNG) solutions so we can export more natural gas globally. Additionally, he says the U.S. should be pumping 17 million barrels per day in the long term, up notably from the current 12 million barrels per day.
What in the world is going on with retail? The sector has been slammed as worries over the trade war and slowing consumer spending are hitting these stocks left and right. As such, Cramer wanted to look at the Good, the Bad and the Ugly.
Starting with the ones doing well, Target (TGT) - Get Report reported a fantastic quarter with strong same-store sales and a top- and bottom-line beat. While shares are still up big, it's got a low valuation and nice dividend yield. There's also TJX Companies (TJX) - Get Report . While this one is a bit more expensive, it hasn't rallied quite like Target and is a great buy on a pullback, Cramer said.
Now for the bad. There's Home Depot (HD) - Get Report , which reported an OK quarter as weather hurt its results. However, management hadn't accounted for the tariffs in their guidance, which weighed on the stock. On a pullback, this too is one to consider.
Then there's the ugly. Foot Locker (FL) - Get Report and Nordstrom (JWN) - Get Report were disastrous. Lowe's (LOW) - Get Report had a disappointing report and while it has a great management team in place, the CEO said the turnaround would take some time.
Kohl's (KSS) - Get Report had a bad quarter too and slashed its guidance. But the yield is north of 5%, the balance sheet is strong, the valuation is low and shares are already down big. With that in mind, Home Depot and Kohl's aren't bad names to have on the shopping list if investors are looking to do some bargain hunting. Otherwise, Target and TJX are good ones to own, Cramer reasoned.
Executive Decision II: Canopy Growth, Acreage Holdings
On the show's second "Executive Decision" segment, Jim Cramer sat down with Bruce Linton, chairman and co-CEO of Canopy Growth (CGC) - Get Report , and Kevin Murphy, chairman and CEO of Acreage Holdings (ACRGF) . The two parties have agreed to a deal for Canopy to acquire Acreage Holdings when cannabis becomes federally legal in the U.S.
The deal will make it easier for Canopy Growth to dominate in the U.S., Linton said. Canopy can pass on its brands, skills and intellectual property, to what is already a great operation in the U.S.
Murphy added that Acreage Holdings has an excellent management team and its board of directors is very solid with great values. They hold corporate governance at a very high level and that will hopefully make partnering with major brands easier in the future.
It's bigger than the U.S. though, with Linton explaining that Canopy is pushing into other countries like Denmark, Spain, Australia and Germany. "This is a global thing," he said, as Canopy is now in 16 countries. These countries want jobs, they want cannabis companies to follow the rules and to bring their products. "That's where we live," he added.
As acceptance grows, Murphy said social consumption will power more adoption. That's in various forms, like vaping, candy, food products and tie-ins with major brands.
Linton estimates that the global cannabis disruption can be around $400 billion.
In the Lightning Round, Cramer was bullish on Six Flags (SIX) - Get Report , EPR Properties (EPR) - Get Report , Cypress Semi (CY) - Get Report , Diamondback Energy (FANG) - Get Report and Pioneer Natural Resources (PXD) - Get Report .
No Huddle Offense
There was a lot of fear about Dollar General going into the report, due to its potential exposure to China. But when president Trump began warning about a trade war with China some time ago, Dollar General management took notice. The company now only has 6% of its supplies coming in from China, a "shockingly low" number, Cramer said.
That's better for consumers as it helps keep prices low, an essential principle for the Dollar General business model. Luckily, these customers have a bit more money to spend as the labor market remains tight, management said.
Same-store sales growth of 3.8% vs. expectations of just 2.8% show just how well the company is doing right now, Cramer reasoned.
Dollar General is the blueprint for how to navigate the trade wars and it's one reason the stock jumped so much, he added.
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