In a market filled with cross-currents, investors need to look for a sign they can count on before making a purchase, Jim Cramer told his Mad Money viewers Monday. Fortunately, there is one of those signs, and it's called insider buying.
Company directors and executives sell stock for all sorts of reasons, Cramer reminded viewers. But they only buy stock for one reason, to make money. That's why when investors see insiders buying up stock, they need to take notice.
That was the case Monday with IBM (IBM) - Get International Business Machines (IBM) Report , a stock that's plunged from $153 to $115 as investors panned the Red Hat (RHT) - Get Red Hat, Inc. Report acquisition. But today, no less than five board members, including IBM's CEO, all made big stock purchases as a sign of confidence in their company and in the acquisition. Cramer said he remains a huge fan of Red Hat and of IBM.
General Electric (GE) - Get General Electric Company (GE) Report CEO Larry Culp also made a big stock buy today, but here Cramer was less excited, as former CEO Jeff Immelt also made similar buys, all of them ill-timed. In this case, Cramer said we know more about the problems than we did a few months ago, but there are a LOT of problems.
Bold stock buys from executives reminded Cramer of JPMorgan Chase (JPM) - Get JPMorgan Chase & Co. (JPM) Report CEO Jamie Dimon making similar moves in the depths of the recession. Dimon purchased 1.5 million shares back then, shares that have since tripled.
Insider buying isn't the only catalyst, there are also company buyback programs, like the one Berkshire Hathaway (BRK.B) - Get Berkshire Hathaway Inc. Class B Report announced today, the company's first in six years. Apple (AAPL) - Get Apple Inc. (AAPL) Report , an Action Alerts PLUS holding, also has a monster buyback program, one that purchased $19.4 billion in shares last quarter alone. Cramer said investors need to take these signs of confidence seriously.
If you're bullish on the oil stocks, you're making a bad call, Cramer warned viewers. Despite a strong showing this quarter from major oil producers like ExxonMobil (XOM) - Get Exxon Mobil Corporation Report and Chevron (CVX) - Get Chevron Corporation Report , all signs point to a big decline ahead.
Cramer's thesis was simple. If oil was truly headed higher, big oil would be leaning heavily on the oil service sector to help them grow. But instead, stocks like Schlumberger (SLB) - Get Schlumberger NV Report , Halliburton (HAL) - Get Halliburton Company (HAL) Report and Weatherford (WFT) - Get Weatherford International plc Report are all trading near multi-year lows, lows that we haven't been seen since oil prices were half of what they are today.
Oil prices are a global market that depend on many factors, Cramer added. But with the U.S. surpassing production of 11 million barrels a day for the first time and Saudi Arabia keeping prices low, there simply aren't any catalysts to keep prices higher. The major oil companies appear to agree, he said, because if they felt otherwise, they'd be spending big to keep growing.
The New York Times (NYT) - Get New York Times Company Class A Report has finally got its act together by embracing its digital future, Cramer told viewers, and that's why shares have rallied 47% over the past 15 months.
Put simply, President Trump's constant attacks on this venerable news outlet have only helped bolster subscriptions. The paper now fully embraces its digital first strategy, which helped it deliver a four-cent-a-share earnings beat when it last reported, along with an 8.2% rise in revenues.
After a slow start to the company's digital paywall in 2011, the New York Times now boasts over three million subscribers. Cramer said even with a market that loves subscriptions, he'd still wait for a pullback in the stock, which now trades at 28 times earnings.
Symantec shares are off 29% for the year, and for good reason. Early this year, the company announced an investigation into its financials, news that sent shares plunging by 33%. Making matters worse, exactly what the investigation was about remained a mystery.
Enter Starboard Value, an activist investor which aimed to shake up the Symantec's board of directors and push for much needed operational changes. Cramer said Starboard has an excellent track track record and became a catalyst for owning the stock.
Flash forward to this quarter, when the company announced the investigation was complete and no material changes needed to be made to the company's financial reports. Cramer said with the weight now lifted, and Starboard involved, the stock of Symantec, which now trades at just 11 times earnings, now looks attractive.
In the Lightning Round, Cramer was bullish on World Wrestling Entertainment (WWE) - Get World Wrestling Entertainment, Inc. Class A Report .
Cramer was bearish on Nokia (NOK) - Get Nokia Oyj Sponsored ADR Report , Johnson Controls (JCI) - Get Johnson Controls International plc (JCI) Report , The GEO Group (GEO) - Get GEO Group Inc Report and Stamps.com (STMP) - Get Stamps.com Inc. Report .
In his "Homework" segment, Cramer followed up on a few stocks that stumped him during earlier shows. He said that Fox Factory Holdings (FOXF) - Get Fox Factory Holding Corp. Report , the aspirational auto parts maker, is seeing strong demand for its products and has shares up 61% for the year. He blessed owning the stock.
Finally, Cramer said that Eros International (EROS) - Get Eros International PLC Class A Report , the Indian media streaming giant is wildly speculative that's likely to always be a boom or bust situation. He blessed it for speculation only.
Cramer and the AAP team say if you value Apple as a consumer-packaged goods company like they do, then shares are still significantly undervalued. 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.
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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL.