Jim Cramer's 'Mad Money' Recap: Fear and Skepticism Are Good
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NEW YORK (
) -- After a gigantic run, a little
is good for the markets, Jim Cramer told his
viewers Tuesday. Alas, investors took off their rose-colored glasses from yesterday's session and returned to focusing on the negatives.
What were some of those negatives? First, it's just too darn cold outside, and that could put the brakes on restaurant and retail sales. Then there are the weaker-than-expected auto sales, which could mean deep discounts might be needed to move the excess inventory.
Sluggish home sales were third on Cramer's list. With homes not selling like hotcakes, even on National Pancake Day, that could have a ripple effect on the broader economy. Fourth, Cramer noted that the semiconductor stocks that were loved yesterday came under fire today after Best Buy (BBY) - Get Report noted that PCs and tablet sales are faltering.
The market's fifth worry is China, Cramer told viewers. China just simply isn't contributing to the global economy, he said. While the Chinese government is making all the right moves, they aren't coming fast enough. Finally, there is oil. With oil prices starting to rise, the economy overall will lose a little steam.
There were some positive in the markets however, and Cramer called out AutoZone (AZO) - Get Report as an aggressive buy as well as Palo Alto Networks (PANW) - Get Report, which rallied 2% on the day.
The good news is that the markets are acknowledging these fears, Cramer concluded, and that's exactly what it needs to do before it can resume its march to new all-time highs.
Executive Decision: Julia Stewart
In honor of National Pancake Day, Cramer sat down with Julia Stewart, chairman and CEO of DineEquity (DIN) - Get Report, purveyors of the Applebee's and IHOP restaurant chains. Shares of DineEquity are up 43% since Cramer last checked in with the company last June.
Stewart said that National Pancake Day has been a huge win for the company over the years, raising over $16 million for charity; it's expected to top $20 million by the end of today. Moreover, she noted that "pancake day" was the number one search on Google for a period earlier today and the event is being tweeted every eight seconds, creating a ton of publicity.
When asked about the company's social media strategy, Stewart said that the best social media comes from the heart because it is about engaging people where they are and being a part of the conversation.
Turning to the topic of growth, Stewart said there are tremendous opportunities for both IHOP and Applebee's to grow both domestically and internationally, as well as opportunities for licensing, brand extensions and a whole lot more.
Cramer agreed that DineEquity's best days are still yet to come. This company delivers not only for charity but also for shareholders with its recent 17% boost in its dividend and its stock buyback program.
Are Vitamins Healthy?
Can there be a silver lining to the dramatic fall of Lumber Liquidators (LL) - Get Report after an investigation revealed that its products, imported from China, may be making people sick? Cramer said perhaps there is, and it's generic drug maker Perrigo (PRGO) - Get Report.
Cramer explained that Perrigo shares rallied over $3 yesterday as the news of Lumber Liquidators spread. What's the connection? On its last conference call, Perrigo noted that the company's earnings were wounded by intense price competition from Chinese vitamin supplements entering the U.S. and not being properly labeled.
Cramer said after last year's scare over tainted Chinese pet food and before that, Chinese toys coated in lead-based paint, the Lumber Liquidators story may force regulators to take a closer look as vitamins sooner as opposed to later. As they stand now the laws are murky at best, Cramer continued. But can any drugstore take the risk of not knowing exactly where their supplements are coming from?
Cramer said that ultimately ultimately the estimates for Perrigo will begin to rise, and that might happen a lot sooner than even Perrigo thought just last week.
Off the Charts
In the "Off The Charts" segment, Cramer pondered the overall direction of the markets, going head to head with colleague Mark Sebastian over the using the CBOE Volatility IndexI:VIX, more commonly known by its ticker symbol.
Sebastian noted that since last September, the S&P 500 has been steadily rising as the VIX has been steadily falling, the typical pattern that is completely normal. However Sebastian also noticed another pattern, one that's been going on since 2013.
Sebastian's research showed that in the weeks ahead of a Federal Reserve press conference, volatility has spiked, as investors begin to "freak out" over what the Fed might say of do. This hasn't been a problem thus far, as the Fed has done nothing, but if Janet Yellen indicates that interest rates might be on the rise sooner as opposed to later, the volatility may be here to stay.
Sebastian also noted the volatility index for 10-year Treasuries has also been slowly trending higher since the beginning of the year, another indication that rocky times may be in the cards.
Cramer said Sebastian's research makes a good case for caution, which is completed warranted given the big run the markets have just seen.
Lightning Round
In the Lightning Round, Cramer was bullish on Idexx Laboratories (IDXX) - Get Report, FireEye (FEYE) - Get Report, CyberArk Software (CYBR) - Get Report, Fortinet (FTNT) - Get Report, Discovery Communications (DISCA) - Get Report, Kohlberg Kravis Roberts (KKR) - Get Report and Blackstone Group (BX) - Get Report.
Cramer was bearish on World Wrestling Entertainment (WWE) - Get Report.
Executive Decision: Scott Painter
In his second "Executive Decision" segment, Cramer sat down with Scott Painter, founder and CEO of TrueCar (TRUE) - Get Report, a stock that fell 7.7% today over concerns of declining revenues and a pending share lockup expiration.
Painter explained that TrueCar is seen by many as a hybrid company. On one hand, it's a fast-growing consumer tech stock. On the other it's a slower-growing transaction auto platform. Tech stocks are judged quarter over quarter, while auto stocks tend to be measured year over year.
That said, while unit volumes were down in the last quarter, monetization of those units was up and his company overall grew 53% year over year. TrueCar is not focused on unique visitors or impressions but on selling cars, Painter added.
When asked about TrueCar's value proposition, Painter said his company offers consumers price discovery, which leads to price confidence, which ultimately reduces friction and helps dealers make more money.
Cramer said investors should do their homework and make a decision on whether TrueCar fits their portfolio.
To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.
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-- Written by Scott Rutt in Washington, D.C.
At the time of publication, Cramer's Action Alerts PLUS had no position in stocks mentioned.
