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NEW YORK (
) -- In the technology world, relevance matters, Jim Cramer said on
Monday. Nowhere is that more evident than in the earnings of
, both of which reported today.
Cramer said that Apple, a stock he owns for his charitable trust, Action Alerts PLUS, is a perennial innovator, a cheap growth stock that shouldn't be traded but owned for the long term. It's no wonder shares of Apple are up 26% for the year.
But then there's IBM, an expensive stock with no innovation or growth at all, said Cramer. This stock deserved to fall 7% on its earnings news.
Cramer said IBM is simply no longer an important name in the tech world. The only bright spot in the company's earnings was IBM's newly forged partnership with Apple and its stock buyback program.
IBM needs a plan, Cramer said, a bold acquisition to once again make itself relevant. With so many businesses leaving IBM's legacy platforms in favor of the cloud, he only hopes the company has the time and the funds make it happen.
Dethroning King Digital
Sometimes a hideous initial public offering is just the beginning, Cramer warned viewers. That has certainly been the case with King Digital Entertainment (KING) , makers of the popular mobile game Candy Crush.
After falling 15% below its IPO price back on March 25, King Digital has only seen its shares continue to falter, down 40% for the year to just over $11 a share. Cramer said the initial analyst recommendations of King were overwhelmingly positive. Unfortunately, they were also overwhelmingly wrong.
The logic at the time was that King was a much better stock than Zynga (ZNGA) - Get Report , the last mobile gaming company to crash and burn in the stock market. King was indeed cheaper than Zynga, with better earnings and growth. But calling a stock better than one of the worst stocks of all time is not a reason to buy, Cramer concluded.
Growth is slowing significantly at King, Cramer noted, and it appears that Candy Crush may indeed be a one-hit wonder. Making matters worse, a full 80% of King's shares are still in an extended lockup period. Cramer said when that lockup expires there could be another flood of selling as insiders try and salvage whatever value may be left in their shares.
Panera's Comeback Story
Investors looking for a terrific comeback story that's levered to a more positive American consumer need look no further than AAP holding Panera Bread (PNRA) , Cramer told viewers.
Shares of Panera have been faltering over the past two years, Cramer explained, but lately the stock has been able to rally nearly 5% when the broader S&P 500 declined by 3.5%. Why? Because the company's Panera 2.0 store concept, which it has been testing in Boston and Charlotte, is beginning to bear fruit.
Cramer said Panera has seen a series of missteps in recent years, but the Panera 2.0 concept not only improves the customer experience but it also allows the restaurant to serve customers faster.
The Panera 2.0 redesign costs more and took a lot longer than Wall Street was expecting, said Cramer, which caused many investors to turn too negative. But now that the big investments are winding down, there are only positives to look forward to.
Panera 2.0 should be in 750 locations by the end of 2015 and everywhere by 2016. If the test markets are any indication, the new Panera should enjoy double-digit increases in same-store sales at a time when the price of corn, wheat and soy is falling.
Cramer said with Panera shares trading at 23 times earnings with a 14% growth rate, the stock is just too cheap, especially given that the comparisons get a lot easier after the company reports its earnings in just a few days' time. Cramer recommended investors buy half of their position ahead of those earnings and the rest on any weakness created afterwards.
Healthy Drug Distributors
With over 10 million Americans now enrolled in Obamacare, Cramer said things are looking up for the drug distributors McKesson (MCK) - Get Report , Cardinal Health (CAH) - Get Report and AmerisourceBergen (ABC) - Get Report .
The logic is simple, Cramer said. More patients with insurance will consume more medication. The pharmacies seeing their margins getting squeezed but the drug distributors are seeing theirs expand because they can now buy generic drugs for less than ever before.
Cramer said the trends in the health care market will likely be a tailwind for the distributors for years. Of the three, McKesson is his favorite because the company affords investors multiple ways to win with its surgical supply and health care information businesses.
Second on Cramer's list is Cardinal Health. He likes the company's new agreement with CVS Health (CVS) - Get Report and Cardinal Health's traditionally conservative guidance. Cramer added that AmerisourceBergen is also a winner, although not his favorite.
In the Lightning Round, Cramer was bullish on RR Donnelley (RRD) - Get Report , Nucor (NUE) - Get Report , Skyworks Solutions (SWKS) - Get Report , Fiat (FCAU) - Get Report and Dow Chemical (DOW) - Get Report .
Cramer was bearish on Ruckus Wireless (RKUS) , United States Steel (X) - Get Report , Plug Power (PLUG) - Get Report , Sierra Wireless (SWIR) - Get Report and LyondellBasell Industries (LYB) - Get Report .
No Huddle Offense
In his "No Huddle Offense" segment, Cramer said the buyers are back, and they're circling back to the winners.
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-- Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, DOW and PNRA.