The stock market's rational lack of exuberance is actually good news, Jim Cramer told his Mad Money viewers Tuesday. One of the best things that could have happened to stocks was having shares of Lyft (LYFT) fall below its offering price, Cramer explained, as this cautionary tale should cool the flood of future offerings.
Last week, Cramer admitted that even he was worried Lyft's hotly anticipated IPO was going to be a runaway success. But instead, investors have acted rationally, opting not to buy when shares reached those artificial post-IPO highs that the investment bankers had so expertly engineered. Thanks to the breakdown in price, which continued today, the markets can breathe a collective sigh of relief.
But it wasn't only Lyft that investors cooled on. Shares of Walgreens Boots Alliance (WBA - Get Report) plunged 12.8% on an abysmal quarter and a conference call where management seemed oblivious to market trends in both retail and healthcare. Cramer said the company's $3.8 billion buyback is not the answer investors were looking for.
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Off the Charts: Tesla
Looking at a long-term monthly chart, Moreno noted that Tesla's stock is often range-bound. From 2014 through 2016, the stock traded reliably between $180 and $280 a share. In 2017, that channel edged higher to between $240 and $380 a share.
Turning to the weekly chart, Moreno again noted the channel, but also a bullish engulfing candle pattern, along with an oversold stochastic indicator. Only the Chaikin money flow was an outlier that needed to turn positive to confirm a bullish move.
Finally, Moreno looked into Tesla's daily chart, again seeing positive signs in the stochastics and a descending channel that appeared poised to rebound. He felt $340 to $380 a share was possible for Tesla. Cramer remained skeptical.
RH has made quite the comeback from its 2017 lows. The company has been busy adding stores, retooling its catalogs and streamlining its online operations with much success. But shares have retreated from their all-time highs in June 2018, culminating in last week's cut in 2019 forecasts and the decision to stop releasing same-store sales comparisons going forward.
While investors panned the move, Cramer said he believes in the company's vision. RH is not following in the footsteps of rivals like Wayfair (W - Get Report) , chasing growth at all costs with razor-thin gross margins. Instead, RH is taking a more measured, Apple-like (AAPL - Get Report) approach, keeping its growth margins at twice the levels of its peers.
Trading at just 10 times earnings, Cramer said the risk-reward for RH is appealing, especially if you believe in the company's vision.
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Executive Decision: Dow Holdings
When is it appropriate to ask a CEO about his company's environmental policies? When those polices affect the bottom line.
That was Cramer's takeaway after interviewing Jim Fitterly, CEO of the new Dow Holdings (DOW) , which began trading on its own earlier today. Cramer did a deep dive into Dow DuPont (DWDP) and it's coming spinoffs on Monday's show, concluding that the first of these deals, Dow Holdings, will be both an innovation and cash flow machine with a stellar 5% dividend.
But his questions for Fitterly today were of another nature: the environment. What happens if states begin banning plastic containers, the way some have plastic shopping bags? What happens if younger consumers shun plastic altogether? How would any of these events affect the company's earnings or its valuation?
Cramer said questions like these wouldn't have even been considered in years and decades past. But today, and going forward, they matter and they will only matter more in the future.
Cramer and the AAP team are looking at the cost dynamic behind the DowDuPont (DOW) (DWDP) spinoff. 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.
Executive Decision: Yext
In his second "Executive Decision" segment, Cramer sat down with Howard Lerman, founder and CEO of Yext (YEXT - Get Report) , the Internet information provider with shares that are up 77.5% over the past year.
Lerman said the Internet is full of information, but when it comes to businesses, most of it is wrong. That's why restaurants like Taco Bell and banks like Morgan Stanley (MS - Get Report) use the Yext platform to provide search engines around the globe with brand-verified answers that are accurate. Everything from locations, hours of operation to menus can all be added to the platform.
Yext added 350 new logos to their customer list last year, Lerman said, and the Yext platform is the ultimate authority for reliable information at all them. For services like healthcare, finding the right doctor, procedure and insurance provider is critical, he said, and reliable, dependable information is a must.
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