Today was a panic like we haven't seen in ages, Jim Cramer admitted to his Mad Money viewers Tuesday. But in the chaos and confusion, there are bargains being created.
Indeed, today was the day that CEOs lowered the boom on shareholders, admitting that the future might have some risks and might not be as rosy as some may have thought. It all began with Caterpillar (CAT) , which delivered the best quarter Cramer's ever seen. The problem? The company admitted that this is probably the best quarter you'll ever see. That one statement sent shares reeling down 6.2%.
The Caterpillar news was followed by 3M (MMM) , which lowered full-year guidance, sending its shares down 6.8%. Lockheed Martin (LMT) then delivered blowout earnings, but mentioned that its cash flow might be challenged. Shares fell 6.1%.
All of this bad news came as the interest rate on the 10-year Treasury topped 3%, the very level investors have been fearing for weeks.
Cramer said the selling is likely to continue Wednesday, but there are bargains being created and investors should be ready once the selling subsides.
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Off the Charts
In his "Off The Charts" segment, Cramer checked in with colleague Carolyn Boroden over the fate of the markets, now that interest rates on the 10-year Treasury have ticked above 3%.
Boroden, a student of Fibonacci ratios, first looked at a monthly chart of the Nasdaq 100, noting that after measuring past swings, the index was do for a change in direction after a 161% extension of the dot com boom. The weekly chart of the Nasdaq proved to be a little more positive. All of the past four declines were between 850 and 900 points, indicating that the most recent downtrend may be over.
Turning to the daily chart, Boroden saw a number or Fibonacci ratios and timing cycles converging. The index must hold 6,164 in order to avoid breaking down, but topping 6,856 would be a bullish sign. In between remains a no man's land.
To see the charts and read more about Cramer and Boroden's analyses, read What the Charts Say About the Big Picture: Cramer's 'Off The Charts'.
Do You Know Your Alphabet?
Cramer said investors just don't understand Alphabet, because the company is not a hyper-growth stock like Amazon (AMZN) , nor is it a value name. That's why despite posting a monster 62-cents-a-share earnings beat, shares fell 4.7% today.
Even after a 26% surge in revenues, investors quibbled over the company's increased spending and weaker margins. But Cramer argued that Wall Street likes when Amazon spends on its business, why not Google? As for falling margins, the company communicated that the decline would occur and 22% versus 27% really isn't that bad.
Cramer said Google is the best of both worlds. It provides growth, albeit not hypergrowth, but also value, as shares trade at just 21 times earnings.
Executive Decision: Six Flags
For his "Executive Decision" segment, Cramer sat down with Jim Reid-Anderson, chairman, president and CEO of Six Flags (SIX) , the theme park operator that just posted a 74-cents-a-share loss, compared to estimates for a loss of 79 cents. Shares rallied 5.6% on the news.
Reid-Anderson started off by saying that Six Flags just posted their best first quarter of all-time, coming on the heels of their greatest fourth quarter in the company's history. He said Six Flags offer both growth and a 5% dividend yield that's seen eight years of increases.
There are a number of factors aiding in the company's growth, Reid-Anderson added, including a transformation in their business model from just selling day passes to season passes and now recurring memberships that were up 10% over the past year.
Another growth driver has been international expansion. Six Flags recently opened three new theme parks in China and one in Saudi Arabia.
In his "No-Huddle Offense" segment, Cramer said when you're looking for values in falling market, you want one thing: pricing power. And companies either have it, or they don't.
Case in point: United Technologies (UTX) , which posted a spectacular quarter because it's products are in demand and the company can easily raise prices to offset rising commodity costs.
Compare that to consumer packaged goods companies like Procter & Gamble (PG) and Kimberly-Clark (KMB) , which were forced to lower prices to fend off more nimble competition that's setting up shop online.
Investors want long-term secular growth themes, not cyclical stocks that are quickly becoming value traps in an inflationary environment.
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