It is still September, Jim Cramer cautioned his Mad Money viewers Monday. That means we're still likely to see more selloffs like we saw last week. But when those selloffs do happen, remember what happened today -- when the markets rallied on the heels of the first "merger Monday" we've seen in years.
There are many different ways to value a company, Cramer explained to viewers. You can use the traditional price-to-earnings ratio or use the company's book value. But you can also value a stock based on other things, like how much other companies are willing to pay to acquire it. Acquisitions were front and center Monday, as several big deals were announced.
For as much as stocks have risen in recent months, what if they're still undervalued?, Cramer asked. Gilead Sciences (GILD) - Get Gilead Sciences, Inc. (GILD) Report announced it's acquiring Immunomedics (IMMU) - Get Immunomedics, Inc. Report and the stock nearly doubled in a single day. Chipmaker Nvidia (NVDA) - Get NVIDIA Corporation Report surprised with the news it's buying ARM Holdings (ARMH) and saw its shares rise 5.8%. Cramer called the deal a "game changer."
TikTok continues to be in play, with Oracle (ORCL) - Get Oracle Corporation Report announcing that it will be acquiring the social media destination, beating out Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report and others, at least for now. Finally, Merck (MRK) - Get Merck & Co., Inc. (MRK) Report said it will be taking a stake in Seattle Genetics (SGEN) - Get Seagen, Inc. (SGEN) Report. Shares of Seattle Genetics traded for $150 on Friday, but now trade north of $171 a share.
All of these deals prove that companies are worth a lot more than their share prices lead us to believe. That's why Cramer said he'd used the next market sell off to do some buying.
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Know Your IPO
In his "Know Your IPO" segment, Cramer drilled down on the coming IPO of Snowflake, the cloud data platform that's expected to debut on Wednesday. It represents the first high-profile IPO we've seen in months. Snowflake will be trading under the ticker SNOW.
Cramer explained that the cloud revolution came after the big data revolution, leaving many analytics platforms not able to work with the next generation of cloud data. Enter Snowflake, the data platform built for the cloud.
Snowflake has everything you'd want from a new IPO, he said. The company has triple-digit revenue growth, a recurring revenue model and $81 billion in total addressable market potential. The company's CEO has a proven track record, and both Marc Benioff of Saleforce.com (CRM) - Get salesforce.com, inc. Report and Warren Buffett have taken a stake in the company.
But as with all IPOs, everything comes down to price and valuation. Demand for Snowflake shares has been strong and the deal size and price has already increased. Based on current projections, Snowflake will debut at 50 times sales -- a sky-high valuation that values the company higher than Zoom Video (ZM) - Get Zoom Video Communications (ZM) Report at 48 times sales.
Cramer said there's no doubt that Snowflake is a great long-term story, but at 50 times sales, the price is too extreme. He suggested waiting for a better entry point during the next market-wide selloff.
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Hopeful for a Vaccine
The race is on for a COVID-19 vaccine by the end of the year, but that hasn't stopped investors from snapping up stocks of companies that need a vaccine to thrive. Cramer weighed in on many of the vaccine hopefuls.
Marriott (MAR) - Get Marriott International, Inc. (MAR) Report is a logical choice, as travel isn't likely to recover without a vaccine. Shares of Marriott surged 5.4% Monday. In the retail space, Cramer liked TJX Companies (TJX) - Get TJX Companies Inc Report, an Action Alerts PLUS holding, after the company's lackluster earnings.
In the apparel space, Cramer said that PVH (PVH) - Get PVH Corp. Report and Tapestry (TPR) - Get Tapestry, Inc. Report have been unstoppable as of late, as have many big box retailers like Home Depot (HD) - Get Home Depot, Inc. (HD) Report and Costco (COST) - Get Costco Wholesale Corporation Report.
When it comes to the beaten-down restaurants, Cramer said Yum Brands (YUM) - Get Yum! Brands, Inc. (YUM) Report caught his eye. He also recommended Penn National Gaming (PENN) - Get Penn National Gaming, Inc. Report for gambling and casinos, along with Norwegian Cruise Line Holdings (NCLH) - Get Norwegian Cruise Line Holdings Ltd. Report as his favorite speculation on a recovery among the cruise lines.
Executive Decision: GW Pharmaceuticals
In his first "Executive Decision" segment, Cramer spoke with Justin Glover, executive director of GW Pharmaceuticals (GWPH) - Get GW Pharmaceuticals PLC Sponsored ADR Report, the drugmaker working on treatments for epilepsy and multiple sclerosis, among other diseases.
Glover said that GW brought in $240 million in revenue from Epidiolex, the company's treatment for epilepsy. For many patients suffering from the disease, they have nowhere else to turn. Patients want the drug and doctors want to prescribe it, he said. Epidiolex is still in its early stages, Glover said, and the drug is being approved for additional indications.
GW's second drug, Nabiximols, which treats multiple sclerosis, has received an accelerated development pathway with the FDA. Glover noted that GW also has a mental health program, looking into potential treatments there as well.
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Why Splits Are Good
In his No-Huddle Offense segment, Cramer sounded off of the notion that the recent stock splits in Apple (AAPL) - Get Apple Inc. (AAPL) Report and Tesla (TSLA) - Get Tesla Inc Report have hurt investors. Stock splits don't create any value, Cramer reminded viewers, they only make stocks more affordable to individual inventors.
Individuals, and those who don't know about fractional shares, love low-dollar stocks. That's why shares of Ford (F) - Get Ford Motor Company Report and General Electric (GE) - Get General Electric Company (GE) Report have been able to rally despite the lack of any good news or momentum. But instead of buying GE or Ford, Cramer said investors should be buying the more affordable Apple and Tesla.
There is always profit taking when stocks split, Cramer said. Investors need to be patient and wait for their moment to buy these dips. In the long run however, stock splits are great for shareholders.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Monday evening:
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At the time of publication, Cramer's Action Alerts PLUS had a position in NVDA, MSFT. TJX, COST, AAPL.