Even on bullish days, the action in the stock market can be frustrating, Jim Cramer admitted to his Mad Money viewers Monday. That's because when it comes to earnings season, what's most important is not the earnings themselves, but the expectations going into the quarter.
Everyone expected the banks to have a terrific quarter and the stock had run up ahead of the report. Cramer said this same pattern may be the kiss of death for Morgan Stanley (MS) - Get Report and Goldman Sachs (GS) - Get Report when they report later in the week.
But then there's the little-known trucking company JB Hunt (JBHT) - Get Report , which popped 6.1% because the company saw some surprise growth that no one was expecting. That news was so strong, FedEx (FDX) - Get Report and XPO Logistics (XPO) - Get Report also rose 2.2% and 4.6%.
Cramer and the AAP team note that seven of the companies in their portfolio are reporting this week, including Abbott Laboratories (ABT) - Get Report , Nucor (NUE) - Get Report and Honeywell (HON) - Get Report . 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.
No Weekends Off
As if keeping up with the news flow during the week wasn't enough, do investors also need to fear the weekends? Cramer said he's beginning to see a familiar pattern emerging and it's one that needs to be on everyone's radar.
Stocks sold off last Friday as investors feared President Trump could take action over the weekend against Syria or that former FBI Director James Comey could deliver a bombshell of his own during a primetime interview. After both proved to be fairly benign, the markets were able to rally today.
Cramer said he remembers the same pattern playing out ahead of the Gulf war in 1991. Every Friday the markets sold off, every Monday they rebounded, but never quite as high as the Friday before. This led to a slow slide until events finally unfolded and the U.S. became involved in the conflict.
The same pattern could repeat itself this summer, as the issues of Syria, Comey, Robert Mueller, and Trump's attorney Michael Cohen all appear to be issues that will be burning slowly over the weeks and months ahead.
Over on Real Money, Cramer says if you're sitting on a down-and-out stock with a real bad chart, you need to hold on at this point because an analyst or a quarter could come to your rescue. Get more of his insights with a free trial subscription to Real Money.
Is It Worth the Fight?
Not every battle is worth fighting, Cramer told viewers. That's especially true if you own shares of Newell Brands (NWL) - Get Report , which is embroiled in a bitter proxy fight between activists Starboard Capital and Carl Icahn.
Viewers may remember that Newell acquired Jarden two years ago for $15 billion. At the time, Newell CEO Michael Polk made terrific predictions of how well the combined company would be able to function. Unfortunately, none of those predictions panned out.
Shares of Newell have lost over 50% of their value since the merger as the company has reported a series of disappointing quarters. Earnings estimate have been slashed three times as a result.
That caught the attention of activist investors Starboard Capital and also Carl Icahn. After Starboard proposed a board shakeup, Icahn reached a deal with management to spin off many of the Jarden assets to a group led by Jarden's former CEO, Martin Franklin.
Cramer said rather than take sides on which proposal makes more sense, investors need to be asking whether it's worth holding onto shares at all. There's little doubt that Newell's next earnings report will be a bad one and the company's 3.5% dividend may then be called into question. He'd rather sell than pick sides.
Executive Decision: Vistra Energy
Morgan said thanks to their acquisition of Dynegy, Vistra will be generating significant cash flows that give his company a lot of flexibility to both service their debt and increase their dividend in the future.
Vistra is still a growth company, he added, with 50% of their earnings stemming from Texas, a market where they see 2% annual growth.
When asked about the future for coal, Morgan said that coal is "on it's way out" for power generation, especially as renewables and battery technology become more cost effective. Coal will remain important for at least the next 10 to 15 years, he said, but not for the long term.
Batteries have become an interesting technology, Morgan added, as it allows the fluctuating nature of renewables to be stabilized so that the grid and the plants that power the grid can be run more efficiently.
Cramer Does His Homework
In his "Homework" segment, Cramer followed up on a few stocks that had stumped him during earlier shows.
He took a look at SiteOne Landscape Supply (SITE) - Get Report , a stock that's quadrupled over the past two years before pulling back recently. Cramer said he likes the fundamentals, but the stock is expensive at 40 times this year's earnings, so he'd only buy in at lower levels.
Finally, Cramer said that Silicom (SILC) - Get Report is an interesting concept with real earnings, and an attractive valuation at just 18 times earnings. However, the company is small, which mean investors need to be careful.
In the Lightning Round, Cramer was bullish on Spotify (SPOT) - Get Report , Alkermes (ALKS) - Get Report , Johnson & Johnson (JNJ) - Get Report , Thermo Fisher Scientific (TMO) - Get Report , Sorrento Therapeutics (SRNE) - Get Report , NVIDIA (NVDA) - Get Report , Nucor, Eli Lilly (LLY) - Get Report and Kohlberg Kravis Roberts (KKR) - Get Report .
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At the time of publication, Cramer's Action Alerts PLUS had a position in ABT, NUE, HON, GS, NVDA, LLY.