It finally happened. A money manager admitted his mistakes. That's a rare event on Wall Street, Jim Cramer told his Mad Money viewers Monday. Unfortunately, that money manager was Warren Buffett, one the world's greatest investors, and perhaps the only one confident enough in his abilities to admit those mistakes.
Buffett's investing strategy is simple, Cramer explained, buy best-of-breed companies at a discount then hold onto them until they realize their full potential. But even Buffett makes mistakes, such a buying IBM(IBM) - Get Report two years ago only to watch shares trade sideways ever since. Buffett also admitted to missing out on Alphabet(GOOGL) - Get Report , which has seen its shares rise from $300 two years ago to over $950 today.
So if the Oracle of Omaha can't get it right, what hope is there for the rest of us? Cramer and Buffett both agree that for retirement savings, a good low-cost S&P 500 index fund is the way to go. But once you've maxed out those IRAs and 401Ks, Cramer takes it one step further.
Investors can augment those index fund gains by picking individual stocks, Cramer said, and it's a great way to growth wealth over time. Buffett's investment in Apple(AAPL) - Get Report , an Action Alerts PLUS holding, was made simply by talking to his grandkids and seeing that iPhones were beloved devices, but Apple shares traded at well below market value.
Gains like Apple are truly gettable, Cramer concluded, you just have to do a little homework.
Play Your Hand Right
Gambling in Macau is still on fire, Cramer told viewers, and that means today's weakness in the casino stocks is a reason to buy, not to head for the hills.
Cramer said anytime you deal with the Chinese government, you need to be prepared for bumps in the road. Today's announcement of new rules to curtail ATM withdrawals in Macau is one of those bumps. The news sent shares of Wynn Resorts(WYNN) - Get Report down 1.6%, Las Vegas Sands(LVS) - Get Report down 2.7% and MGM Resorts(MGM) - Get Report skidding 2.4%.
But Cramer said we've seen this movie before, in December of 2016, when the Chinese also attempted to curtail ATM withdrawals. In the end, those attempts were not as bad as people feared and the stocks came roaring back in the weeks and months that followed.
The important number to focus on is the casino revenue growth in Macau, which rose 17% in February, 18% in March and another 16% in April. ATM withdrawals or not, things are heating up in Macau and that's what investors should be watching.
Of the three, Cramer still liked Wynn Resorts, which is up 11% since he last recommended it eight months ago. MGM is up even more, 20%, over the same time period.
Meanwhile, over on Real Money, Jim Cramer says demand is not beckoning in the oil equation. It's still all about supply. Get more on his insights with a free trial subscription to Real Money.
When Deals Look Great
There are two ways to value stock prices. You can compare them to bonds, in which case they look pretty good, or you can compare them to what an acquirer would pay, in which case they look even better.
That was certainly the case with today's group of mergers, which included Sinclair Broadcasting(SBGI) - Get Report snapping up Tribune(TRIB) - Get Report for $3.9 billion and Coach (COH) acquiring Kate Spade (KATE) for an 8% premium.
Deregulation was largely responsible for the Sinclair deal, Cramer said, as the FCC's rulings in April made it clear that the Trump administration will be looking at media mergers in a new light. Cramer said he thinks serial acquirer Nexstar Media Group(NXST) - Get Report , which is down 1% for the year, is the stock to buy next in this group.
Cramer said that Coach played the Kate Spade deal perfectly, as Kate's stock had run up to $24, only to fall back to $18.50. Coach is now a house of powerful brands, Cramer noted, which should be a wake-up call to both PVH(PVH) - Get Report and VF Corp(VFC) - Get Report , who are no strangers to acquisitions themselves.
Executive Decision: Newell Brands
For his "Executive Decision" segment, Cramer sat down with Michael Polk, CEO of Newell Brands(NWL) - Get Report , another Action Alerts PLUS holding, which just posted a five-cents-a-share earnings beat with a dividend boost and strong guidance to boot. Shares of Newell soared 11.9% on the news.
Polk said that the Newell team did a fantastic job this quarter, both on innovation, with new products like easy-open Ball jars; and with listening to social media channels for the hottest trends like making slime -- which requires an entire bottle of Elmer's glue. He was also bullish on Newell's candle business, which includes Yankee Candle.
Other strengths in the quarter included strong international growth. Latin America sales were up 12%, and sales in Europe grew by 5%. Polk also credited commerce as a driver, which now accounts for 10% of overall global revenue.
Polk said the new combined Newell is only a year old. It's still in its early days of finding its rhythm and fully integrating the Jarden brands.
Cramer was bearish on Camping World(CWH) - Get Report , Micron Technology(MU) - Get Report , Stamps.com(STMP) - Get Report , Teekay Offshore Partners(TOO) - Get Report and Nordic American Tanker(NAT) - Get Report .
In his "Homework" segment, Cramer followed up on a few stocks that stumped him during earlier shows. He said that Advanced Energy(AEIS) - Get Report has been steadily working its way higher and the sector has been red hot, but up 36% so far in 2017, it's more expensive than LAM Research( LCRX) , so investors need to wait for a pullback.
Cramer and the AAP team are telling their investment club members about several stocks that are catching their attention right now: Apple(AAPL) - Get Report , Arconic(ARNC) - Get Report and Facebook(FB) - Get Report . Get in on the conversation with a free trial subscription to Action Alerts PLUS.
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At the time of publication, Cramer's Action Alerts PLUS had positions in AAPL, ARNC, FB, NWL, GOOGL.