Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.
Did you miss last night's "Mad Money" on CNBC? If so, here are Jim Cramer's top takeaways for today's trading.
Stericycle(SRCL) - Get Report : Don't try and catch a falling knife, Cramer warned viewers as he took a look at the medical waste disposal company Stericycle. He said this stock had a picture-perfect run from its initial public offering in 1996 through October of 2015. Then everything fell apart, with the stock falling 40% in six months, erasing over three years of gains.
What made Stericycle great, Cramer said, was its consistent growth, which was compounding at 16% a year. Stericycle is a roll-up company, a serial acquirer of other companies. It has purchased a total of 442 companies since coming public, or about 19 deals a year.
But then in 2015, Stericycle acquired a document disposal company, Shred-It, for $2.3 billion. While the deal was touted as being additive to earnings with plenty of tax benefits and synergies, the deal's closing also marked the high point for the stock.
It turns out Stericycle's gross margins had been eroding throughout 2015, down to 34% from 45%. Then the company posted a rare 11-cents-a-share earnings miss in October, followed by a second miss of 4 cents this past April. But what really did shares in, Cramer said, was the company's lowered guidance for all of 2016 and its commentary that the Shred-It acquisition will not realize the promised synergies this year.
Trading at 17 times earnings, Cramer said Stericycle may seen attractive, but investors need to stay away as management has clearly lost its way.
Whole Foods Market (WFM) versus Sprouts Farmers Market(SFM) - Get Report : When your stock has been down for so long, even doing one thing right is enough to send shares soaring. That's exactly what happened with Whole Foods Market, which saw shares rally 6% when it reported a 3-cents-a-share earnings beat, while rival Sprouts Farmers Market saw its share plunge 7% on a 1-cent-a-share earnings beat.
Did these two stocks trade places, or did the expectations change? Cramer said that while Whole Foods saw declining gross margins and a 3% drop in same-store sales, the stock was near its lows, allowing the hype about the company's new smaller-format stores to spark a rally.
As for Sprouts, this grocer saw expanding gross margins and a rise in same-store sales. But with shares up 3% for the year, they were ripe for a selloff on what was perceived as slower days ahead.
Cramer said Whole Foods is still a turnaround story, but in the short term the stock will likely be choppy. Sprouts, on the other hand, may be seeing increased competition, making its continued growth suspect.
Macy's(M) - Get Report , Kohl's(KSS) - Get Report and Nordstrom(JWN) - Get Report : With the disastrous earnings from Macy's, Kohl's and Nordstrom, is it time to finally declare that bricks-and-mortar retail is dying a slow death? According to Cramer, the answer might be yes.
Cramer said the big retailers are in the same position that newspapers were in a decade ago. Both industries saw the Internet coming, but both initially thought they were special and immune. Then they reluctantly joined the party, only to drown in the riptide.
Cramer recalled a trip to the headquarters of Borders Bookstore years ago, where executives wouldn't even acknowledge that Amazon.com(AMZN) - Get Report was a threat. At the time, the booksellers felt that experience mattered. They neglected to take into account that people didn't have time to drive to a store and browse, which made Amazon the more convenient choice.
In the case of Nordstrom, the company often cites that its excellent customer service, with personal suggestions and generous return policy, is what keeps customers coming into the stores. But Amazon's return policy is just as generous, and its personal recommendations are second to none.
So are the retailers going the way of your local newspaper? It's too early to tell, Cramer concluded. But it is safe to say that a return to the glory days of the department store is highly unlikely.
To read a full recap of "Mad Money" on CNBC, click here.
To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.
To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.
At the time of publication, Cramer's Action Alerts PLUS had no position in stocks mentioned.