Jim Cramer's Best Blogs

NEW YORK ( TheStreet) -- Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
  • J.B. Hunt's earnings and what they meant for the transport stocks;
  • what to do if you managed to score some shares of Workday; and
  • the seeming disappearance of the fourth-quarter tech trade.

Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.

Transports Are in Roar Mode

Posted at 3:16 p.m. EDT on Friday, Oct. 12

Whoever thought you could get solace from the OK earnings from J.B. Hunt Transport Services ( JBHT), a trucking company? When I came in at the beginning of the week, I noted to myself that you had to be careful because J.B. Hunt could take down the whole transportation average and we would be back into a world of nonconfirmation.

Turns out that J.B. Hunt did well and that the best part came from intermodal. That shouldn't be a total shock, as even Norfolk Southern ( NSC) said that intermodal is good, and Union Pacific ( UNP) said that it's been the standout. Still, because we are so skittish, just a reaffirmation of any positive rail traffic data points is going to be positive for the transports.

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And boy do we need it. You have more than 35% of the S&P 500 being taken down by some bank reports that are disliked and a tech market that's taking its cue from Advanced Micro Devices ( AMD), not Workday ( WDAY).

To me, it will be hard to take down this whole market with the transports in roar mode. The fact that a trucking company didn't slice numbers dramatically was enough to ignite a beaten-down group, and that bodes well for a market in which we are constantly trying to gauge expectations.

Maybe, just maybe, despite Wells Fargo ( WFC) and JPMorgan Chase ( JPM), they are lower than you think?

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long WFC and JPM.

Set the DeLorean for 1999

Posted at 11:50 a.m. EDT on Friday, Oct. 12

Sometimes even when you get it right, it doesn't matter.

This morning the stock of an initial public offering, Workday ( WDAY), a cloud-based software company, was priced at $28 per share by Morgan Stanley and Goldman Sachs and opened as high as $48. That's 40x sales. Not 40x earnings, 40x sales. That makes it the single most richly valued company I follow, a $7.5 billion concern with no earnings that is spending aggressively to take share in the cloud space. You hire Workday, you tend to save 50 cents on every dollar that you spend in taking out costs that are largely related to personnel and human resources hardware and storage expenses that it replaces by putting their data in the cloud.

Yet frankly, the whole thing is absurd. The stock is so overvalued as to take your breath away. It's as if we have just gone into the Wayback machine and ventured right into 1999, the epicenter of the dot-com bomb blast.

Yet, here's a shocker. You shouldn't blame management or the underwriters for this travesty of a valuation. This was no Facebook ( FB). They really did everything right. Management didn't choose to sell any on the deal. In fact, many insiders bought on the deal. Neither Morgan Stanley, Goldman nor management elected to raise the price of the deal to anywhere near where the demand was, so as not to be too greedy. The company allowed 14% of its stock to go public, so it is not one of those sliver deals I talk about, the ones where so little is offered that it has to pop no matter what.

And most important, Chairman and Co-CEO Aneel Bhusri wasn't perturbed or upset that the bankers left so much on the table. It would have been reasonable to think that Workday had a right to demand every last dollar, but Bhusri told me and my colleagues at "Squawk on the Street" that he wanted the deal priced as close to the comparables, the other companies in the space, and not a penny more than that.

They were anything but avaricious vs. the greedy ravenous buyers.

Nevertheless, even as everyone involved with bringing this deal did everything right, we are stuck with an opening that immediately took the company's stock to the stratosphere of valuations.

How can that happen? Simple. This is a tech company with sustainable long-term growth coming public at a time when one of the largest sectors of the S&P 500 has so little growth to go around that it's become a pathetic parody of a cohort. When the personal computer market away from Apple ( AAPL) is shrinking, when spending on hardware is being radically curtailed in large part because of the cloud, but also because of slowing economies worldwide and when two cell phone companies are crushing everyone else, there's a terrible dearth of high-growth companies to choose from.

Into that breach stepped Workday. Even though the pricing was richly valued, the need for a high growth entry in a manager's portfolio drove that opening price. The institutions got so little on the deal that they figured it was better to pay up to get a full position and that required this crazy aftermarket buying that gives these customers an average basis that while above the actual IPO pricing is certainly below where it is ultimately opened.

Look, in the end it comes down to supply and demand. We don't have a lot of supply of companies that are growing at 98%, and we have endless demand for any companies with the accelerating revenue that Workday has.

So Workday opens at $48. As illogical as that is, when you consider the ice-cold sector, the needy buyers and the reasonable sellers, it makes a ton of sense that this stock opened at a $20 premium even as you need an oxygen mask to fathom it all.

Here's my bottom line: if you got some on the deal, you are a winner. Congratulations. Just remember that the history of companies selling at 40x earnings that succeeded is small and as good as Workday is, the odds of success make it so that you should feel blessed and just take that wonderful gain off the table. I bet someday you will get a chance to buy it lower and cheaper and you won't regret taking the profit you were so lucky to get.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long AAPL.

Isn't Tech Supposed to Rock Now?

Posted at 2:27 p.m. EDT on Wednesday, Oct. 10

Whatever happened to seasonality? Whatever happened to the trading pattern that has made you money for ages? I am talking about the fourth-quarter tech trade, the one that allows you to take advantage of all of the tech that enterprise buys and the consumer buys.

You know, I don't like trades based on pure calendar superstition like "sell in May and go away," or "sell in October because we have crashed in October," or "buy in an election year because we've been up in an election year."

These all presume a steady set of fundamentals as if nothing's changed year over year, so with the same set of economic facts stocks, seasonally, should do the same things. That's nonsense. The facts differ all of the time.

But two things have always been certain about tech. One is that there is a holiday buying season where people buy consumer products that use a lot of flash memory, semiconductors, disk drives and glass screens. And the other is that companies have a lot of money allocated each year to tech, and that money gets spent that year. That means if it hasn't been spent by the time of the fourth quarter it gets spent in that quarter.

These aren't unreliable ditties like "sell in May and go away." These are empirically demonstrated, rigorously analyzed trends that make too much sense to buck.

Except this year. First, the whole consumer tech world is in disarray. Sure we have gadgets galore being sold here. But consumer tech is global, and there's a total slowdown in the global consumer spending world that we can't make up for. Plus, the consumer's faced with two choices, the Apple ( AAPL) closed system and the open systems for everyone else. Guess what? They like the closed system. So tech seems to have gotten very zero-sum.

The enterprise is even more convoluted. We have seen a gigantic shift away from internal hardware buys and toward the cloud. There is a reason why I have Red Hat ( RHT) and Salesforce.com ( CRM) on each quarter. Those are companies that allow you to save on hardware costs while becoming leaner and more productive. The data are stored away in server farms. Each firm no longer needs its own giant tech infrastructure.

Plus, we have this bring-your-own-device world where individuals at companies are taking tech matters into their own hands, typically buying Apple products and convincing information technology departments to back away from companies like Dell ( DELL) and Hewlett-Packard ( HPQ).

Plus, we have seen an amazing slowdown in telecommunications spend as those like Verizon ( VZ) and AT&T ( T) have built out their networks for now and don't need any more infrastructure.

These are all trends that are manifesting themselves right at the moment, when tech spending is supposed to be robust. These are trends that surface in Avnet ( AVT), the tech-part supermarket, which has always been a solid part of the fall tech trade, or in Jabil ( JBL), which, too, has been a bedrock fall selection.

I know I believe in this tech cycle. It's worked for years and years. But here it is October, right in the tech sweet spot, and it sure isn't happening.

Maybe it just won't happen at all. The result? Unless you have a very specific tech player that is taking share and taking names -- I am thinking Amazon ( AMZN) and Google ( GOOG) here -- it might not pay to play the tech trade. In fact, it looks like it has become the most deadly trade of all.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long AAPL.

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