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Simple: Greece drives Rite Aid stock lower. Greece pushed most stocks lower on a day where the Dow was down nearly 108 points and the S&P 500 dropped almost 0.5%. Cramer says investors may be bailing in advance of what may be a European debacle.
Of course, Greece has nothing to do with the business of the U.S. drug store chain. It's a domestic company that should trade on earnings, Cramer said. There's tremendous consolidation in the health care sector, evidenced by today's announced $1.9 billion deal for CVS (CVS) to take over Target's (TGT) pharmacy business. Rite Aid could be part of that trend down the road, boosting its value.
Greece has nothing to do with Rite Aid's business. But it has plenty to do with Rite Aid's stock.
Cramer said Greece may default, but that's a one-day event. There may be a second-day stock selloff, and we find out how high the losses are at highly leveraged hedge funds -- which have to sell good positions in good stocks that aren't anywhere near Greece -- and have to cover positions that are severely affected by the default and resulting fear.
Cramer's conclusion: The irrational collateral damage to stocks that are unrelated to Greece but are pulled down in its vortex should be bought near the end of day two (probably around 2 p.m.) after a default, and then he recommends doubling down on the third day (probably near the market open). He'd buy 100 shares of Rite Aid on Day 2, and 100 more shares on Day 3 at the open.
Executive Decision: Larry Merlo and Brian Cornell
For his "Executive Decision" segment, Cramer spoke with CVS Health President and CEO Larry Merlo and Target CEO Brian Cornell to dig deeper into CVS' acquisition of Target's pharmacy and clinic business. Target is a holding in Cramer's charitable trust, Action Alerts PLUS.
Cornell said the partnership will strengthen Target's position in the wellness space with an expert that brings scale, experience and capabilities. Cornell said the CVS portion of his stores will operate as a store-within-a-store and have the look and feel of a CVS pharmacy. More than 1,660 Target pharmacies in 47 states will be rebranded as CVS pharmacies.
This deal expands CVS' presence in new markets, Merlo told Cramer, and said that while there may be some one-time costs in the short term, the transaction will be at least 12 cents accretive in 2018 and beyond. Cornell added the deal is all about growth and expects the deal to drive traffic to Target stores and return cash to shareholders. In addition, the deal allows Target to increase focus on its signature product categories.
Cramer said since dropping tobacco sales, CVS has committed to being the country's health care company rather than just its drug store company.
What's Wrong With Twitter
Cramer wondered whether Twitter (TWTR) is whistling past the graveyard. He is a long-time user, owns it for AAP and believes in the stock, which offers the kind of free promotion most companies would jump through hoops for.
But he's concerned Twitter might kill the golden goose out of arrogance, mismanagement and a mistaken belief that it's always going to be the only game in town. Cramer's not so sure about that anymore.
Twitter's stock is down nearly 26% in the last three months. Cramer didn't expect it to squander its huge opportunity instead of harnessing what heavy users, advertisers and first-time dabblers want from the service.
Cramer is happy to see former CEO Dick Costello on the way out, though he'll remain on the board. Leaving Costolo on the board is a signal that Twitter doesn't truly believe that something's wrong.
In his 36 years of picking stocks, Cramer had never heard more complaints about a CEO. But the company messed up by adding Jack Dorsey, co-founder and chairman, as interim CEO instead of a new head with a plan to restore user growth.
Twitter looks like it's too arrogant to accept criticism combined with major obliviousness, Cramer said. There's something very wrong with this company in its failure to grow new users.
If Twitter doesn't get its act together, Cramer said, it could be the first big fizzle of the second Internet revolution.
Focus on Express Scripts
Cramer's been saying for weeks that we need to start swapping into secular growth stocks to prepare for the pending slowdown. Either the Federal Reserve will raise rates this week, slamming the brakes on the economy, or it won't raise rates because it thinks the economy's too fragile.
How do you invest? Look to health care for consistent growth. After focusing on other areas of health care in the past couple of weeks, tonight he focused on pharmacy benefit managers, or PBMs. The biggest is Express Scripts (ESRX), another AAP holding.
The company's long-term fundamentals are perfect. Its market share is simply too big, especially on expensive new drugs. By 2018, expensive specialty medicines will account for roughly half of all prescription drug spending, Cramer said.
ESRX is powered by some tremendous long-term themes given our aging population. Its market share means it may be the most powerful company we have for containing the rising cost of prescription drugs. Buy it into any short-term weakness for the long term.
Off the Tape
In the "Off the Tape" segment, Cramer sat down with Christine Day, CEO of Luvo, a privately held food company disrupting the frozen food aisle.
Day, former CEO of Lululemon (LULU), said her company's goal is to offer personal-chef style foods in the frozen food aisle, starting at $3.99. Day said Luvo has mastered flash-freezing food -- its proprietary "Steamazing" technology allows food to be reheated and cooked its own juices -- to provide tasty, nutritious offerings with low sugar and low sodium through its small-batch cooking process.
Luvo's suppliers are required to use a program that allows the company to verify ingredient and process authenticity, which many larger rivals can't claim. Shoppers are label-readers now, Day said, and quality matters.
Day said that her goal at Luvo is to build a great business model while keeping the company's mission intact, though ultimately she'd love to see the company go public.
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