NEW YORK (Real Money) -- 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:
- Trying to predict the winners in the competive airline zone
- Why owning stocks often takes a leap of faith and so Facebook investors might need to tolerate some "pain"
- Three companies with potential (two are biotech firms and one is in cybersecurity)
Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
It's a Dogfight Among the Airlines
Posted on June 9 at 12:44 p.m. EDT
Can American (AAL) lead a squeeze in the airlines? Can United (UAL) help it mount a comeback? If you care about today's session, put these five stocks right in front of you: Delta (DAL), Southwest (LUV), United, American and Spirit (SAVE).
These were the former leaders that have been crushed endlessly, and two of them -- American and United -- aren't down. Glory be, this is amazing given the fact that people have been bailing left and right on this group.
Yes, there are still way too many analysts who are bullish. Yes, the numbers are too high. But even the worst dogs have their day, and these are far from the worst, given that their earnings aren't going to collapse. They are just going to get cut.
It's the ghost of airlines past that is dogging these.
So, they are the battleground. I wish I could tell you who wins. I will tell you that if the bulls win and AAL and UAL pull the others up, you have some leadership away from the fins, and that may be all the bulls need to snap down this streak in its tracks.
When to Sell Facebook, and Why
Posted on June 10 at 5:50 a.m. EDT
To me his crowning-glory moment came when he was asked, before he shot the scene, for his prediction for his fight in Rocky 3, and he uttered one single word: "pain."
I happen to think of this succinct moment of cinematic brilliance when a tweeter said that he was getting his butt handed to him in Action Alerts Plus holding Facebook (FB) and he couldn't handle the pain of these "huge" losses.
I wanted to sentence him to watching several full-length Mr. T dramatic expositions because, frankly, if you think that what is happening in Facebook is painful, then you should leave the table right now, before you actually experience some real pain.
First, this is not a piece about the coming apocalypse. We have apocalyptic masters everywhere these days; you don't need me to be part of the Apocalypto (the name of a fine film by Mel Gibson, his best even) although I just like to appropriate the term to fit the doom-saying chorus I hear every day.
This is not a piece about what happens when the Fed tightens. There's already a well-defined end-of-the-world sense about that event, too. While I would prefer that the Fed wait until other currencies get stronger, I accept the judgment that it is going to occur and am making my peace with it by suggesting stocks that will work, like the health care cohort, once the Fed gets the ball rolling.
No, this is a piece about tolerance because let's say you somehow picked the absolute worst moment to buy Facebook, which was March 21, at $85.31. You are simply not down that much and you have to be able to take that pain if you are going to own stocks.
Let's deconstruct what's the source of the pain. First, "huge losses?" Hardly. Unless you cash out today, you don't have huge losses. You are down on a position of a company that, if everything works out well, could earn $3.50 in 2017. Is that expensive at 23 times that amount, given how fast Facebook is growing? I would certainly say not.
But you know what would make it even cheaper? If the stock went lower and you could buy even more.
The problem, though, is that if you adopt that pain mentality, you will be a seller when it gets, say, to 20 times earnings, rather than a buyer. A losing mentality is a mentality that is best left out of the stock market. It's good if you are in cash. Second, a 5-point drop on a $80 stock -- and, again, I am presuming the worst possible moment of buying -- just isn't that much of a hit.
If you think it is, please run now because there isn't enough oxycodone in the world to handle what you feel if this stock goes to $70.
Will it? If you shudder that it could, again, sell. Why? Because this market's not trading as much off the fundamentals of earnings as it is about the fundamentals of the Greek talks. And unless there are takeovers or big restructurings, Facebook could easily sell at $70 with this exact same set of circumstances at the company that we have now.
In other words, part of the process of owning stocks is pain tolerance. If it hurts too much, don't look every day. If that doesn't help, then sell. Owning stocks is a leap of faith. You have to believe that things will get better at the company you own, at the stock market it is in and in the world in general.
That's a tough road to hoe. It's happened quite often, but the only people who stay on the road are the ones who can handle what Mr. T dishes out. If you can take the punishment, welcome aboard. If you can't, sell now. Because you never know when real pain might strike, even, if the end, the pain, like the irrepressible Mr. T, goes down for the count.
Here Are 3 Stocks With Huge Potential
Posted June 11 at 5:40 a.m. EDT
First, Axovant's going public, and this is a biotech developed to solve the problems associated with one of the greatest issues of our lifetime: dementia.
This deal should be red hot because while it is a clinical-stage biopharmaceutical firm (aren't they all that go public these days?) its lead drug candidate RVT-101 is starting a phase three trial in the fourth quarter for those with mild to moderate Alzheimer's disease. There have already been statistically significant benefits shown from its 684-patient phase two B trial.
So you know there will be tremendous interest in this one. If this one opens by 10:30, I would be shocked. That's how hot I expect it to be.
Second, CyberArk Software priced 4.9 million shares, 4.0 million from selling shareholders and 900,000 from the company, at $61. This deal is important for two reasons:
- It is two more than two bucks in the hole, so it's possible to see how real the price discovery here is, given that there is a 23% short position and the shorts have played a big role in the levitation; this additional stock could bust the short.
- Cybersecurity is so hot that we need to find out if it is too hot. CyberArk protects privileged accounts and it is a best-in-class provider. I had the CEO, Udi Mokady, on Mad Money recently, and he impressed me as a man offering wares where the need is quite genuine.
Finally, there is Receptos, which I have been behind for many months now. Here's a stock that rallied 20 points both into and out of the closing bell, on rumors that either Teva (TEVA) or AstraZeneca (AZN) is in talks to buy the company.
I featured this story on the webinar today as one of my three favorite junior biotechs and all I can say is hold on, you do not need a takeover to make this work. But I want to know if it even sells off; that's how fevered the pitch is.
Axovant, CyberArk and Receptos -- the key to this morning's market following a big up day that has tended to be a harbinger of, well, nothing.