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With this morning's headlines warnings of doom and gloom this earnings season, Jim Cramer told his Mad Money viewers Monday that if this is what bad looks like, then he'll take it!
Cramer said he's frankly puzzled by today's Wall Street Journal, which cited weak oil prices, low interest rates and a glut of smart phones as weighing down earnings this quarter. He countered with earnings from Pepsico (PEP) , an Action Alerts PLUS holding, which has rallied to all-time highs, Alcoa (AA) , which saw its beat earnings in years and Seagate Technologies (STX) with a surprise earnings boost that no one saw coming.
Even the banks managed to rally after three of the four majors posted numbers that vastly exceeded expectations.
As for the headlines citing slowing mergers and acquisitions, Cramer countered with today's $32 billion bid for ARM Holdings (ARMH) . So if this is what bad looks like, Cramer concluded, he'll take it any day.
Executive Decision: Brian Goldner
For his "Executive Decision" segment, Cramer spoke with Brian Goldner, chairman, president and CEO of Hasbro (HAS) , which today posted a 2-cents-a-share earnings beat only to see shares fall by 6.6%. Prior to today, shares of Hasbro were up 25% for the year as investors anticipated a picture-perfect quarter.
Goldner responded to concerns over rising inventory levels by saying that increased inventories were needed as his company continues to expand its global footprint and ramp up new initiatives for the third and fourth quarters. He said concerns over slowing sales of toys for boys are exaggerated and sales are actually 13% for the year.
Goldner said Hasbro's mobile gaming segment is seeing sales up 80% for the year, and his company will continue investing in that segment.
When asked about today's slumping share price, Goldner noted Hasbro increased the dividend by 11% this year and will buy back between $100 million to $150 million worth of Hasbro shares this year.
Cramer said rarely do investors get to buy a good company on a big down day, but today is that day for Hasbro.
The Key to Retail Success
What's the secret to retail success in an Amazon.com (AMZN) world? Value and convenience, Cramer told viewers.
Cramer illustrated these points with two purchases he made over the weekend. He said when he needed new socks for his workouts, he went to TJ Maxx, owned by TJX Stores (TJX) . Why? Because the store was conveniently located near Wall Street and it had high-quality socks from Under Armour (UA) for less than Amazon. Better still, he walked out with his new socks. That's convenience.
Later in the weekend, Cramer found himself in need of a new flyswatter, something every household needs but certainly not something you're going to pay to ship. That's where Dollar General (DG) came in. For just a dollar, Cramer had his new weapon at the ready, also the same day.
What do these two stories tell us? Our country has changed, Cramer explained. Convenience is key and frugality is the new normal. That's why stocks such as Burlington Stores (BURL) shot up 8.5% on strong earnings, taking shares of Five Below (FIVE) up 5.4% and Ross Stores (ROST) up 1.3%.
Customers are simply not willing to pay up at department stores, Cramer concluded, which is why the value and convenience leaders continue to roar.
Are Small Business Lenders Safe?
After the implosion of LendingClub (LC) , are the small business lenders off limits? Cramer took a look at Square (SQ) , PayPal (PYPL) , On Deck Capital (ONDK) and American Express (AXP) , which recently announced a small business lending arm, to find out.
Right off the bat, Cramer said all four lenders are vastly different than LendingClub, which did not actually make loans but acted as a matchmaker for businesses and lenders.
Square makes most of its money as a payment processor and only recently started making small business loans, taking a cut of sales if customers are unable to repay. Loan growth is slowing at Square, as the company needs to raise more money to lend, but its defaults are 4%, which is fairly high. Shares of Square trade at 1.6 times sales.
PayPal, an Action Alerts PLUS holding, is the premier online payment network and is also adding lending to its portfolio. PayPal boasts a 1.2% default rate and saw a 9% increase in lending. Paypal trades at 22 times earnings and has a 19% overall growth rate.
On Deck lends to small and medium size businesses and is growing at 37%, down from 50% last year. The company's defaults are the highest at 5.7% but that, too, is down from last year. Cramer said On Deck's biggest problem is the company needs to se ll existing loans to free up capital to make new loans. That prospect is getting tougher post-Brexit. OnDeck shares trade for one times sales as a result.
Finally there's American Express, which recently announced its entry into the small business lending arena. Given the company's execution problems in the rest of its businesses, Cramer finds this announcement suspect. Shares of American Express trade at 11 times earnings.
Cramer said On Deck is simply too risky while American Express has too many problems. He still likes PayPal but would wait and see how Square performs going forward.
Off the Tape
In his "Off the Tape" segment, Cramer sat down with Chris Altcheck, CEO of the privately held Mic, an online media company focused on Millennials.
Altcheck explained that Mic is a media company for the new age, one where most content is consumed on smart phones. That has led his company to invent new ways of covering events and new formats to match the emerging trends.
Mic recently introduced Money.Mic, a channel focused on financial issues. Altcheck noted that while Millennials are among the most engaged of generations, their financial literacy is among the worst, giving Mic tremendous opportunities.
In the month of June, Mic reached over 51 million people with its coverage.
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