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No currency is more valuable to investors than credibility, Jim Cramer told his Mad Money viewers Thursday. Some CEOs have it, others don't, Cramer said, but the companies of those that do are the stocks you buy into when the market declines like it has for the past eight days.
Cramer said that NXP Semiconductor (NXPI) , an Action Alerts PLUS holding, has credibility, especially when it purchased Freescale and diversified itself from just a cell phone-chip maker into autos and the Internet of things. That credibility was rewarded after Qualcomm (QCOM) offered to purchase the company.
Time Warner (TWX) also has credibility, rejecting a bid from Fox for $85 a share, only to receive a much better deal from AT&T (T) for $110 a share. Cramer said that Apple (AAPL) , another Action Alerts PLUS name, also has a ton of credibility, although you wouldn't know it by listening to all of the negativity.
Those without credibility include Fitbit (FIT) , which posted a horrendous quarter that sent shares plunging an astounding 33% in a single day. The same applies to GoPro (GPRO) , which unlike Apple, has proven to have products that aren't that special after all. Cramer added Occidental Petroleum (OXY) to the list, saying that this Action Alerts PLUS holding will be sold at the earliest opportunity after the company announced it's spending $2 billion on acreage in the Permian Basin it doesn't need.
Management matters, Cramer concluded, which is why investors must always remember a company's track record and whether it delivers on its promises.
Executive Decision: Take-Two Interactive
For his "Executive Decision" segment, Cramer spoke with Strauss Zelnick, chairman and CEO of Take-Two Interactive (TTWO) , the video game maker that just posted a 15-cents-a-share earnings beat with a 21% increase in year-over-year revenues. Shares of Take-Two were up 7.7% on the day and are up more than 30% since Cramer last checked in back in May.
Zelnick said that video games have the same creative opportunities as movies did in the 1930s and that HD video games will soon become the norm. He said that "Mafia III," their latest release, is authentic, has a great soundtrack and sets a new standard for what cinematic video games can be.
Zelnick was also bullish on Take-Two's sports franchises, including "NBA 2K." He noted that sports games used to track the seasons they followed, but now, sports games are played year-round. He also reiterated a fall 2017 release for a highly anticipated "Red Dead" title.
As for Take-Two's gold standard, "Grand Theft Auto," Zelnick noted that "Grand Theft Auto 5" has already sold 70 million units to date and continues to sell very well.
Sometimes all it takes are three little words to derail a company's conference call, Cramer told viewers, and that certainly was the case when Facebook (FB) , a core position in Action Alerts PLUS, reported this week. Despite the company's phenomenal 56% revenue growth, investors still headed for the exits, sending shares lower by 5.6%.
Those three little words were "meaningful," "aggressive" and "substantial," Cramer said, and they were interpreted in the worst possible way. What Facebook actually said was that there will be a meaningful decline in revenue growth and they would be aggressively and substantially investing for the future.
After a 56% rise in revenues, wouldn't it make sense to temper expectations, at least a little bit? And don't we want Facebook to be investing heavily in their future? Cramer felt so, and was quite puzzled that so many investors fled the stock despite the company, as of yet, not receiving any estimate cuts from analysts.
Cramer found no reason to doubt Facebook's management and continued to recommend the stock as a long-term holding.
Executive Decision: American Electric Power
In his second "Executive Decision" segment, Cramer spoke in person for the first time with Nick Akins, chairman, president and CEO of American Electric Power (AEP) . The utility is a part of Action Alerts PLUS and its shares rose from $58 in January to a peak near $71 before retreating to current levels near $63 a share.
Akins said that AEP's performance stems from a years-long process of transforming itself into a fully regulated utility. Now that it is fully regulated, he said, they can focus on providing long-term consistency in its earnings and dividend, which is what investors have come to expect.
When asked about what challenges new technologies like the solar shingles announced by Tesla Motors (TSLA) CEO Elon Musk might pose, Akins said the key is managing the grid to handle distributed generation. He said that new technologies to effectively manage the flow of information will be needed.
Turning toward the election, Akins noted that AEP is managed for the long term and doesn't make short-term decisions based on who occupies the White House and what fuel preferences they may have.
Cramer continued his recommendation of American Electric Power.
In the Lightning Round, Cramer was bullish on Edwards Lifesciences (EW) , Vodafone Group (VOD) , Universal Insurance (UVE) , Allstate (ALL) , American International Group (AIG) and Hormel Foods (HRL) .
Am I Diversified?
In the "Am I Diversified" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer to see if investors' portfolios have what it takes for today's markets. The first portfolio included Bristol-Myers Squibb (BMY) , Darden Restaurants (DRI) , Matador Resources (MTDR) , General Electric (GE) and Scotts MiracleGro (SMG) .
Cramer said this portfolio was "well played" and even offered some dividend yield.
Cramer said that Dover, GE and Exxon all have energy exposure. He suggested selling Dover and adding a health-care stock.
Cramer said while this portfolio was diversified it also has a lot of speculation.
Cramer suggested taking out Oracle and adding Schlumberger (SLB) .
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