When it comes to earnings season, what really matters are the numbers, the read-throughs and the derivatives, Jim Cramer told his Mad Money viewers Wednesday. Fortunately, today's action had plenty of all three.
Why did the Nasdaq see a midday bounce? Cramer said it was due to the bullish commentary from semiconductor equipment maker ASML Holdings (ASML) , which not only sent its own shares up 6%, but also lifted the entire sector, including Skyworks Solutions (SWKS) and Broadcom (AVGO) .
Cramer said the weak results from Target (TGT) also saw derivative action, sending shares of Macy's (M) and Walmart (WMT) lower, as investors realized that even a strong e-commerce presence like Target is ultimately bad for brick-and-mortar stores.
The markets also saw action in the financials, where profit-taking ruled the day, and in the rails, where talk of consolidation boosted shares of CSX (CSX) by 7.6%.
Finally, Cramer called out Netflix (NFLX) and its now 94 million subscribers as another bright spot in a growing sea of positivity ahead of the inauguration.
This Ag Stock's Growing Like a Weed
After spending years in the doghouse, shares of FMC Corp (FMC) have finally reignited, and Cramer said he'd be a buyer on any weakness.
For those not familiar with FMC, the company is largely a manufacturer of agricultural chemicals, which account for 70% of sales. But FMC also makes compounds for lithium batteries, a business that is now growing at 22% a year.
Cramer said that when agriculture was out of favor, FMC continued to invest in itself and make smart acquisitions, most of which are only now bearing fruit. On the company's last conference call in early November, FMC noted strength in Latin America, particularly Brazil, as well as in Asia and North America. Goldman Sachs (GS) added the company to its Conviction Buy list on Dec 12.
After falling from a high of about $84 a share to as low as $32 a share, Cramer said, FMC is inexpensive where it's trading now, at $58 a share and 18 times earnings -- especially after bullish comments from rival Monsanto (MON) today.
Competition in the Trump Era
The market is evaluating stocks through a new prism, Cramer told viewers, and that prism is whether the company will benefit under Donald Trump. How do investors determine if a stock is a Trump stock? Cramer used Whirlpool (WHR) as an example.
Whirlpool is, of course, the last American manufacturer of big-ticket items like washing machines and dryers. Shares are up 18% since the election, despite the company missing earnings in October as it struggled against a strong dollar.
What makes Whirlpool a Trump stock is that the company recently received a favorable ruling against rivals Samsung and LG for importing products at unsustainable prices, a ruling that would likely only tighten under a protectionist Trump administration. As the last remaining manufacturer of its kind in the U.S., it's easy to see Trump treating the company as a pet project, Cramer added.
But Whirlpool only derives 44% of sales from the U.S., so the company also benefits from growth in the global economy, something it is already seeing in countries like Brazil.
While Whirlpool could certainly get caught up in any trade wars caused by Trump, Cramer said, the pros outweigh the cons, making Whirlpool a Trump stock.
Executive Decision: Splunk
For his "Executive Decision" segment, Cramer sat down with Doug Merritt, president and CEO of software analytics provider Splunk (SPLK) .
Merritt said that Splunk is a leader in being able to ask questions of big data and to structure that data so that answers can be retrieved. The company got its start in security and IT services, but quickly grew to include government, retail and customer experience services as well.
Merritt says he's excited for the prospects of machine learning and for the overall digital transformation that most industries are now experiencing.
Cramer said while the market tends to shy away from growth names like Splunk when the economy is expanding, the company remains a great story.
In his "No Huddle Offense" segment, Cramer asked whether investors are nimble enough to sell a stock, then get back in at a lower price. If you're a hedge fund manager, you likely are nimble enough to trade stocks minute-by-minute, but for most average investors, that's not the case.
So when it comes to a stock like Bank of America (BAC) , where short-term traders are looking to take profits and run, and at the same time, long-term investors are looking to build a base for the upcoming Trump administration, it may be difficult to determine which way shares are headed on any given day.
Cramer said he doesn't see shares falling back to the $16 or $17 level, but he also thinks it will be tough to rally beyond $23 a share given how many traders are looking to sell. That's why he suggested investors take a longer-term view and just hold on to Bank of America for the next four years.
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