Investing is a lot like fantasy football, Jim Cramer told his Mad Money viewers Tuesday. To pick a winning team, you need to stay diversified and make sure your roster is full of the best of the best. Every year around this time, Cramer picks his fantasy stock portfolio, and this year was no different.
In the position of wide receivers, Cramer chose Nvidia (NVDA) , an Action Alerts PLUS holding, along with Adobe (ADBE) and Salesforce.com (CRM) . In the coveted quarterback slot was Apple (AAPL) , another Action Alerts name and a solid performer with a cheap multiple. Runners-up included Visa (V) and McDonalds (MCD) .
Defense contractors Lockheed Martin (LMT) , General Dynamics (GD) and Raytheon (RTN) made Cramer's draft for, you guessed it, his defensive line, while UnitedHealth Group (UNH) topped his list for kickers.
Who didn't make the cut? Cramer said his team doesn't include any retailers, with the exception of Amazon (AMZN) , nor any oil stocks, which have been unable to perform this season.
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Off the Charts: Chip Stocks
In the "Off The Charts" segment, Cramer checked in with colleague Carolyn Boroden to review the charts of the semiconductor makers, which sold off hard last week, only to rebound this week.
Boroden first looked at Nvidia, the high growth chipmaker, noting that the stock has powerful floors of support between $148 and $152 a share, which explains the sell-off last week from $172 to those levels. She also noted the timing from low to low, which typically ranges between 28 and 32 days, putting last week's plunge right on schedule. Boroden felt that $176 to $180 a share was likely for Nvidia.
Next up was Micron Technology (MU) , a commodity chipmaker. Micron has a floor between $25 and $27 a share, but a ceiling of $34 to $36 a share, meaning there's a lot more upside than downside potential.
Finally, Boroden considered Applied Materials (AMAT) , the capital equipment maker. This stock had a floor between $41 and $42 a share, with a rally possible to $49 if the stock can hold these levels.
While this year's hot tech IPOs, like Snap (SNAP) and Blue Apron (APRN) , have plummeted, the hot tech IPOs of years past (think GrubHub (GRUB) and Yelp (YELP) ) have been on fire thanks to a recently announced partnership.
GrubHub provides online ordering for over 55,000 restaurants in more than 1,000 cities. The company has nine million active users. Yelp has over 135 million user-generated reviews of local businesses. Cramer called the long-term partnership a "match made in heaven" and the market agreed, sending shares of Yelp up 27% and GrubHub up 9% after the deal was announced two weeks ago.
Both companies were already growing, Cramer noted, and this tie-up will only help both companies accelerate that growth.
Cramer and the AAP team say that after TJX's (TJX) strong quarter, they are encouraged by the outlook and management's approach to customer loyalty. Find out what they're telling their investment club members now and get in on the conversation with a free trial subscription to Action Alerts PLUS.
Executive Decision: CyberArk
For his "Executive Decision" segment, Cramer spoke with Udi Mokady, chairman and CEO of CyberArk Software (CYBR) , a stock that plunged 16% after the company pre-announced weaker-than-expected earnings.
Mokady explained that this quarter's shortfall was a combination of new and existing business that didn't close on time, but he noted that those deals are still out there. After 11 consecutive quarters of beating expectations, Mokady said it was very disappointing to miss expectations. He said the problem was purely poor execution on their part and is not a change in the competitive landscape.
CyberArk has "overcorrected" for this problem in a good way by globalizing their salesforce and appointing new leadership. Mokady said there's still high demand for CyberArk's services, which complement investments companies have already made in cybersecurity.
Cramer said CyberArk has a good business and will have growth for a long time.
Cramer was bearish on Teva Pharmaceuticals (TEVA) .
In his "No-Huddle Offense" segment, Cramer said he's never seen anything like it. Never in his career has a single company been able to obliterate an entire sector of the economy like Amazon has been able to obliterate the entire retail cohort.
Even Cramer favorite Home Depot (HD) was not immune, as the company reported its best quarter ever, but still saw shares fall 2.6% as analysts grilled management on its conference call about the state of ecommerce. Home Depot's CEO has said that Amazon's Alexa could be a real problem for retailers, as customers no longer even know if they're getting a good deal. They just ask a question and an order is placed.
How should investors play Home Depot? Cramer said to wait for shares to get so cheap that the company can buy back all the shares it wants and boost its dividend. Otherwise, this fabulous do-it-yourself retailer may be too vulnerable to own.
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