Don't mistake the the market "action" for actual action, especially during the month of August, Jim Cramer told his Mad Money viewers Monday. Sometimes, nothing happens, but the market still tries to make sense of it.
There was no real news to move stocks today, Cramer said, yet as soon as FANG (his acronym for Facebook (FB) , Amazon.com (AMZN) , Netflix (NFLX) and Alphabet (GOOGL) ) began to decline, the pundits were quick to write the obituaries.
But just as they have so many time before, FANG quickly rose from the dead, once again proving the pundits dead wrong.
August is always a wild month, Cramer reminded viewers. Big declines can happen at any time and for any reason, and sometimes for no reason at all. The infamous flash crash happened during August, but so too did the beginning of the great bull market 35 years ago. As for this week, Cramer said the Federal Reserve, Congress and the White House are likely to remain quiet, which means where the markets move will be anyone's guess.
On Real Money, Cramer says don't let this random market make you bonkers. Get his insights with a free trial subscription to Real Money.
Executive Decision: ADP
For his "Executive Decision" segment, Cramer sat down with Carlos Rodriguez, president and CEO of Automatic Data Processing (ADP) , the nation's largest payroll processor which is currently embroiled with activist investor Bill Ackman over the direction of the company.
Rodriguez said that Ackman's 176-page report criticizing ADP was sprung on them publicly with no prior discussions or opportunities to respond. He said while many of the ideas in the report were not new to ADP, many of the conclusions drawn and the data used were wrong.
Rodriguez continued by saying that he takes offense to the claim that ADP have overstated their results. In fact, he said, his company's client count has not gone down.
When comparing ADP to companies like Workday (WDAY) , which has higher growth, and Paychex (PAYX) , which has better gross margins, Rodriguez explained that what appear to be apples-to-apples comparisons really aren't, as all three of these companies are slightly different businesses or report results in different ways.
Rodriguez also responded to the allegations that ADP has become insular to new ideas and technology. He said nearly 50% of their engineering team has been with the company for less than five years and there's no shortage of new ideas or future plans.
Cramer said the facts do speak for themselves and shares of ADP have trounced the broader averages.
Macy's: Cheaper Than the Sum of its Parts?
How low can a department store stock go before it becomes too cheap to ignore? Cramer said with shares of Macy's (M) now trading below $20 a share for the first time since 2010, we might soon be approaching that time.
A stock isn't a bargain when the earnings estimates are continually getting cut, Cramer reminded viewers, but eventually, a stock becomes cheaper than the sum of its parts, and that's when things get interesting. In the case of Macy's, the company's same-store sales were growing from 2010 through 2013. But then things leveled off in 2014, before declining 3% in 2015, 3.5% in 2016 and as much as 5.2% earlier this year.
But Cramer noted that this past quarter, Macy's results were not as bad as expected. Given that Macy's owns all of its real estate, the company could be worth $5.5 billion, but its stock values it at just $6 billion. That means you're getting a profitable retailer, and a 7.7% dividend, for just $500 million.
Is Macy's a high-risk stock? You bet, Cramer concluded. But for those who can stomach that risk, the valuation may be too cheap to ignore.
Cramer and the AAP team are highlighting a few names in the portfolio that are trading based on news and information outside the general market, including Starbucks (SBUX) and Southwest (LUV) . Get in on the conversation with a free trial subscription to Action Alerts PLUS.
In his "No-Huddle Offense" segment, Cramer said investors can never look at Foot Locker (FL) the same again, after the company blindsided shareholders with some of the most dire commentary in retail.
On the company's conference call, management indicated that the disruptions they're seeing in consumer spending patterns are the most significant they've seen in 25 years. The pace of that change, they admitted, is faster than they have been able to keep up with.
Double-digit declines in the sales of basketball shoes is unheard of, Cramer declared, as that's where all the profits are. Foot Locker may have a $1.2 billion stock buyback, but even that may not be enough to stem these losses.
Cramer's bottom line: Foot Locker is still not a buy, even at current levels. He's not sure the company can turn things around, and by the sound of things, the company isn't sure either.
Executive Decision: CyrusOne
In his second "Executive Decision" segment, Cramer sat down with Gary Wojtaszek, president and CEO of CyrusOne (CONE) , the data center operator with a 2.8% yield.
Wojtaszek said that we're still in the early innings of the transition to cloud computing and more companies are discovering that it makes sense to outsource their data center needs. CyrusOne currently boasts nine of the top 10 cloud computing companies as customers and said that they're working hard to get the last one in their portfolio as well.
When asked about growth, Wojtaszek explained the CyrusOne has been sold out since the third quarter of last year and will have more capacity coming online later this year to help meet demand.
When asked about cybersecurity, Wojtaszek noted that CyrusOne's first priority is always reliability and keeping their centers online, but their No. 2 priority remains security.
Cramer said that while he doesn't like the REITs in this environment, CyrusOne is a growth company and he continues to recommend it.
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