Here are Jim Cramer's top thoughts on some of the biggest stories of the week.
Jim Cramer: How to Avoid Being Amazon Roadkill
That's how I feel about the Kohl's (KSS - Get Report) -Amazon (AMZN - Get Report) deal that allows you to return merchandise you bought at Amazon to Kohl's, which will box it and send it back to the online behemoth for free.
I have been a big fan of the stock of Kohl's for about 10 points because it is a conservative, reliable company that does a lot of things right and is located in strip malls, which make it ideal as a place to return goods.
In fact, I think the company's stock, with an almost 5% yield and a fantastic balance sheet, might be a real good idea even now. Sure, the Amazon deal will only be in 85 stores in Chicago and Los Angeles for the nationwide chain. Still, though, I can't wait until it comes east because I can use it aplenty to make my life a heck of a lot easier for us.
What happens if you do nothing but take a beating from Amazon? Consider the case of Toys R Us, which filed for bankruptcy today. There are two things you need to know about Toys R Us. First, toys are a category that's easily crushed by Amazon, and second, the balance sheet of Toys R Us has been loaded up with debt as part of a failed leveraged buyout left over from the halcyon days of deals yore. It's been expected and the company doesn't seem to want to go down the liquidation path. This kind of filing might allow the company to get debtor-in-possession financing, which is why the stocks of Hasbro (HAS - Get Report) and Mattel (MAT - Get Report) aren't getting hit.
Who else is taking action to make sure it's not Amazon roadkill? I think Macy's (M - Get Report) is introducing a lot of fashion and sprucing up its stores to make sure it isn't left behind. But that's a work in progress. Childrens Place (PLCE - Get Report) has done a remarkable job as a category winner. It defeated Gymboree and is now the last man standing in the mall, thanks to the smart work by Jane Elfers, the unsung CEO. Elfers recognizes the more sizes the better, and given how quickly kids grow, unless you want to run to Kohl's all the time to return goods to Amazon, it really is easier to try them on.
I'm not giving up on Burlington (BURL - Get Report) , Ross (ROST - Get Report) and TJX (TJX - Get Report) given their model of selling marked-down merchandise below Amazon's price point. I wish Costco (COST) hadn't run so much as the card remains a giant bargain. And Home Depot (HD - Get Report) is all about the storms, Harvey and Irma. (TJX is part of TheStreet's Action Alerts PLUS portfolio.)
Of course, when you build up a full head of steam, as Best Buy (BBY - Get Report) did before its analyst meeting this morning, you run the risk of having the rug pulled out from under you if you go conservative, and that's exactly what they did.
And it's hard to be able to tell a good story if you sell food or drugs, which is why I gave up on Walgreens (WBA - Get Report) for my charitable trust and am not tempted to buy the stock of CVS (CVS - Get Report) . Amazon's going to crush it in food and can go prescription, which is the bread and butter of the front and back of these stores.
Athletic apparel remains tough and I am not going to disagree with the now-frequent downgrades of Nike (NKE - Get Report) and Under Armour (UAA - Get Report) or the pancaking of the stock of Finish Line (FINL) .
But do not rule out the newfound alliances with Amazon or the more aggressive style of those we think are being left behind, including, by the way, Walmart (WMT - Get Report) with its Jet.com. It's not over until the fat lady sings, and I am not hearing anything from her yet, that is if there's ever going to be a song at all.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long TJX.
Originally published Sept. 19 at 1:03 p.m. EDT.
Jim Cramer: Northrop-Orbital Deal Is Bigger Than Just the Synergies
We yawned when Northrop Grumman bid for Orbital ATK (OA) as if was good for Northrop but no more than that.
The synergies are pretty obvious. The possibilities for Northrop Grumman and the potential to bid on new contracts it didn't have could be enormous.
No wonder the stock went higher.
But the one thing that wasn't mentioned was antitrust. Nobody said "you know what, this makes it so there are fewer competitors that could bid and drive down the price of important military equipment." It would almost sound like Pollyanna goodie-two-shoes kind of talk if someone did.
That's amazing, because a year ago, I don't think this deal would have gone through -- and if Hillary had won, I don't think the two companies would even entertain it. Not any more than United Technologies (UTX - Get Report) would be able to buy Rockwell Collins (COL) to eliminate a potential competitor in some key portions of the airline business.
Now, there's not been much done between the White House and Congress. It's been pretty rancorous, and the latest posturing -- the sitdown between the President and Nancy Pelosi and Chuck Schumer -- is still one more gambit that could sour things within the Republican party. The repeal and replace horror show waste of time, the border tax fiasco, these are all distractions from two parts of the agenda that we would have expected by now -- tax reform and repatriation.
But one thing is for certain, the Congress is doing nothing to stop deals that at another time wouldn't have been proposed because they would have been opposed by the Justice Department's antitrust division simply because of market power concentration.
Ideally you want Northrop to compete with Orbital on contracts. Sure, they don't now, but why couldn't they if Northrop wanted that business so badly? You think that the government would want United Tech to own a huge part of the plane to the point where it can be too powerful a supplier and box out, say Honeywell (HON - Get Report) ? The old government would find a reason because it hated big business. This government would bless anything, even the tie-ups between the health maintenance organizations and the aborted Baker Hughes-Halliburton deal.
I think that between here and year end, the notion that deals will get done without any repercussions or opposition from the Justice Department is going to be a hallmark of the stock market. Yesterday on Halftime with Scott Wapner, I was asked by my friend Pete Najarian why there was huge call volume in T-Mobile (TMUS - Get Report) stock. The answer? Because anyone in the industry could buy them and I think it would be allowed. Why not? This Justice Department has shown no resistance whatsoever, no more than it is showing to the ATT (T - Get Report) -Time Warner (TWX) deal, even as the President said he wanted to block it. Remember that campaign promise?
Yes, there may not be big legislative changes. But when it comes to deregulation and corporate America, the changes are real. And they are spectacular if you are a bull looking for ideas.More From Jim Cramer
Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.
Originally published Sept. 19 at 7:03 a.m. EDT.
Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- How Hurricane Irma and Hurricane Harvey busted the algorithms.
- How, under the Trump administration, some deals are probably done deals Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's--and reader comments--in real time.