For weeks now, the bears have been telling us the positive effects from tax reforms were already baked into stock prices. But Jim Cramer told his Mad Money viewers Wednesday that nothing could be further from the truth, as we saw no less than 29 upgrades today alone.
Nobody expected the Republican tax plan to actually pass, Cramer told viewers, which is why analysts are now scrambling to raise their estimates on just about every domestic company that pays high tax rates. That explains the action in Dave & Busters (PLAY) , up 2.5%, Dick's Sporting Goods (DKS) , up 2.6%, and Ulta Beauty (ULTA) , up 6.7%.
Many bears trumpeted that tax cuts would only result in buybacks and dividend boosts. But Cramer said he's hearing from CEOs that hiring is on the way too, as are investments in capital equipment now that more favorable tax rules are in place for such expenditures.
That's how a company like Dominion Energy (D) could make a bid for Scana (SCG) and offer to pay Scana customers $1,000 each as an apology for rising rates. Even with the huge payout, the deal is still immediately additive to Dominion's bottom line.
Cramer and the AAP team look at what's happening with Apache (APA) and Nvidia (NVDA) . Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts PLUS
Dogs of the Dow
What should investors do with the so-called "Dogs of the Dow"? Cramer looked at the five worst performers in the Dow Jones Industrial Average from last year to offer his take.
Coming in at No. 5 was Verizon (VZ) , down 0.8% in 2017. Cramer said he's not crazy about Verizon, but investors could do a lot worse than the stock's 4.5% yield.
No. 4 was Merck (MRK) , which saw shares fall 4% last year as investors fled big pharma in favor of faster growing stocks. No. 3 was ExxonMobil (XOM) , the big oil giant that tanked 7%. Cramer said he's not really a big fan of these stocks either, as they lack the growth that investors crave. Cramer liked Magellean Midstream Partners (MMP) in the oil sector.
In the runner-up slot was IBM (IBM) , which also fell 7% in 2017. Cramer said while IBM is reinventing itself, that reinvention can't come fast enough. He remained bullish on the stock however.
Finally, there's General Electric (GE) , which fell a staggering 45% in one of the best economies we've seen in ages. GE needs to make changes, and fast, Cramer said, which is why he's taking a wait-and-see approach before weighing in.
Over on Real Money, Cramer talks about the memory lapse that's a big part of this spectacular rally. Get more on his insights with a free trial subscription to Real Money.
Survivors at the Shopping Mall
If mall-based retail is supposedly dead, no one told Children's Place (PLCE) , the kids' apparel retailer with shares that rocketed up 45% in just the last 10 weeks of 2017 and have tripled since their lows two years ago.
Children's Place operates over 1,000 locations in the U.S. and Canada as well as another 168 overseas. The company is, first and foremost, a turnaround story, Cramer said, thanks to CEO Jane Elfers and activist investors.
The company has closed underperforming locations and added a new inventory system that has allowed it to operate with a precision it previously didn't have. When Children's Place last reported in November, it delivered a 5.1% increased in same-store sales and a top- and bottom-line beat.
More importantly, kids clothing is largely Amazon-proof (AMZN) , as kids grow so quickly, trying on clothes is almost an imperative.
Shares of Children's Place trade at just 18 times earnings and Cramer said with Elfers at the helm, he expects them to continue heading higher.
Executive Decision: Mindbody
For his first "Executive Decision" segment of the year, Cramer once again sat down with Rick Stollmeyer, chairman and CEO of Mindbody (MB) , the business management software provider for the fitness industry.
Stollmeyer said that just about everyone makes new year's resolutions to get and stay healthy and Mindbody helps make that happen by connecting gyms and spas to the largest audience possible. The company's platform allows customers to book classes themselves and offers dynamic pricing to ensure that every spin bike and yoga mat is occupied at the best possible prices.
Mindbody currently boasts over 6.8 million users on their platform. The company makes money from selling subscriptions to wellness centers and taking a small fee of every transaction that occurs. Stollmeyer said Mindbody was international almost from inception, but continues to invest both domestically as well as overseas.
In his "No-Huddle Offense" segment, Cramer said you can tell a lot about a market by how it handles bad news. In a normal markets, negatives tend to linger, but in today's market, bad news is processed and quickly forgotten.
Investors are always looking for bargains, and they're finding them in stocks like Wells Fargo (WFC) . Despite admissions of creating false accounts, investors are looking forward towards multiple Federal Reserve rate hikes.
Steelmaker Nucor (NUE) has seen three earnings shortfalls in a row, but investors are counting on infrastructure projects and new tariffs to lift shares. Those same investors have all but forgotten shipping delays at UPS (UPS) a few weeks ago and sent shares to new all-time highs today.
When bad news is seen as a buying opportunity, that's a sign of a strong bull market.
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