Follow the fundamentals and use any weakness in high quality stocks as a buying opportunity, Jim Cramer told his Mad Money viewers Friday, as he laid out his game plan for next week's action. Despite the "sky is falling" attitude of some investors, eventually the positives prevail and good things do happen.
Cramer's game plan started on Monday with the Equifax (EFX) analyst meeting. Despite this company's monumental data breach, shares are recovering, and if the company tells a good story, they'll recover even more.
Wednesday brings earnings from Signet Jewelers (SIG) , a company that's been a mess lately. Cramer said it's too early to bet on a turnaround. Also on Wednesday, there's Williams-Sonoma (WSM) , which should see strong sales.
Then on Thursday we can expect earnings from Dollar General (DG) , Adobe Systems (ADBE) , Ulta Beauty (ULTA) and Broadcom (AVGO) . Cramer said he'd consider Dollar General on weakness, but is super excited for Adobe. Ulta remains a battleground, which led Cramer to recommend Estee Lauder (EL) . He continued to be a fan of Broadcom over the long term.
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Treat Supermarkets With Caution
Sometimes, the stock market can get too negative, but it can also get too positive as well. That's the only way you can explain the rise of supermarket chain Kroger (KR) from $21 a share in October to $31 a share at the end of January on absolutely no news. It's almost as is investors forgot that Kroger competes with not only the likes of Amazon (AMZN) , but also several new entrants into the grocery space.
That's why this week's 11.9% plunge in the stock should have come as no surprise. Gross margins fell hard during the quarter and they're likely to get worse before they get better, as management indicated they will not lose on price.
Cramer said that translates to a price war that Kroger simply cannot win and one that will hurt the entire industry. Kroger has a unionized workforce. Amazon does not.
Cramer said he'd treat the entire sector with caution and fear and he'd take a hard pass on Kroger in particular.
On Real Money, Cramer says he thinks this time the analysts have pretty much had it with Kroger's promises. Get more of Cramer's insights with a free trial subscription to Real Money.
A Surprise from Axon
Some stocks don't get the attention they deserve. Take Axon Enterprise (AAXN) , formerly known as Taser, which rocketed up 28% this week on stunning earnings of 13 cents a share, when analysts were expecting a loss.
Axon got its start as a maker of stun guns, thus its original name, Taser. But soon the company diversified into body cameras for law enforcement and more importantly, the software and services that go with it. The latter part is important, as hardware sales were initially choppy. Axon soon pivoted hard into software, even going so far as giving away its cameras for free and making its money from the services that go with them.
That strategy, initially panned by analysts, is now paying off in a big way, as evidenced by this quarter's surprise earnings. Cramer said while shares trade at 100 times today's earnings, given the company's growth rate, they are actually cheap at 29 times 2020 estimates.
Executive Decision: GTT Communications
For his "Executive Decision" segment, Cramer sat down with Rick Calder, president and CEO of GTT Communications Inc. (GTT) , the broadband provider that has seen its shares rise 1,584% over the past five years.
Calder explained that GTT connects businesses to the cloud with simplicity, speed and agility that the big incumbent players like AT&T (T) cannot match. Their network, leased from other providers, does not require big capital expenditures, and that results in terrific cashflow for the company.
Calder said they're playing in a $400 billion market but have less than 1% market share, leaving lots of room for growth. The company is outpacing the size of their sales team and GTT is hiring salespeople as fast as they can.
Cramer reiterated that GTT is a terrific story that you probably have never heard of, unless you're a regular viewer of "Mad Money."
Cramer Does His Homework
In his "Homework" segment, Cramer followed up on a few stocks that had stumped him during earlier shows. He said that BGC Partners (BGCP) is still suffering under the weight of its real estate spinoff in December, of which BGC still owns 85%. Cramer said he'd rather own Goldman Sachs (GS) .
After looking into laser-based manufacturing company Electro Scientific (ESIO) , Cramer said this company is suffering from great expectations from analysts. He preferred to take the easy money in Applied Materials (AMAT) or Lam Research (LRCX) .
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