- ChannelAdvisor and Hewlett-Packard; and
- the latest game plan.
Two Tech Stocks Explain This Market Posted at 3:31 p.m. EDT on Thursday, May 23 ChannelAdvisor ( ECOM) and Hewlett-Packard ( HPQ), the two standout names today, represent polar opposites, and yet both are up big today, a phenomenon that explains a lot of this market's innate strength. Most market participants thought that Hewlett-Packard would be a disaster, given the rapid secular decline of the personal computer and the hideous results of competitor Dell ( DELL). Instead we got the opposite, a totally solid positive-cash-flow quarter that showed a dramatic improvement in the balance sheet and a nice bump in the dividend. None of this was expected. Consequently, Hewlett has rallied significantly, something that makes a ton of sense, because the issue of the company's viability, which was in question not that long ago, has been taken off the table entirely. CEO Meg Whitman has reined in expenses, improved supply-chain management and billing and is doing much more with far less.
All that said, though, the revenue for just about every single line item was horrendous, particularly personal computers, which were down 20%. I like the lineup of new personal computers, which includes new form factors with Android operating systems and ARM Holdings ( ARMH) chips instead of the usual Microsoft ( MSFT) software and Intel ( INTC) Inside semiconductors. Still, as David Faber stated this morning, there's no doubt that the personal computer market could be shrinking right before our eyes, with no conceivable turn in sight. In short, Hewlett-Packard, a once-great growth company, is now a cash cow without the kind of sales boom that the market ultimately wants. Hewlett is a quintessential value play, and if we don't get world economic growth, it will be the quintessential value trap. We will look back and say it was down 44% in 2012 because it looked like the company was doomed but bounced back 40% for the year so far because it's not going out of business. Of course, a stock that plummets 44% then rallies 40% is far from back to even, but it's still something worth writing home about.
So why was it loved? Why did it go to a premium immediately? Because ChannelAdvisor has growth, specifically accelerating revenue growth, as it offers solutions to 27% of the top Internet retailers that help them get the most out of their ads on Google ( GOOG), Groupon ( GRPN), Yahoo! ( YHOO), Bing, eBay ( EBAY) and Amazon ( AMZN). You want to see ChannelAdvisor's handiwork? Go to eBay's men's clothing section, as you might want to do for Father's Day. Then go to men's suits. Notice that Jos. A. Banks ( JOSB) ad to the right, the one that's offering suits for as low as $99? That's ChannelAdvisor's client, which pays ChannelAdvisor a subscription fee to manage the ad and a revenue share if the sales perform above expectations.It's a growth business. In fact, it is such a growth business that unlike Hewlett-Packard, which is returning its money to shareholders, it's seeking as much money as possible to be able to build up its sales force and build out its infrastructure to take advantage of the moment, as it is the dominant cloud play for retail sales.Now I hope you recognize how a money-loser like ChannelAdvisor can roar on the same day as a moneymaker like Hewlett-Packard. It's all about growth and value, both of which satisfy the needs of today's bipolar investment styles. At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long EBAY.
People Are Losing It Posted at 3:27 p.m. EDT on Wednesday, May 22 So, rates are going higher and we have to sell everything that's rate sensitive. That's the game plan. Or is the game plan to sell stuff that's been up a lot because it's a good thing to take profits? Or is the game plan to just go along with the futures selling because you never know what the Fed is going to do.
Give it some room. Most stocks are up so much you just ruin your basis if you buy here. But there are plenty of stocks that are pulling back hard that I like, stocks like Joy Global ( JOY) and Vale ( VALE), because they haven't moved yet. There's a stock like EOG ( EOG), which is getting crushed or Wells Fargo ( WFC), which is giving you still one more chance to get in. Plenty to look at and start bidding for, but let's get some of these summer soldiers -- who have never experienced any pain -- to bolt before putting any serious capital at risk here because they create the best bargains in their own panic.