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The stock market may be out of the niche, but investors still hate FAANG shares, warned Jim Cramer. Crazy money viewers on Wednesday. Does this make them a buy? Cramer dived to find out.
Cramer said he was still an Apple fan (AAPL – Get Report), now that the latest iPhone, iPad and Apple Watches have been announced. Apple's shares trade at just 17.5 times earnings. He was also still a fan of Facebook (FB – Get Report), which can be criticized by regulators and politicians, but is still appreciated by users.
Alphabet (GOOGL – Get Report) is under control of antitrust violations, but at 22 times earnings, Cramer said these fears were probably exaggerated. However, with Netflix (NFLX – Get Report), the situation is getting worse. It's hard to evaluate Netflix in a world where everyone has their own streaming service.
Finally, there is Amazon (AMZN – Get Report), which can be despised by the White House, but is a huge deflationary force in our economy. Cramer also remained optimistic about Amazon. Cramer said you did not become a business as big as FAANG without doing something right, which is why they always buy everything, except for Netflix.
Cramer and the AAP team track their semiconductor stocks under the guidance of Marvell (MRVL – Get Report). Find out what they say to their investment club members and join the conversation with a free trial subscription at Action Alerts Plus.
Stocks that should be on your team
What fantastic football and actions have in common? Sometimes you can get a great player who is in a bind for a real deal. Cramer commented on Starbucks (SBUX – Get Report) after listening to the company's recent comments. He said Starbucks' operational growth rate remains intact and the stock is a good deal at current levels.
Cramer was also optimistic about VMware (VMW – Get Report) after talking to the company earlier this week. VMware shares rose 6% over the past week. Also on Cramer's Recurring List are Splunk Cloud Analyzer Provider (SPLK – Get Report), Shopify Trading Platform (SHOP – Get Report) and Chipotle Mexican Grill (CMG – Get Report), which are exchanged for a price well below what they are worth.
Interest for Pinterest
The market rotation has created some very good buying opportunities, such as Coxer (Pinterest) (PINS), which has reported exceptional profits, but has since seen its shares erase all of its gains after earnings.
Pinterest presents itself as a visual discovery engine and spends money to make a name for itself in the world of social media as a personal and friendly space to share and discover. At the same time, revenue per use increases, with the last company recording 88 cents per user, well above analysts' estimates of just 80 cents per user.
Cramer said Pinterest has a lot to like. Society has no hype about it, as Snap (SNAP – Get Report) did when it went public. Pinterest is very non promotional. This is also increasing its user base at a time when many other platforms have stabilized. Pinterest also offers many benefits to advertisers because Pinterest users are already looking for new ideas and new products. Finally, Cramer said that Pinterest is just a nice place to live, without the nastiness and controversy of all other social platforms.
For all these reasons, Cramer stated that Pinterest was a purchase. He would be a buyer of any weakness and buy more when the insider lock-up period expires next month.
In real money, Cramer takes a closer look at the excellent shares currently on sale. Get more of his ideas with a free trial subscription to real money.
Retail remains risky
Many failed retailers have managed to make a step back recently, but Cramer urged viewers not to be misled. With regard to retail, it's still a very dangerous place.
This year again, many retail bankruptcies have occurred, including Gymboree, Diesel, Payless Shoes and Barney's New York. Still others, like J. Crew and Neiman Marcus, are at stake. What is the common denominator? Cramer said they had all recently had private equity-backed IPOs, which had indebted them. It's hard to revitalize your online operations and stay competitive when you're in debt.
However, not all private equity deals are bad, as Cramer noted that Dollar General (DG – Get Report) and Burlington Stores (BURL – Get Report) were recent successes.
Cramer warned of two other distressed retailers, Michaels (MIK – Get Report), the craft retailer, and Party City (PRTY – Get Report). In particular, he advised using the recent strength of Micheals to sell, the rebound probably being only a slight tightening.
A broken stock, or a broken company?
Cramer told viewers that it's important to know the difference between a broken stock and a broken company. A broken stock can be fixed, but a broken company can be dangerous for your portfolio. Back on August 1st, Square payment processor (SQ – Get Report) shares traded for $ 83. A few days later, they dropped to $ 59 a share. Is diving an opportunity to buy or a warning sign?
Cramer said Square is a profitable business. Payment processing is only gaining popularity as every trader goes digital and Square presents the added benefit of Square Capital, where he uses what he knows from merchants to make loans that he can. no other lender can consent.
So, what is the reason for the recent collapse of the title among investors? Cramer said Wall Street seemed fed up with the company's poor comments and advice after every earnings report, regardless of the quality of the report. He also disagrees with the apparently part-time status of CEO Jack Dorsey, who runs Square and Twitter (TWTR – Get Report).
But after two recent updates from smart analysts, Cramer said he was siding with the bulls when it came to Square. The company has a long-term growth rate of 46%, which justifies the price of its share of 8.3 times its turnover. The company still has a lot to do in terms of growth. As for payments, size and execution, Square continues to deliver.
Lightning Tower
In the Lightning Round, Cramer was optimistic for Pilgrim's Pride (PPC – Get Report) and Rio Tinto (RIO).
Cramer was bearish on Sarepta Therapeutics (SRPT – Get Report), MGP Ingredients (MGPI – Get Report) and Occidental Petroleum (OXY – Get Report).
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