As shares of Alphabet soared in after-hours trading after the Google parent reported a second-quarter earnings beat, CNBC’s Jim Cramer was heartened by the stock’s flight higher.
“There’s just a ton to like about this company, which managed to reverse a niggling trend towards sliding down the day after it reports,” the “Mad Money” host said on Monday.
Among Alphabet’s “big wins” were deals with cloud-savvy companies like Domino’s and Target, a lack of China-related weakness and strength in its international markets, Cramer said.
“It looks like Alphabet’s business is so strong that we don’t have to fret as much as some thought about the $5 billion fine recently handed down by the EU,” he said, noting that “European business, by the way, was incredibly strong.”
“I think [the fine] might’ve been actually helped,” he added. “I think they may be the big winner because of GDPR, that privacy standard that played out in Google’s favor.”
But not all was rosy in Monday’s trading session. Trade war fears lingered, so Cramer took to the tape to explain how Trump’s tariff debacles could actually help stocks. Read his analysis here.
Fantasy role-playing board game “Dungeons & Dragons” is seeing its best year ever, Hasbro Chairman and CEO Brian Goldner, whose toy and game maker owns the brand, told CNBC on Monday.
“People are more into ‘Dungeons & Dragons’ today than ever before,” Goldner told Cramer in an exclusive interview. “People are re-engaged with that brand because it’s a face-to-face game, it’s immersive and it’s a game that people really enjoy playing with one another.”
The double-digit new user growth could have in part been spurred by Netflix’s nostalgic, 1980s-set hit drama “Stranger Things,” in which the characters play “Dungeons & Dragons.”
But the surge in popularity of both “Dungeons & Dragons” and fellow high-fantasy game “Magic: The Gathering” seem to be part of a broader, longer-term trend of interest in immersive and online gaming.
“We just announced this afternoon that there’ll be a crossover between ‘Dungeons & Dragons’ and ‘Magic: The Gathering’ in the fall, and I think our fans and gamers are going to be very excited about what’s coming,” the CEO said.
When spices and flavorings manufacturer McCormick acquired Frank’s RedHot and French’s mustard from consumer goods giant Reckitt Benckiser a year ago, the purchase was met with little fanfare and some criticism from Wall Street.
But McCormick Chairman, President and CEO Lawrence Kurzius saw it differently, he told CNBC on Monday.
“One of the things we said when we bought these brands was that these were fantastic food brands that were trapped at a non-food company,” Kurzius told Cramer in an interview. “You put them into our business; we’re the experts in flavor, we’ve gotten tremendous placement in restaurants, we’ve been able to expand at the shelf. It’s really been good for us.”
McCormick’s second-quarter earnings report managed to sway once-doubtful investors as well. The double-digit sales and profit growth helped the spice maker’s stock surge nearly $10 per share on the day of the report.
Kurzius added on Monday that if investors had taken Cramer’s advice and bought McCormick’s stock after Kurzius’ year-ago appearance on “Mad Money,” they would’ve beaten the S&P 500 by 10 basis points.
Cramer’s always telling individual investors that if they want to know their holdings, they need to listen to the post-earnings conference calls.
But he knows that good conference calls aren’t always easy to spot. So he decided to backtrack to last Wednesday, when Abbott Laboratories, a Cramer-fave pharmaceutical company, delivered the best conference call he’d heard in ages.
“The reason why Abbott’s stock shot to an all-time high last Wednesday before pulling back a couple of points was the conference call,” he said. “[CEO] Miles White literally put on a clinic in how to orchestrate a conference call.”
Cramer’s favorite part was when a top industry analyst asked management if Abbott was planning on making any major changes to the health care giant’s portfolio.
White responded by laying out the company’s whole philosophy, saying its current structure was the result of “very deliberate shaping” and poised to “operate and execute well organically,” with the “single biggest opportunities … all in [Abbott’s] own pipelines.”
“What more can you ask for?” Cramer said. “White exud[ed] a quiet confidence as he laid out all of the reasons why he believes in the company’s growth targets. If you don’t own Abbott already, I’d be a buyer right here.”
Finally, Cramer zoomed in on a trend he sees bubbling up in this market: stock picking might be making a comeback.
“I’ve been investing for 36 years and for the vast majority of that time, we accepted that the market worked a certain way,” the “Mad Money” host said. The widely accepted idea was that half of a stock’s performance was tied to its broader sector’s performance, and the other half was tied to its own trajectory and how management led the company.
But with the rise of ETFs and index funds, all that has changed. Cramer has even seen some estimates that suggest 75 percent of trading is either automated or tied to ETFs, not individual stocks.
“However, something’s happened, really in just this quarter, that makes me think stock picking may be coming back into vogue. I’m talking about the widely disparate performances of stocks within the same sector,” he said, pointing to the stark differences in Schlumberger and Halliburton’s stock performances after their respective quarters.
“Management’s execution finally matters again,” Cramer said. “That means stock picking is, therefore, back in style.”
In Cramer’s lightning round, he flew through his take on callers’ favorite stocks:
The Estee Lauder Companies: “The stock has really been marking time since the last quarter because there were some very small things that were concerning to people. I think it is a buy. I think [CEO] Fabrizio Freda is doing a remarkable job and you should pick some up. It’s part of the selfie generation.”
Axon Enterprise, Inc.: “Oh, boy. We liked it in the $20s and the $30s and the $40s and the $50s. Look, I’m afraid to say ‘Continue to buy it up here’ because it’s at $75. We’ve been such stalwart supporters of it. I think now you’ve got to wait for a pullback. I can’t come in right now with guns blazing saying ‘Time to buy’ when I’ve been saying it’s time to buy for 50 straight points.”
Disclosure: Cramer’s charitable trust owns shares of Alphabet, Abbott Laboratories and Schlumberger.
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