Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Thursday, March 8.
Thursday was not a boring day despite how many might have seen. The market was filled with good news and new winners in an otherwise narrowing winner list. Stocks were going up for the right reasons and that is a good sign, according to Cramer.
The market had just been hanging on Qualcomm (NASDAQ:QCOM) – Broadcom (NASDAQ:AVGO) merger till the news of Cigna (NYSE:CI) buying Express Scripts (NASDAQ:ESRX) for $67B was out. The stock of Cigna went down 11%, which is more than what happens typically to an acquirer’s stock. Cramer is on the side of the deal and would recommend buying Cigna on weakness. “More important, the deal is good for the entire stock market,” said Cramer.
Healthcare stocks also rallied following Johnson & Johnson (NYSE:JNJ). Cramer said JNJ is a good stock with a great balance sheet and 2.5% yield. It was nice to see a new leadership group and he would be a buyer of JNJ. The consumer packaged goods stocks and casino stocks also saw positive action. The airline stocks had a good day with Southwest Airlines (NYSE:LUV) leading the pack.
“Today we got some new winners, which were sorely needed. We get a not-so-hot employment number tomorrow, not too hot, and we put the tariff talk behind us, and we can mount a real rally that so few expect,” concluded Cramer.
CEO interview – Thor Industries (NYSE:THO)
The stock of Thor Industries had a good run until January, after which it is $40 off its highs despite good earnings. Cramer interviewed CEO Bob Martin to know what lies ahead.
While many think that RVs do not for a part of a millennial bucket list, Martin thinks otherwise. “We’re getting younger people, we’re getting younger families, and I think, for us, it’s because we appeal not just to dad, or mom and dad, but we appeal to the entire family. Millennials are bigger than Boomers, so for us as a company, we’re starting to talk to them,” he said. The company is building smaller, more affordable travel trailers and motor homes to appeal to younger buyers.
Commenting on labor costs, he said that labor is tight in Indiana, but they are expanding in Idaho and Ohio to find the workers they need. Martin adds that he doesn’t run the company on quarterly basis but with a long-term view in mind. The labor costs and steel and aluminum tariffs will have little effect as they source their steel from the US.
Cramer continues to recommend Thor.
Though the automaker group looks cheap, it should not be a part of one’s portfolio, according to Cramer, who thinks automaker stocks are a value trap. He adds that theory of “peak autos” was put to rest after two hurricanes which would require people to buy new cars partly helped by insurance. However, the Feb auto sales numbers and Beige book showed that “peak autos” theory is still valid.
What could be the reasons for this? First, ride sharing has made traveling easy and affordable which makes owning a car not necessary. The consumer behavior is changing with car rides being available on the click of a button. This will get worse as autonomous vehicles will make ride sharing cheaper.
It’s not just ride sharing alone. Rising interest rates and tougher lending standards are making car loans expensive. Rising oil prices and steel and aluminum prices just adds to the dent. As the automaker margins squeeze, the trend is not in their favor.
Stay away from automaker stocks.
CEO interview – Martin Marietta Materials (NYSE:MLM)
As US focuses on infrastructure, aggregates supplier Martin Marietta Materials is at the center of it, being a big beneficiary. Cramer interviewed CEO Ward Nye to know what lies ahead.
Nye said even without the US infrastructure bill, the public business is increasing as states are picking up. The states are getting more projects and he expects the volume to rise 4-6% this year. Texas is a hot state with rising shale drilling and department of transportation expected to spend $70B on roads and bridges in the coming years. The company expects big business from them.
They also acquired the largest privately-held aggregates company, Bluegrass Materials, for $1.6B which adds to their business.
Cramer said the stock is too cheap reckoning how strong the business is.
Viewer calls taken by Cramer
Weight Watchers International (NYSE:WTW): The stock has moved up a lot and Cramer is not a fan. Book profits.
Kohl’s (NYSE:KSS): The stock is going down on profit taking. It’s a buy.
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