Earnings season is always the time when winners separate from losers, but Jim Cramer told Mad Money viewers on Wednesday that some companies deserve the edge of doubt.
Case study: Netflix (NFLX) – Get the report, which reported weaker-than-expected results that included a slowdown in subscriber growth. When asked about this in conference calls, management explained that yes, growth is slowing after a huge rise at the start of the pandemic.
While many investors rushed to sell the news, Cramer said he took the other side of the trade and gave Netflix the benefit of the doubt.
Seeing a slowdown after the pandemic doesn’t make Netflix a bad company, especially considering how little new content came out in 2020. It will only take one or two hit movies to rekindle growth. .
Cramer noted that all actions of FAANG (acronym for Cramer for Facebook) (FB) – Get the report, Amazon (AMZN) – Get the report, Apple (AAPL) – Get the report, Netflix and Alphabet (GOOGL) – Get the report) deserve the advantage of doubt. Amazon continues to innovate, like Wednesday’s announcement of touch payments to Whole Foods. Apple continues to diversify its non-iPhone products, which according to smart analysts will increase Mac sales in the long run.
Thus, while investors use a “share sum” analysis to value Google, Cramer said it gave that company the advantage of the doubt. Because? Because they have earned it.
Cramer and the AAP team are looking from earnings and politics to the Federal Reserve. Find out what they tell members of the investment club and join the conversation with a free trial subscription to Action Alerts Plus.
Executive decision: Qualtrics International
In his first segment of “Executive Decision,” Cramer spoke with Zig Serafin, CEO, and Ryan Smith, founder and CEO of Qualtrics International. (XM) – Get the report, the experience management platform with shares of 12.7% for the year, ahead of Wednesday’s strong earnings announcement.
Serafin said Qualtrics has just completed a record quarter that included 120% net retention as customers expand their use of the Qualtrics platform. For a growing number of companies, an experience management platform becomes as critical as their customer relationship and human resource platform.
Smith added that not only companies have to offer fantastic experiences, but governments as well. That’s why the state of Missouri uses Qualtrics to gather valuable feedback on its vaccine distribution program.
Using Qualtrics, companies like United Parcel Service (SAI) – Get the report has been able to provide its customers with better experiences while Royal Caribbean Cruises (RCL) – Get the report he has been able to ask his guests how they would like the cruise ships to return after the pandemic.
Executive decision: Marvell Technology
For his second segment of “Executive Decision,” Cramer also spoke with Matt Murphy, president and CEO of Marvell Technology Group (MRVL) – Get the report, the semiconductor maker with shares that rose 3.5% on Wednesday when the company closed on acquiring Inphi. Marvell is currently involved in Action Alerts PLUS.
Murphy said he is delighted to finally have Chinese approval to close the acquisition of Inphi. He said the merger combines two large companies.
When asked about the state of the semiconductor market, Murphy confirmed the imbalance between supply and demand, noting that the demand for proprietary chips has never been so strong. He said the market continues to be driven by increased 5G wireless connectivity, cloud migration and strong innovation in the automotive sector.
Murphy also commented on Marvel’s long-term collaboration with Samsung. He said Marvel is a key provider for Samsung for many of its 5G wireless products and that its alliance remains very strong.
Executive decision: PPG
For his latest segment of “Executive Decision,” Cramer consulted with Michael McGarry, President and CEO of PPG Industries (PPG) – Get the report, the materials and coatings manufacturer that just posted a monster gain of 31 cents per share that caused shares to rise 2.7% at the close. PPG shares are now up 20% for the year.
McGarry said PPG continues to make selective acquisitions that make sense. The company has completed six in the last 18 months. He said many of these acquisitions have better returns than a simple repurchase of shares.
Simply, “We’re very good at this,” McGarry added. Many of its recent acquisitions in Europe, for example, had no presence in Asia or China. But PPG was able to quickly use its resources to instantly expand into these regions.
The PPG is on a lot of things I wouldn’t think of, McGarry said. Its home appliance business grew 14% in the last quarter and sales have risen, from electronics to kitchen utensils. His company also has a strong military business that accounts for a third of PPG sales.
Finally, McGarry noted that electric vehicles are a great opportunity for PPG. Battery boxes need paint as well as stickers and sealants, he said. They also require protective coatings, thermal gap fillers and other materials.
Cramer said PPG is a real company with real profits and real growth.
Where are the bargains
In his “No Huddle Offense” segment, Cramer spoke of those who believe the stock market is dangerous. While there are many reasons to worry about SPAC, NFT and meme values, there are plenty of stocks that are still on offer.
Take, for example, the ongoing bidding war for the Kansas City Southern Railroad (KSU) – Get the report. He said sometimes companies are willing to pay a lot more for a company than the market, and Kansas City Southern proves it.
Round Lightning
Here’s what Cramer said about some of the actions callers offered during the “Mad Money Lightning Round” Wednesday night:
Snap (SNAP) – Get the report: “I think they will have a great room with fantastic growth.”
Regal-Beloit (RBC) – Get the report: “This company is fantastic and I’m not talking about it enough.”
Boston Scientific (BSX) – Get the report: “This is fantastic, surgical intuitive (ISRG) – Get the report it’s fantastic and so is Edwards Lifesciences (THAT) – Get the report and Medtronic (MDT) – Get the report. “
Cleveland-Cliffs (CLF) – Get the report: “The Chinese spend iron ore and that’s a winner of my book.”
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At the time of publication, Cramer’s Action Alerts PLUS had a position on FB, AMZN, AAPL, GOOGL, MRVL.