Jim Cramer knows the word „tech“ has rattled the Street lately, but thinks one stock could offer a safe haven when the tides change.
As sellers continued to drive technology stocks lower on Thursday, Jim Cramer wanted to right the record and make the case for the sector and its leading players.
„If the stock market sentiment switches, then I think you’ll recognize that Alphabet’s giving you the consistency that Nike or Kroger used to give us at a very inexpensive price, “ the “ Mad Money “ host said. „Is Alphabet a bargain? Yes, if it can deliver on the numbers in 2018 and 2019.“
Cramer said he felt the same way about Facebook and consumer tech giant Apple, both of which he said are riding many different, reliable trends.
„Remember that while ‚tech‘ has become a curse word of late, there’s a reason why so many clamor for it and come back to it in the end: earnings, solid, raw, organic earnings, the type you don’t get shortfalls from, the type you get upside surprises from, “ he said.
Then, Cramer sat down with Mark Siegel, the chairman of oil field services player Patterson-UTI Energ y, for his take on the industry given the decline in oil prices.
Siegel said that his company, which works primarily with on-shore drilling, has been increasing its rig count. That typically drives oil prices down, but the chairman contended that it serves on-shore oil companies well.
„We’ve had 12 consecutive months of increases in rig count despite oil prices, as you say, being a little bit soft, “ he told Cramer on Thursday. „So the reason is that the people who produce oil in the mid-continent and the Permian Basin – they figured out how to be economic at these kinds of prices. And for us, on-shore, $50 is the new $80.“
In fact, declining oil prices do not affect Patterson’s business as drastically as they do with off-shore and international drilling companies, Siegel said.
„We’re kind of in a Goldilocks position, and the Goldilocks position is between $45 and $55 for oil prices. Quite frankly, it’s not so good for off-shore, it’s not so good for international, but it’s pretty darned good for people who are in the on-shore business in the regions of the mid-continent and the Permian, “ Siegel told Cramer. „If it’s between $45 and $55, we’re going to do just fine.“
When a small-capitalization stock that has been downtrodden for months starts to see a turnaround, Cramer takes notice.
That is why the „Mad Money“ host decided to look into the business behind Rent-A-Center, a chain that sells consumer goods like appliances, computers and furniture on a rent-to-own basis, where customers pay off the cost of the merchandise they take home in installments.
„Rent-A-Center’s stock is down 70 percent from its all-time high set nearly four years ago, and that attracted me. But lately it’s begun to bounce and bounce hard, so this could be interesting. Right now, the stock’s up 8 percent year-to-date. It’s rallied more than 50 percent from its 52-week low back in January, “ Cramer said.
Following that, Cramer wondered if the bounce is sustainable and presents an investment opportunity or if the company is truly in dire straits.
Finally, after supermarket giant Kroger cut its guidance for 2017 and saw its stock nosedive nearly 19 percent on Thursday, Cramer took it as yet another segment of retail becoming a risky investment.
„Let it be duly noted that after today, the grocery business has now become no better than department stores as a place to invest, “ he said. „That’s right, after the horrendous forecast cut by the largest supermarket chain in the country, Kroger, one that drove the stock down almost 19 percent, we have now officially come to still one more un-investable space in the retail business.“
Cramer said that he did not want to blame Kroger for its decline, calling it a „fantastic company“ that excels at what it does.
„But after listening to today’s conference call, one can only conclude that supermarkets are now in one gigantic race to the bottom and no one come out unscathed, perhaps least of all Kroger, “ the „Mad Money“ host said.
Micron Technology: „We’re going to have a good quarter. People think it’s the last good quarter. I’d prefer for you to be in Western Digital, which my charitable trust owns, because I think Western Digital has some upside from this Toshiba [fracture] , where they just, amazingly, went for a restraining order. If they get it, then I think that Toshiba has no choice but to flip that huge flash business to Western Digital and the stock will go right to $100. More upside to WDC than there is to MU.“
Sirius: “ Pandora is a sell and Sirius is a buy. Sirius, once again, took advantage of its unbelievable balance sheet and management and did that deal with Pandora. I think Sirius is very good at stall. What happens [is] it goes up, and then it stalls, goes up, then it stalls. That’s where it is right now. I like it.“
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