Earnings season is always when the winners get separated from the losers, but Jim Cramer told his Mad Money viewers on Wednesday that some companies deserve the benefit of the doubt.
Example: Netflix (NFLX) – Request report, which reported weaker than expected results, including a slowdown in subscriber growth. When asked during conference calls, management explained that growth is indeed slowing after a massive wave at the start of the pandemic.
While many investors were quick to sell the news, Cramer said he is taking the other side of the trade and giving Netflix the benefit of the doubt.
Seeing a slowdown after a pandemic doesn’t make Netflix a bad business, especially considering that little new content was produced in 2020. It doesn’t take more than one or two blockbusters to rekindle growth.
Cramer noted that all shares of FAANG (Cramer’s acronym for Facebook (FB) – Request report, Amazon (AMZN) – Request report, Apple (AAPL) – Request report, Netflix and Alphabet (GOOGL) – Request report) deserve the benefit of the doubt. Amazon continues to innovate, such as Wednesday’s announcement of touch payments to Whole Foods. Apple continues to diversify its non-iPhone products, something the savvy analysts say will drive Mac sales in the long run.
So while investors use “sum-of-the-parts” analysis to value Google, Cramer said he gives that company the benefit of the doubt. Why? Because they deserve it.
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Executive decision: Qualtrics International
In his first “Executive Decision” segment, Cramer spoke with Zig Serafin, CEO, and Ryan Smith, Founder and Executive Chairman of Qualtrics International (XM) – Request report, the experience management platform with stocks up 12.7% for the year, ahead of Wednesday’s strong earnings announcement.
Serafin said Qualtrics just completed a record quarter with 120% net retention as customers expanded their use of the Qualtrics platform. For a growing number of companies, an experience management platform is becoming just as important as their customer relationship and workforce platform.
Smith added that not only do businesses need to deliver great experiences, but governments too. That’s why the state of Missouri uses Qualtrics to gather valuable feedback on their vaccine distribution program.
With the help of Qualtrics, companies love United Parcel Service (UPS) – Request report has been able to offer their customers better experiences, while Royal Caribbean Cruises (RCL) – Request report asked their guests how they would like to see post-pandemic cruises return.
Executive decision: Marvell Technology
For his second “Executive Decision” segment, Cramer also spoke with Matt Murphy, President and CEO of Marvell Technology Group (MRVL) – Request report, the semiconductor maker with shares that rose 3.5% on Wednesday when the company closed its Inphi acquisition. Marvell is currently an Action Alerts PLUS holding.
Murphy said he is pleased to finally have Chinese approval to complete the Inphi acquisition. He said the merger combines two great 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 stronger. He said the market is still driven by a surge in 5G wireless communications, cloud migration and strong innovation in the automotive sector.
Murphy also commented on Marvell’s longstanding partnership with Samsung. He said Marvell is a major supplier to Samsung for many of their 5G wireless products and their alliance remains very strong.
Executive decision: PPG
For its latest Executive Decision segment, Cramer audited Michael McGarry, Chairman and CEO of PPG Industries (PPG) – Request report, the materials and coatings manufacturer that just posted a monstrous profit of 31 cents a share, pushing shares up 2.7% at close. PPG shares are up 20% this year.
McGarry said PPG will continue to make selective acquisitions that make sense. The company has completed six in the past 18 months. He said many of these acquisitions yield better returns than a simple share buyback.
Simply put, “We’re very good at this,” added McGarry. For example, many of their recent acquisitions in Europe were not present in Asia or China. But PPG was quickly able to use their resources to expand into those regions immediately.
PPG is in a lot of things you wouldn’t think about, McGarry said. Their appliance business grew 14% in the quarter and sales were up in everything from electronic materials to kitchenware. His company also has a strong military business, which accounts for a third of PPG’s sales.
Finally, McGarry noted that electric vehicles represent a huge opportunity for PPG. Battery boxes need paint, as well as adhesives and sealants, he said. They also need protective coatings, thermal gap fillers and other materials.
Cramer said PPG is a real company with real revenue and real growth.
Where the bargains are
In his “No Huddle Offense” segment, Cramer spoke of those who believe the stock market is dangerous. While there are plenty of reasons to be concerned about SPACs, NFTs, and meme shares, there are plenty of stocks that are still bargains.
Take, for example, the bidding war that is going on for the Kansas City Southern railroad (KSU) – Request report. He said that sometimes companies are willing to pay a lot more for a company than the market, and Kansas City Southern has just proved that.
Here’s what Cramer had to say about some of the stocks that callers were offering during the “Mad Money Lightning Round” Wednesday night:
Snap (SNAP) – Request report“I think they will have a great quarter with fantastic growth.”
Regal-Beloit (RBC) – Request report: “This company is fantastic and I don’t talk about it enough.”
Boston Scientific (BSX) – Request report: “This is a great, intuitive surgical procedure (ISRG) – Request report is great and so is Edwards Lifesciences (THAT) – Request report and Medtronic (MDT) – Request report. “
Cleveland-Cliffs (CLF) – Request report: “The Chinese spend on iron ore and this is a winner in my book.”
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At the time of publication, Cramer’s Action Alerts PLUS held positions in FB, AMZN, AAPL, GOOGL, MRVL.