Earnings season is always the time when winners separate from losers, but Jim Cramer told his Mad Money viewers on Wednesday that some companies deserve the benefit of the doubt.
Example: Netflix (NFLX) – Get the report, which reported poorer-than-expected results, which included a slowdown in subscriber growth. When asked about this at telephone conferences, management explained that yes, the increase is declining after a huge increase at the beginning of the pandemic.
While many investors rushed to sell the news, Cramer said he takes the other side of the deal and offers Netflix the advantage of the doubt.
Seeing a slowdown after the pandemic doesn’t make Netflix a bad company, especially given how little new content was produced in 2020. It won’t take more than a successful movie or two to renew growth.
Cramer mentioned that all FAANG shares (Cramer’s acronym for Facebook (FB) – Get the report, Amazon (AMZN) – Get the report, Apple (AAPL) – Get the report, Netflix and Alphabet (GOOGL) – Get the report) deserves the benefit of the doubt. Amazon continues to innovate, such as Wednesday’s announcement of tactile payments coming to Whole Foods. Apple continues to diversify its non-iPhone products, which smart analysts say will boost Mac sales in the long run.
So while investors use a “sum of shares” analysis to assess Google, Cramer said it gives that company the advantage of doubt. Why? Because they won it.
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Executive decision: Qualtrics International
In his first segment, “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 up 12.7% per year, ahead of Wednesday’s strong revenue announcement.
Serafin said Qualtrics has just completed a record quarter that included a 120% net withholding as customers expanded their use of the Qualtrics platform. For a growing number of companies, an experience management platform is becoming as critical as the customer relationship and human resources platform.
Smith added that not only companies need to offer great experiences, but also governments. That’s why Missouri is using Qualtrics to gather valuable feedback on their vaccine distribution program.
Using Qualtrics, companies like United Parcel Service (UPS) – Get the report managed to offer their customers better experiences while Royal Caribbean Cruises (Rd) – Get the report he was able to ask his guests how he would like to see cruises return post-pandemic.
Executive decision: Marvell Technology
For the 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 percent on Wednesday as the company closed on the acquisition of Inphi. Marvell is currently an Action Alerts PLUS.
Murphy said he is pleased to finally have Chinese approval to complete the Inphi acquisition. He said the merger combines two large companies.
When asked about the state of the semiconductor market, Murphy confirmed the supply-demand imbalance, noting that demand for proprietary chips has never been stronger. He said the market continues to be driven by the growth of 5G wireless, cloud migration and strong innovation in the automotive sector.
Murphy also commented on Marvell’s long-term partnership with Samsung. He said Marvell is a key provider for Samsung for many of their 5G wireless products and their alliance remains very strong.
Executive decision: PPG
For his final “Executive Decision” segment, Cramer audited Michael McGarry, President and CEO of PPG Industries (PPG) – Get the report, the manufacturer of materials and clothing that just recorded a monstrous gain of 31 cents per share that brought shares up 2.7% to close. PPG shares have now increased by 20% for that year.
McGarry said PPG continues to make selective purchases 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 share buyback.
“We are very good at this,” McGarry added. Many of their recent acquisitions in Europe, for example, did not have a presence in Asia or China. But PPG has managed to quickly use its resources to expand instantly in those regions.
“PPG is a lot of things you wouldn’t think of,” McGarry said. Their home appliance business grew 14% in the last quarter, and sales rose in everything from electronics to kitchen baking utensils. His company also has a strong military business, which accounts for a third of PPG’s sales.
Finally, McGarry mentioned that electric vehicles are a huge opportunity for PPG. Battery boxes need paint, as well as adhesives and sealants, he said. They also require protective coatings, thermal fillers and other materials.
Cramer said PPG is a real company with real revenue and real growth.
Where are the bargains?
In his “No Huddle Offense” segment, Cramer talked about those who believe the stock market is dangerous. Although there are plenty of reasons to worry about SPAC, NFT and meme stocks, there are plenty of stocks that are still bargains.
Take, for example, the ongoing bidding war for the Kansas City Southern Railroad (KSU) – Get the report. He said companies are sometimes willing to pay much more for a company than the market, and Kansas City Southern has just proven it.
Lightning round
Here’s what Cramer had to say about some of the callers’ actions during the “Lightning Crazy Round” on Wednesday night:
Snap (SNAP) – Get the report: “I think they will have a great quarter with fantastic growth.”
Regal-Beloit (RBC) – Get the report: “This company is fantastic and I don’t talk enough about it.”
Boston Scientific (BSX) – Get the report: “This is wonderful, surgically intuitive (ISRG) – Get the report it’s great and so is Edwards Lifesciences (THAT) – Get the report and Medtronic (MOT) – Get the report. “
Cleveland-Cliffs (CLF) – Get the 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 had a position in FB, AMZN, AAPL, GOOGL, MRVL.