CNBC’s Jim Cramer on Thursday said that shares of FedEx have been tough to own as of late, but noted an optimistic sign in its recent stock activity.
The stock mustered a rally after the company reported mixed-quarterly results late last month. On the conference call, management told shareholders that the global economic slowdown has weighed on business and that it saw 2020 would be a transition year — one thing that investors do not like to hear. The whole transports sector has traded less than ideal on the market.
However, the stock rallied 2.5% the day after the June 25 earnings report, gained 2% the following day and has since climbed 4.2% as of Thursday’s close.
“This is a big deal. When a stock rallies on bad news, it’s often a sign that shares have finally bottomed,” the “Mad Money” host said. “At the very least, it usually means that most of the weak hands have been washed out.”
Cramer said investors who were looking for a bullish outlook had already cut the stock from their portfolios and that a realistic forecast induced a floor. If FedEx can deliver on future expectations, the stock will continue an upwards trajectory as demand grows.
And Cramer is not alone: Goldman Sachs on Wednesday issued a buy call on the shipping company and sees more than 20% upside for the equity.
“I admit that sounds flimsy, but historically it’s been a very effective way to spot bottoms,” he said. “At the same time, FedEx is dirt cheap historically as long as you believe the company can meet its own forecasts.”
“I think you can start buying FedEx right here,” he added. “If it goes back down, it’s so darned cheap that you can just buy more into weakness.”
Get his full thoughts here
A Walmart logo is displayed above the floor of the New York Stock Exchange shortly after the opening bell in New York, August 16, 2018.
Lucas Jackson | Reuters
Acronyms, sometimes, make life a little easier.
And it makes tracking the top stocks of a sector easier for CNBC’s Jim Cramer, who curated the so-called FANG group and on Thursday introduced a new simple name for retailers with scale — “WATCH.”
Scale is a business’ capability to grow operations and sales while maintaining costs. As Cramer put it: it’s “a company that’s big enough and powerful enough to control its own destiny.”
“A company that scales is one that survives and then thrives in even the toughest environment,” he said. “As an investor, you need recognize which businesses can scale because those are the ones that win. Like Amazon, like Microsoft, like WATCH. “
Find out Cramer’s new WATCH list here
New frontier of investing in weed
A worker trims cannabis at the growing facility of the Tikun Olam company on March 7, 2011 near the northern city of Safed, Israel.
Uriel Sinai | Getty Images
There has been a paradigm shift in the budding marijuana industry and it has affected how Wall Street trades in the space, Cramer said.
Pot stocks caught fire last year between Canada’s legalization of recreational weed and the United State’s legalization of hemp in the 2018 Farm Bill. But Cramer says shareholders set expectations too high. The sector has experienced two dramatic sell-offs within the past nine months, during the fourth-quarter meltdown and again in the recent earnings cycle.
“This is why I told you to be wary of some of the wilder promises made by marijuana executives, even though I’m a big believer in the long-term thesis …” the host said. “As the weak hands exit the cannabis space, investors are starting to care about the actual results, for once.”
Get more here
Charif Souki, Chairman, Tellurian
Scott Mlyn | CNBC
While it’s tough to bet which direction oil prices may swing, Tellurian Chairman Charif Souki said Thursday that the Permian Basin in Texas and New Mexico is the key influence on the market.
“What I’m thinking now is that the Permian Basin has become the swing producer in the world and, therefore, what happens in America matters more than what happens at OPEC,” he said in a sit down interview with Cramer.
Read more here
Cramer’s lightning round: People doubted this stock, but they’re wrong
In Cramer’s lightning round, the “Mad Money” host zips through his thoughts about callers’ favorite stock picks of the day.
Amgen: “I am not going to recommend this stock here.”
Sarepta Therapeutics: “I think they’re brilliant. I think they’ve got the right combination. I think that a lot of people doubted them. I think those people are wrong.”
Wingstop: “Wingstop is one terrific stock.”
Disclaimer: Cramer’s charitable trust owns shares of Amazon and Microsoft.
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