Retailers Fighting Competition From Amazon – Cramer’s Mad Money (8/8/17)

Stocks discussed on the in-depth session of Jim Cramer’s Mad Money TV Program, Tuesday, August 8.

Some retailers fight competition from Amazon better than others and it’s starting to show in their numbers. “I think the market’s finally starting to behave logically, at least when it comes to many phases of retail, which have been in a bear market,” said Cramer. The earnings from Michael Kors (NYSE:KORS) and Ralph Lauren (NYSE:RL) show that retail is bouncing back.

None of them reported positive same-store sales. “Because their managements are finally acting like they have a clue, and arresting the decline is the first step in turning things around,” added Cramer. Both these companies reported a surprise based on strength in online and omni-channel sales.

The management said that their digital initiatives are driving customer engagements. Cramer said these two companies are finally embracing the web and hence are able to fend of competition.

Off the charts

Cramer went to the charts with the help of technician Bob Lang to get a view of the credit card companies – Visa (NYSE:V), MasterCard (NYSE:MA), American Express (NYSE:AXP) and Discover Financial (NYSE:DFS).

All these companies are benefiting from the paper to plastic shift. The chart of Visa shows a perfect pattern for the bulls. Every pullback to its 50-day moving average represents a buying opportunity. The rally in the stock is genuine as it is backed by strong volume. It’s the best stock in the group, per Cramer. The stock can climb to $120 by the end of the year.

MasterCard is the second-largest credit card company that has been rallying. The MACD indicator is in the overbought territory which shows that the stock has run up too far, too fast. “Ideally, Lang would like to see MasterCard pull back to its 50-day moving average. That’s been an excellent floor of support for the stock. However, given that MasterCard’s doing quite well and the company has a large, aggressive buyback, you might have to wait a long time for that kind of decline,” said Cramer.

American Express is turning itself around. The stock bounces back quickly once it is sold off and the chart shows cup-and-handle pattern. Now that American Express has broken out above $85, Lang is betting it could reach $100 very soon,” said Cramer.

Lastly, the stock of Discover Financial is down 14% for the year. The chart shows a series of lower lows and low highs which is not a good sign. Lang doesn’t expect the outlook to improve and Cramer isn’t a fan of the stock either.

CEO interview – Meritor (NYSE:MTOR)

The truck component maker Meritor had a good last quarter. Cramer interviewed CEO Jay Craig to hear what lies ahead as the stock has rallied 50% in 2017.

Craig said their hardcore manufacturing grows with the economy and they are able to capitalize. They have plans in place to grow for the short and long term and their current market position is strong. They are looking at unique options for the future of trucking.

“We have a big push on electrification right now,” he added. There is a trend of building vehicles to run using electric power. “We think we’re establishing a strong position in that marketplace as we see the trend of commercial vehicles most likely moving where life vehicles are, more highly electrified, and we think that will start to catch some people’s attention that may not have looked at us,” he said.

Europe has been a growth driver for them and in the US, they make parts not only for trucks but tractors, trailers, buses and fire trucks as well. The end market growth in housing, oil and gas and even e-commerce are making up for the decline of other sectors.

CEO interview – Henry Schein (NASDAQ:HSIC)

The stock of Henry Schein fell 5% after it reported earnings. Cramer interviewed CEO Stanley Bergman to find out more about the quarter.

Bergman said that the end markets remain strong with 4-6% growth per annum. The global expansion of the middle class is helping sales growth along with the digitalization of the medical space. “The dental equipment market is doing very, very well as that market digitalizes. Align is a typical example of the digitalization of an industry, and they have digitalized, in a very successful way, the orthodontics space,” added Bergman.

“That market is on fire. Anything to do with digital – imaging, prosthetics – is advancing in a very rapid way,” he added. They are the largest software provider to dentists and animal health providers in the US.

Viewer calls taken by Cramer

How would NAFTA impact auto companies? Cramer thinks there would not be any real hit but at the same time he doesn’t like the auto business.

Wells Fargo (NYSE:WFC): Cramer is disappointed with the company. He has been selling the stock for the trust. Citi (NYSE:C) appears better than Wells Fargo at this point.

Darden Restaurants (NYSE:DRI): Their chart is horrible but the company is doing a lot of good things. Their yield is good.

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