After a brutal week of continual selling in bear markets like technology, banks and pharma, Jim Cramer is ready for the bear to continue its revenge on stocks next week.
Most notable have been brick and mortar retail stocks, which are now competing with the monstrous earnings recently reported by Amazonand declining mall traffic.
“They are all looking mighty cheap. They do, however, seem like value traps to me,” the “Mad Money” host said.
And as earnings season winds down, Cramer saw various themes emerge that could be pernicious to the earnings of many companies. He reviewed those themes by outlining the stocks and events on his radar next week:
Tuesday: Allergan, Disney, Norwegian Cruise
Allergan: Many investors have compared Allergan to being a lot like Valeant, and Cramer doesn’t think the bloodletting is finished for the group.
“They are all in the grips of one of the worst bear markets I have ever seen,” Cramer said.
Friday marked the sixth anniversary of the Flash Crash, where the Dow Jones industrial average fell almost 1,000 points in just a few minutes. Since that time, Cramer says things have not gotten any better.
On the day of the Flash Crash, buyers seemingly vanished from the market, allowing a frightening plunge to occur right before the world’s eyes.
Cramer instantly recognized the toxic combination of aggressive short-sellers and high-frequency traders who vanished whenever the selling got intense as the root cause of the crash.
Even as the market recovered from its losses that day, the incident wrecked the confidence of homegamers after they couldn’t withstand losing that much value in the blink of an eye.
“Nothing has really changed to stop the market from once again losing its integrity in 15 minutes of insane, manipulated trading,” the “Mad Money” host said.
Drug distributor AmerisourceBergen has been one of the most consistent winners in the market during the past few years. Yet, over the course of the past year, Cramer has watched as it transformed into a total house of pain.
“The stock has gone from market darling to dirty dog in almost no time flat,” the “Mad Money” host said.
Is there any hope in sight for one of the largest drug distributors in America?
“The truth is, the whole drug distribution industry is being threatened, but ABC is getting hit the hardest and I bet it goes lower before they figure out how to turn things around,” Cramer said.
Basic material stocks caught fire after bottoming with the market in February. Then at the beginning of this week, the group began to sell-off as part of a rotation out of cyclical stocks.
All of a sudden, Martin Marietta Materials reported a spectacular quarter. Martin Marietta is the maker of aggregates, concrete, asphalt and other basic materials used in construction and infrastructure.
Cramer spoke with Martin Marietta’s chairman and CEO Ward Nye on what drove a successful quarter.
“We are finally seeing all parts of the economy hitting … So, if you’re looking at our business, about 45 percent of it is infrastructure. That is working today,” Nye said.
Another clear sign that the market has gotten healthier is the amount of mergers occurring. Quintiles Transnational Holdings reported a strong quarter on Tuesday and announced it will be combining with competitor IMS Health in a $18 billion merger of equals.
Quintiles is the world’s largest contract research organization that helps drug companies manage clinical trials. And while Quintiles and IMS are different businesses, Cramer thinks the two complement one another. IMS is the provider of information and technology services that help health care companies measure and improve performance.
The combined company will be called Quintiles IMS Holdings, is anticipated to use IMS Health’s technology to improve the design and execution of Quintiles’ clinical trials. It also expects the merger to be additive to the combined company’s earnings per share.
Unfortunately, analysts who follow the stock hated the move. Since the news broke, Quintiles has been downgraded four times, and the stock has dropped 4 percent since before earnings and the merger were announced.
Cramer spoke with Quintiles CEO Tom Pike, who will transition from CEO to vice chairman of the new company. He discussed the deal, stating “These are difficult decisions for boards to make, but what I’m excited about is what we can do together.”
In the Lightning Round, Cramer gave his take on a few caller favorite stocks:
Sprint: “Sprint had a decent quarter. And that’s why I can’t hate the stock. It’s a decent spec now, the quarter was that good. I do like T-Mobile and I like Verizon more. T-Mobile for growth, and Verizon for dividend.”
Ameriprise Financial: “The stock has come down too much. I kind of like it here. It’s got a 3.3 percent yield. You buy some here, maybe you buy some at 4 percent yield. That stock is overdone on the downside.”
Correction: This article was updated to reflect the Quintiles and IMS Health merger of $18 billion.