Revaluing Entertainment Companies: Cramer's 'Mad Money' Recap (Thursday 6/14/18)


Thursday’s market was all about one thing: entertainment, Jim Cramer told his Mad Money viewers. If you weren’t about entertainment, your stock was heading lower.

Investors eschewed the banks, which are suffering from a flattening yield curve that’s crimping profits. They left healthcare behind, because these defensive names aren’t as attractive with a roaring economy. Retail stocks took a breather after a huge move earlier this week. And the industrials remain on pause as the likelihood of tariffs remains.

That left media and entertainment as the only viable place to put your money, Cramer said, especially after a judge ruled earlier this week that our antitrust laws are woefully out of date and traditional media needs all the help it can get to compete with the likes of Netflix (NFLX) and Amazon (AMZN) . As the bidding war for Twenty-First Century Fox (FOXA) continues, both Comcast (CMCSA) and Walt Disney Co.  (DIS) saw gains as the markets realize just how profitable these companies are.

Don’t forget that media doesn’t need a strong economy to produce strong earnings, and they aren’t affected by tariffs or trade. We’re in a golden age of content, Cramer said, content that can be consumed practically anywhere.

In an ideal world, you’d want every sector participating in a rally, Cramer concluded, but that doesn’t mean you can’t celebrate the gains the entertainment world is finally seeing.

Cramer and the AAP team dive into Comcast’s offer for 21st Century Fox assets. Find out what they’re telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts PLUS.

On Real Money today, Cramer says you need more than tech to get a real broad-based advance and we have failed to get that. Get more of his insights with a free trial subscription to Real Money.

Executive Decision: Adobe Systems

For his “Executive Decision” segment, Cramer spoke with Shantanu Narayen, chairman, president and CEO of Adobe Systems (ADBE) , the creative software provider that just posted a 12-cents-a-share earnings release on a 24% rise in year-over-year revenues. Shares of Adobe closed down 3.2% on the day.

Narayen said that Adobe serves two primary markets, empowering creative professionals and helping businesses with digital transformation. “Everyone has a story to tell,” he added, and whether you’re a student needing multimedia for a presentation or a professional building the latest immersive augmented reality experiences, Adobe is the only company to provide end-to-end solutions.

Adobe recently acquired Magento, a company with Narayen said completes the commerce loop, providing services for both business-to-business and business-to-consumer transactions.

Adobe also has a partnership with Microsoft (MSFT) to help companies scale their offerings around the globe using Microsoft’s Azure cloud services. The two companies together deliver unique value to customers.

Cramer said investors should cheer this stock going lower because it gives them an opportunity to buy it.

Cramer says when you spend a whole day interviewing and listening to more than a dozen people, as he did last week at TheDeal’s Corporate Governance conference, you can come back with a gazillion takeaways. Check out his Top Takeaways over on Real Money.

Executive Decision: Thor Industries

In his second “Executive Decision” segment, Cramer sat down with Bob Martin, president and CEO of Thor Industries (THO) , the motorhome and RV maker with shares that have fallen 39% from their highs earlier this year and which now trade for less than 10 times earnings — despite a 17% long-term growth rate.

Martin explained that Thor is working through a number of issues that arose since he last spoke with Cramer earlier this year. The said the labor shortage in Indiana where Thor is based has eased slightly, helping to lower their labor costs. The weather in the Northeast finally got better, helping to buoy sales. And Thor continues to react to tariffs as they arise.

Inventories at dealers is higher than they’d like, Martin admitted, but he said that Thor is a build-to-order company and their dealers bought what they thought they needed for the busy spring selling season. Now that the weather is better, sales are increasing, and overall, the age of the inventory is good, Martin noted.

Martin added that gasoline prices are not a big factor for RVs as consumers adjust to them by simply taking shorter trips. What’s important, he said, is that credit remains available and there’s still a big opportunity to attract younger consumers.

Executive Decision: Zuora 

In his final “Executive Decision” segment, Cramer sat down with Tien Tzuo, founder and CEO of Zuora Inc.  (ZUO) , the cloud-based software company that helps other companies grow and manage their subscription businesses.

Tzuo said subscriptions are the business model of the future, and over time, consumers will buy less and a less and subscribe to more and more. It all began with DVDs and music, Tzuo said, but now people are questioning whether it makes sense to own cars, houses and more. It truly is the end of ownership as we know it.

Companies are starting to discover that rather than sell an item once, it’s far more lucrative to have that customer subscribe for a lifetime. Even the tech industry, which was built on the product economy, is starting to realize that selling the product is only the beginning and the real revenue stems from pricing and packaging the services that surround it.

Lightning Round

In the Lightning Round, Cramer was bullish on Zscaler (ZS) , DexCom (DXCM) , GW Pharmaceuticals (GWPH) , Constellation Brands (STZ) , Lockheed Martin (LMT) , Raytheon (RTN) , DocuSign (DOCU) , Teck Resources (TECK) and Home Depot (HD) .

Cramer was bearish on Skechers USA (SKX) , Campbell Soup (CPB) , Evolus (EOLS) and Masco (MAS) .

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