Earnings season is always the time when the winners get separated from the losers, but Jim Cramer told his Mad Money viewers Wednesday that some companies deserve the benefit of the doubt.
Case in point: Netflix (NFLX) - Get Report, which reported weaker-than-expected results that included a slowdown in subscriber growth. When asked about it on conference calls, management explained that yes, growth is decelerating after a huge surge at the onset of the pandemic.
While many investors were quick to sell the news, Cramer said he's taking the other side of the trade, and giving Netflix the benefit of the doubt.
Seeing a slowdown after 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 blockbuster movie or two to reignite growth.
Cramer noted that all of the FAANG stocks (Cramer's acronym for Facebook (FB) - Get Report, Amazon (AMZN) - Get Report, Apple (AAPL) - Get Report, Netflix and Alphabet (GOOGL) - Get Report) deserve the benefit of the doubt. Amazon continues to innovate, like Wednesday's announcement of touch payments coming to Whole Foods. Apple continues to diversify its non-iPhone products, something the smart analysts say will boost Mac sales over the long term.
So while investors use a "sum-of-the-parts" analysis to value Google, Cramer said he's giving that company the benefit of the doubt. Why? Because they've earned it.
Cramer and the AAP team are looking at everything from earnings and politics to the Federal Reserve. 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.
Executive Decision: Qualtrics International
In his first "Executive Decision" segment, Cramer spoke with Zig Serafin, CEO, and Ryan Smith, founder and executive chairman, of Qualtrics International (XM) - Get Report, the experience management platform with shares up 12.7% for the year, before Wednesday's strong earnings announcement.
Serafin said that Qualtrics just completed a record quarter that included 120% net retention as customers expanded their use of the Qualtrics platform. For a growing number of companies, an experience management platform is becoming just as critical as their customer relationship and human resources platform.
Smith added that it's not just companies who need to deliver great experiences, it's also governments. That's why the state of Missouri is using Qualtrics to gather valuable feedback on their vaccine distribution program.
Using Qualtrics, companies like United Parcel Service (UPS) - Get Report has been able to provide their customers with better experiences, while Royal Caribbean Cruises (RCL) - Get Report has been able to ask their guests how they'd like to see cruises return post-pandemic.
Executive Decision: Marvell Technology
For his second "Executive Decision" segment, Cramer also spoke with Matt Murphy, president and CEO of Marvell Technology Group (MRVL) - Get Report, the semiconductor maker with shares that rose 3.5% Wednesday as the company closed on their acquisition of Inphi. Marvell is currently an Action Alerts PLUS holding.
Murphy said he's thrilled to finally have Chinese approval to close on the Inphi acquisition. He said the merger combines two great companies.
When asked about the state of the semiconductor market, Murphy confirmed the supply-demand imbalance, noting that the demand for proprietary chips has never been stronger. He said the market continues to be driven by a surge in 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 supplier to Samsung for many of their 5G wireless products and their alliance remains very strong.
Executive Decision: PPG
For his final "Executive Decision" segment, Cramer checked in Michael McGarry, chairman and CEO of PPG Industries (PPG) - Get Report, the materials and coatings maker that just posted a monster 31-cents-a-share earnings beat that sent shares surging 2.7% by the close. Shares of PPG are now up 20% for the year.
McGarry said that PPG continues making selective acquisitions that make sense. The company has completed six in just the past 18 months. He said many of these acquisitions have better returns than a simple share buyback.
Put simply, "We're very good at this," McGarry added. Many of their recent acquisitions in Europe, for example, didn't have a presence in Asia or China. But PPG was able to quickly use their resources to instantly expand into those regions.
PPG is in a lot of things you wouldn't think about, McGarry said. Their appliance business grew 14% in the past quarter, and sales are up in everything from electronic materials to kitchen bakeware. His company also has a strong military business which accounts for a third of PPG sales.
Finally, McGarry noted 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 gap fillers and other materials.
Cramer said PPG is a real company with real earnings and real growth.
Where the Bargains Are
In his "No Huddle Offense" segment, Cramer talked about those who believe the stock market is dangerous. While there are plenty of reasons to worry about SPACs, NFTs and meme stocks, there are plenty of stocks that are still bargains.
Take, for example, the bidding war underway for railroad Kansas City Southern (KSU) - Get Report. He said sometimes companies are willing to pay a lot more for a company than the market, and Kansas City Southern just proved it.
Lightning Round
Here's what Cramer had to say about some of the stocks that callers offered up during the "Mad Money Lightning Round" Wednesday evening:
Snap (SNAP) - Get Report: "I think they're gonna have a great quarter with fantastic growth."
Regal-Beloit (RBC) - Get Report: "This company is fantastic and I don't talk about it enough."
Boston Scientific (BSX) - Get Report: "This is great, Intuitive Surgical (ISRG) - Get Report is great and so is Edwards Lifesciences (EW) - Get Report and Medtronic (MDT) - Get Report."
Cleveland-Cliffs (CLF) - Get Report: "The Chinese are spending 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.
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