“There’s one huge winner in this ‘Amazon to buy Whole Foods’ deal: you! The prices are coming down,” the “Mad Money” host said on Friday.
Cramer compared Amazon’s landmark offer to an army bolstered by mechanical weapons and an air force fighting against cavalry. Amazon, with its non-union workforce and stellar delivery system, would do to the supermarket what the e-commerce giant did to the mall, he said.
As follows, the clear winners of this deal are Amazon and Whole Foods, Cramer said. Amazon’s technological know-how will make shopping at Whole Foods much simpler, from cutting down the long lines to expanding loyalty programs to streamlining mobile payments, he argued.
But other than the consumer, Amazon and Whole Foods, Cramer said the deal brings losers aplenty.
Cramer also tracked the market’s many contradictions to see if any sector is truly resilient to the inconsistent trends.
“Conclusions that have historically held true are worthless,” he said. “Layer on top of that the uncertain nature of this administration and you get a world where you have to default to companies that have growth no matter what, hoping that they execute to take advantage of that growth.”
For example, when the unemployment rate is below 5 percent, wages and inflation should both be rising, but with unemployment at 4.3 percent, the two are fairly stagnant.
The retail sector should be cyclical, with stocks like Macy’s, Nordstrom and Tiffany doing well when the economy and employment are growing, and discount plays like the dollar stores and Target outperforming in a weaker environment. But the entire retail space has been struggling of late.
“And that’s why people end up buying the dips,” Cramer explained. “They’re buying what they know has growth at a minor discount because they recognize how scarce growth is. In this environment, FANG and its ilk can be scorned, but they’ll ultimately be embraced because the one correlation that’s held up is that when the economy slows, you need to buy stocks of companies that can control their own destinies, and that’s exactly what tech has going for it right now.”
As Wall Street digests Amazon’s offer to buy Whole Foods, Cramer flagged some key earnings reports and events on the horizon that could further sway the market.
For one, massive homebuilder Lennar will report earnings on Tuesday, and Cramer thinks its numbers could define much of next week’s market activity.
“I hope Lennar can solve some of the conundrum about whether the consumer’s weak, like the bond market says, or strong, like the unemployment rate says,” Cramer said. “We need answers. I bet CEO Stuart Miller will have some great perspective. He always does.”
And with Wall Street questioning the welfare of the auto industry, Cramer thinks Carmax’s Wednesday earnings report could bring some clarity to that issue.
“I’m going to listen to the [conference] call, but only to find out the state of the industry, as I, too, am worried about whether autos have become a big drag on the economy and that used cars have lost a lot of their value,” he said.
Cramer sees two ways to approach this Bed Bath & Beyond’s poor performance ahead of its Thursday earnings report. The first is attributing it to Amazon’s retail domination. The second is waiting for it to “pull a Nordstrom” and go private, he said. Either way, Cramer would avoid it altogether.
With acquisitions top-of-mind for Wall Street, Cramer turned to one acquisitive name that has been making a serious comeback under its new leadership: luxury goods retailer Coach.
“After spending years in the doghouse, Coach brought in a new CEO, Victor Luis, a genius who rejuvenated the brand and started delivering some excellent numbers,” the “Mad Money” host said. “At this point, it seems pretty undeniable: Coach is back.”
Shares of Coach have climbed 31 percent since Cramer recommended the stock in September 2016, and based on the momentum of its turnaround, he thinks it could have more room to run.
Finally, Cramer delved into a merger on the horizon that he believes could be one of next year’s best combinations: between American industrial gas giant Praxair and German chemicals company Linde.
“First of all, it’s a huge transaction,” Cramer said. “The combination of the American Praxair and the German Linde, which is going to keep Linde’s name, will have nearly $30 billion in sales, and based on where the stocks are currently trading, it could be worth about $70 billion. And it is a match made in heaven.”
The merger would put the newly combined company at the top of its game, as Praxair and Linde currently hold the No. 2 and No. 3 spots in the industrial gases space behind competitor Air Liquide.
“Most importantly, Praxair and Linde have different core competencies, so the hope is that they’ll complement each other,” Cramer said.
Linde’s end markets differ slightly from Praxair’s, and the two do business in different regions of the world. A combination would mean enlarged business and market share, along with $1.2 billion of synergies, according to the companies’ management teams.
“I think it’s worth getting in on this one ahead of time while we wait for the deal to close sometime next year,” Cramer said. “While Praxair’s run up just over 10 percent since the announcement, I think it’s only just begun to rally. I think this combination’s going to be the real deal and you want to be in it.”
In Cramer’s lightning round, he sped through his take on caller favorite stocks, including:
Comcast Corporation: “I work for Comcast, they’re the parent company of this network. They have unbelievable cash flow. They’ve got absolutely terrific growth in that cash flow, so I am a buyer. My charitable trust owns it.”
Blackstone Group: “I have liked Blackstone very much. I think it’s absolutely terrific. If that IPO market were to open up, it would be even better. I want you to stick with it.”
Disclosure: Comcast is the owner of NBCUniversal, the parent company of CNBC and CNBC.com.
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