Cramer’s lightning round: Barnes & Noble’s stock is trading like it could get acquired

Image result for Cramer's lightning round: Barnes & Noble's stock is trading like it could get acquiredBarnes & Noble: “I’m going to say something I typically wouldn’t say, but it does feel like it’s getting a bid or something, because it just goes up, up and up and yet the fundamentals are not great. So, I don’t want to recommend a stock on a takeover basis, but I see what’s happening and it seems pretty positive.”

Booz Allen Hamilton Holding Corp.: “It’s not a bad stock. A lot of people don’t talk about it. I think it’s pretty good. Now, candidly, I like Accenture more. I like ACN, really, a lot more.”

TE Connectivity Ltd.: “It’s interesting. It’s not great. It does network solutions, got a little cable stuff in it. It’s not compelling enough for me to pound the table.”

Adobe Inc.: “I cannot recommend this stock on a short-term basis because … I recommended it at $50. It’s at $250. I think you buy some and then you wait for it to come down because we’re not going to play the quarterly game. The quarter’s going to be good, but stocks aren’t reacting to the quarter. They’re reacting to the Fed. They’re reacting to the president. That’s not certain enough for me.”

Global Blood Therapeutics Inc.: “It’s had a very big run and it’s coming back down. I think you sold half and now portfolio management would say, ‘You know what? Let the rest run.'”

Activision Blizzard Inc.: “It has to do with Call of Duty. People think it’s not doing that well. I wish [CEO] Bobby Kotick would come on.”


Cramer’s lightning round: I’m not a fan of Netflix’s stock as an end-of-year buy

Netflix Inc.: “Candidly, I’m not a fan of Netflix. I’m not a fan of Netflix because I think that a lot of it depends on the content and I just don’t find the content as compelling as it once was. I think it’s a good story, but not a great story, because it’s up so much for the year and that’s been a real big determinant about how stocks are doing right now.”

Cytokinetics Inc.: “Very speculative, but I’ll endorse it as long as you understand that that thing is literally one of the most speculative stocks out there.”

Yeti Holdings Inc.: “Yeah, I think [its post-earnings dip is a buying opportunity]. I actually liked the quarter. I mean, far be it from me to disagree with the market’s view, but I liked the quarter. I think it’s OK. The market liked the PepsiCos and the Gileads this week, and the Celgenes.”

The Kraft Heinz Co.: “[What’s not to love?] Well, the fact that it has no growth whatsoever. But I’ll do this for you: I’ll say that if you want to hope that they somehow manage to get some growth, then you can buy it. But if I want no growth, I want safety and I want a bond.”

Chico’s FAS Inc.: “No. Don’t ask me about Chico’s. That was a horrible quarter, frankly. I mean, that may have been the worst of the mall-based stores. No, well, obviously there’s Sears and J.C. Penney, but it was a bad call. I don’t want you in that, OK?”

LyondellBasell Industries NV: “People feel that we’re going into a big slowdown and you don’t want to own a chemical company into a slowdown, but I agree with you. I think it represents good value with a 4 percent yield, but I do prefer DowDuPont.”


Coal India stock fails to impress, but government made a cool Rs 74,000 crore

The BSE Sensex has climbed 231 per cent during the same period.
  • Centre to offer 99 lakh Coal India shares to staff at 5% discount
  • Institutional buyers offer bids worth Rs 4,300 crore for Coal India shares
  • Coal India OFS fully subscribed
Coal India, which made a smashing market debut eight years ago, has failed to live up to investor expectations till now.

The stock is down nearly 7 per cent at Rs 268.20 against its listing price of Rs 287.75. However, it’s up 9 per cent from the issue price of Rs 245.

Retail investors, who got around 5 per cent discount on the IPO, have gained around 15 per cent since the listing of the coal major.

The BSE Sensex has climbed 231 per cent during the same period.

But the underperformance of Coal IndiaNSE 0.63 % on Dalal Street has not stopped it from announcing a hefty dividend year after year since listing. The central government, the biggest shareholder in the PSU firm, has made Rs 74,267 crore by way of dividend during 2010-11 to 2017-18. Overall, the company announced a dividend of Rs 88,916.80 crore during the past eight years, according to data available with Ace Equity.

Total number of shares at the end of each financial year is considered for the calculation of dividend.

Coal India handed out a minimum of 39 per cent of dividend over its face value of Rs 10 in FY11 and a maximum of 290 per cent in FY14. It did not announce any stock split or bonus during these years.

The government held 78.32 per cent stake, or 4,86,16,80,228 shares, in the company as of September 2018.

The Centre on Friday announced an offer for sale of 99 lakh shares of Coal India reserved for its employees at Rs 252.7 per share. It is expected to fetch the government Rs 250 crore.

The current offer for employees is part of the divestment tranche that concluded last week in which the Centre divested 3.19 per cent of its stake at a final price of Rs 266 per share to financial institutions and retail investors.

The Centre is likely to raise Rs 5,267 crore through sale of 19.8 crore equity shares of the company from the recently concluded offer for sale. After last week’s sale, the government will continue to hold a majority stake of 75.13 per cent in the coal behemoth.

The state-owned firm is slated to announce its financial results for the quarter to September on Monday.

For 2018-19, the company posted 24 per cent year-on-year fall in consolidated net profit at Rs 7,019 crore against Rs 7,281.50 crore last year. It posted a net profit of Rs 14,267.90 crore, Rs 13726.60 crore and Rs 15111.60 crore in FY16, FY15 and FY14, respectively.

Last year, Coal India announced 165 per cent dividend on the face value. The figure was 199 per cent in FY17.

A report issued by CIMB Investment Bank Berhad, or CIMB, on November 2 assigned ‘Reduce’ rating to Coal India with a target price of Rs 245. However, it showed that the consensus has 26 ‘Buy’, 5 ‘Hold’ and 1 ‘Sell’ on Coal India.


The reasons to be bearish on the stock market now are swamping the bull case

The reasons for investors to be pessimistic are beginning to pile up just as quickly as the market has been sliding down.

A once-pristine fundamental backdrop suddenly looks tarnished, as worries accelerate that economic growth may have peaked, political headwinds are forming, and rising interest rates will stand in the way of future fiscal stimulus from the Trump administration.

While stocks had been staging a mild relief rebound in November, Monday’s sharp decline shows that the market remains temperamental. All it took was a negative headline for Apple about iPhone demand and news about a lingering regulatory issue for Goldman Sachs to send Wall Street into another tailspin.

The market’s vulnerability has become a common theme among market pros warning their clients not to take too much risk in the current climate.

“Ongoing risks keep us cautious and we continue to recommend that investors pare back risk if their equity holdings are above longer-term strategic allocations,” senior strategists at Charles Schwab warned clients in a report Monday. “Economic and earnings growth rates may be peaking, while the labor market continues to tighten. This mix contributes to higher wage growth, possibly higher inflation and related uncertainty with regard to Fed policy.”

Those are but some of the risks on invevstors’ minds these days.

Why you shouldn't panic when stocks are getting slammed

Why you shouldn’t panic when stocks are getting slammed   9:47 AM ET Fri, 12 Oct 2018 | 02:11

Talk around the Street has ranged from the dangers that wobbly fundamentals pose to the weak technical backdrop that includes a dangerous double-top chart formation in the S&P 500. Schwab’s team pointed out there remain reasons for hope, particularly from seasonal trends that back a strong November and a historical pattern behind positive results in the third year of presidential election cycles.

“But given the uncertainties that still exist and the potential slowdown in both earnings and economic growth, we continue to recommend a fairly cautious approach to investing, including discipline around diversification and rebalancing,” the paper, co-authored by Liz Ann Sonders, Brad Sorensen and Jeffrey Kleintop, advised.

The bear case

The factors lining up against the market are formidable: fears over growth in China and around the world, rising interest rates, the ongoing tariff battle between the U.S. and its trading partners, midterm election results that saw the Democrats take the House, slumping oil prices caused in part by a drop-off in demand and the likelihood that U.S. corporate profits, while stellar, are peaking and likely will taper off in 2019.

“Unlike 2016, there are no more tax cuts to salivate over and the deregulation momentum is going to now slow, or maybe stall, in the House,” David Rosenberg, chief economist and strategist at Gluskin Sheff, said in his daily note Monday. “Rare is the day when the stock market goes down in the lead-up to Thanksgiving – and if it does, that indeed will be a very bearish signal.”

These corrections are buying opportunities: Pro

These corrections are buying opportunities: Pro   12 Hours Ago | 03:21

November is generally a solid if unspectacular month for the markets, averaging a 0.9 percent gain over the past decade, ranking it fifth overall, according to FactSet. November, though, has not been negative since 2011, the longest winning streak for any month.

However, there are some cracks in market behavior.

Rosenberg pointed to rising trading volume amid a market decline Friday, which he said shows “that institutions are now more willing to sell on strength than buy the dips.”

On the more fundamental side of the ledger, a deceleration in China reflected in tumbling energy prices is just the latest sign of a global economy that is putting on the brakes. Meanwhile, the U.S. and China continue to apply duties to imports that, while not yet showing up in corporate earnings, are a concern into 2019 absent a thawing in tensions.

“So much of it is going to depend on the tariff stuff,” said JJ Kinahan, chief market strategist at TD Ameritrade. “The market hates uncertainty. That’s the biggest cause of uncertainty. You’ve got the election settled, hopefully you have that settled by the end of the month.”

The bull case

While optimism is on the ropes, the U.S. economy is far from being weak-kneed.

GDP growth continues to shine, and the fourth quarter is likely to be around the 3 percent level that would be consistent with the full year. The jobs machine continues to crank on all cylinders, with October alone adding 250,000 positions and wage growth that surpassed 3 percent year over year for the first time since the recovery began.

There’s also some trust that should things take a more pronounced downturn, the Federal Reserve will step in and halt or slow its interest rate increases.

However, there’s a good news-bad news scenario there as well.

“A pause in the tightening campaign might be cheered by markets, but only if economic growth remains healthy and inflation risk has ebbed,” the Schwab strategists said. “If the Fed is forced to lift its foot off the brake due to a sharper rolling over of growth — or in the face of rising inflation — markets would not likely take that as kindly.”

The election passing also is a cause for at least relief, as no post-midterm year has been negative since the end of World War II.

That doesn’t mean volatility can’t stick around. The Schwab note points out that the Black Monday 1987 crash was a year after the 1986 midterms.

The jobs picture also must be watched with caution. The 3.7 percent unemployment rate is well below what the Fed considers full employment, meaning that a turnaround in the jobs market seems only a matter of time.

“At the point the unemployment rate begins to tick higher again, it’s likely the countdown to the next recession will begin based on history,” the Schwab note said.

The brightest argument, then, may be that the market’s ups and downs are just the typical gyrations that nonetheless have been absent for much of the bull run that began in 2009. After all, even with Monday’s slide in stocks, the CBOE Volatility Index, which measures market fear, was barely above 20, or its long-term average.

“This is kind of where we are at right now,” Kinahan said. “There should be the possibility that sometimes stocks go down.”