Starbucks was able to engineer a top- and bottom-line beat in its latest quarter report thanks to the moves that tech veteran and CEO Kevin Johnson made to line up customers up for coffee, CNBC’s Jim Cramer said Monday.
The ubiquitous coffee chain saw it stock price surge to surge to near $100 after raising its full-year earnings and revenue outlook last week. Starbucks boosted its same-store sales growth to 6% in its most recent quarter from 1% the year prior, powered by its $7.15 billion deal with Nestle and aggressive stock buyback program, the “Mad Money” host said.
The stock is up more than 52% in 2019 and nearly 90% in the past 12 months.
“KJ, as he’s known on the Street, recognized that if he could improve digital ordering, if he could solve the throughput problem, if he could make delivery happen, he could then orchestrate a magnificent turnaround, regardless of what the competition was up to,” Cramer said of Johnson, the former CEO of Juniper Networks. “Johnson rolled out all sorts of new technology to make it easier for you to buy his coffee.”
J.P. Morgan Chase is not as bullish about the odds of Starbucks’ stock at these levels, however. The bank downgraded the equity to “neutral” from “overweight” on Monday. Analyst John Ivankoe noted its roughly 9% rally last Friday was “its biggest one-day gain since November 2” and that it exceeds the firm’s $91 price target, CNBC reported.
Cramer, however, says “even after this move, with Kevin Johnson at the helm, I think the stock’s got more room to run, although it did get downgraded by a couple of firms today.”
Get Cramer’s full thoughts here
Waiting on the Fed
Buchachon | Getty Images
Investors should add Cramer’s so-called “Cloud King” stocks to their shopping list as the stock market awaits an interest rate cut by the Federal Reserve later this week, the host said.
Money has been rotating from high-quality growth names into the industrial sectors as Wall Street eyes a quarter-point rate cut will spur more business investment and give a boost to cyclical and industrial companies,
That explains why the Dow Jones Industrial Average, which tracks 30 large blue-chip stocks, gained nearly 29 points during the session Monday. The S&P 500 and tech-heavy Nasdaq Composite slipped 0.16% and 0.44%, respectively.
“You need to accept that this rotation is happening. It’s what’s driving these stocks,” Cramer said. “The Fed’s rate cut will push money out of the ‘Cloud Kings’ and into the industrials, but your job is not to trade around a rotation, it’s to find high-quality stocks and stick with them for as long as the underlying business stays strong.”
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Bolstering cancer research
Kevin Conroy, Exact Sciences
Source: Exact Sciences
Exact Sciences announced Monday a $2.8 billion tie-up with Genomic Health. Cramer talked with the cancer diagnostic company’s CEO Kevin Conroy to find out what’s in store for the company on the heels of the merger.
Catch the discussion here
Off the charts: Amazon
A worker assembles a box for delivery at the Amazon fulfillment center in Baltimore, Maryland, April 30, 2019
Clodagh Kilcoyne | Reuters
Shares of Amazon plunged for a third-straight trading day on Monday, and it may have opened up the kind discount that investors are looking for, according to the charts.
Cramer, citing analysis from chart analyst Caroly Boroden, said the stock is on a positive trend that could carry it back above the $2,000 level in due time. Since reporting a second-quarter profit miss last week, the equity has shed nearly 4.5%, but it has a chance to catapult past its record high, says Boroden, who heads FibonnacciQueen.com
“Boroden says that the larger pattern here is still bullish, pointing to much higher prices down the road,” the host said. “After the stock’s recent pullback, she thinks you’re getting a rare buying opportunity in Amazon.”
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Sean Boyd, CEO, Agnico Eagle
Scott Mlyn | CNBC
Gold is trading at levels it has not seen in years and could be on its way to reaching all-time highs in the near future, the CEO of a Canadian miner told CNBC Monday.
Sean Boyd, the vice chairman and CEO of Agnico Eagle Mines, said the current state of interest and inflation rates creates a perfect environment for the industry. The price of gold broke above the $1,400 level last month for the first time since 2013 and is currently hovering in the $1,420 range.
“We’re in a period now where gold blossoms when you have low real interest rates … gold does well,” Boyd said in an interview with Cramer. “And then the inability of the industry to respond to a higher gold price is, I think, the key to get it going forward.”
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Cramer’s lightning round: Red Hat’s Jim Whitehurst is ‘changing the culture’ at IBM
In Cramer’s lightning round, the “Mad Money” host gives viewers his thoughts about their favorite stock picks in rapid speed.
Dollar Tree: “I think you buy some Dollar Tree.”
DXC Technology: “DXC does not have growth, and that’s what I’m looking for. If you’re going to be in DXC, I suggest swap out of that and just go into IBM where I believe that [Red Hat CEO] Jim Whitehurst is changing the culture.”
Disclosure: Cramer’s charitable trust owns shares of Amazon.com and J.P. Morgan Chase.