Cramer’s game plan: In a controversial week, leave room for strategy

When stocks reversed course and fell on Friday after President Donald Trump doubled down on his call to place tariffs on Chinese goods, CNBC’s Jim Cramer offered investors some advice on how to approach the trade debacle.

“You need to realize the president doesn’t want China to talk. He wants China to cave,” the “Mad Money” host said. “You should never believe we’re going to make a deal with the Chinese unless you’re hearing it from an outspoken protectionist like Peter Navarro, the president’s top trade advisor.”

For now, tariffs and trade news remain the stock market’s main drivers, Cramer said. And those who are invested in the stock market need to resist the euphoria brought about by news of resuscitated trade talks.

“Please, let’s learn from today,” he said. “Don’t be taken in the next time Treasury Secretary [Steven] Mnuchin makes it sound like we’re making progress with China. Mnuchin’s not in charge.”

In other words, until the U.S.-China trade spat officially ends, the president will likely use strong economic results to push his hawkish tariff agenda, so investors should be prepared for the associated declines.

With that strategy in mind, Cramer turned to his game plan for the week ahead:

FedEx: Cramer wasn’t looking forward to FedEx’s Monday earnings report because of how much shipping companies have been spending on boosting their capacity for the age of e-commerce.

“Last time the company reported, its stock fell from $264 to $226 over a dreadful couple of weeks,” he recalled. “FedEx has worked its way back to $255, which I think, frankly, heightens the risk. Having too much business is not a high-quality problem in the shipping industry. It’s just a plain old problem.”

Oracle: While he was bullish on Oracle’s recent performance, Cramer also hesitated when it came to the software giant’s upcoming earnings report.

He reminded viewers of Oracle’s last report, which sent its stock tumbling because the company stopped sharing specifics about its cloud platform revenues.

As a result, investors “figured it meant it was losing share, perhaps to the likes of Salesforce and SAP,” Cramer said. “It’s hard for me to believe that they’ll disappoint this time. The problem is the upside — how much is it going to go up on a pretty good quarter? Not clear.”

Autozone: The auto parts retailers had been in a funk until last quarter, and with Autozone reporting Tuesday, Cramer’s looking for what can keep driving their stocks higher.

“I don’t want to talk about trying to profit from this horrible hurricane that’s hammering Carolina — you can’t put a price on human life — but anything that causes cars to get damaged tends to result in a lot more business for Autozone,” he said.

Cramer added that he keeps hearing that Autozone has been chronically short of inventory lately, meaning that even without Hurricane Florence, business is likely strong.

General Mills: General Mills, on the other hand, could be hungry for business drivers, Cramer warned.

“This stock’s been rallying with the rest of the packaged food group, but it needs a new catalyst before it can have much more upside,” the “Mad Money” host said. “I’m concerned about commodity costs and the crowded market for high-end pet food after they paid a fortune for Blue Buffalo.”

He added that General Mills’ recent $1 billion equity offering, in which the company offered stock at $44 a share as a way to raise money to help pay for the Blue Buffalo deal, “disturbed” him.

“I think you can do better,” Cramer said.

Red Hat: Cloud king Red Hat, a software company that helps set enterprises up in the cloud, will report earnings on Wednesday. Cramer was hoping to see a recovery from last quarter’s earnings report, which seemed to disappoint investors.

“These trends are so strong that I bet CEO Jim Whitehurst will deliver some stronger numbers,” he said. “It’s a decent spec going into the quarter.”

Herman Miller: Adding Herman Miller to his list of stocks that do well when there’s small business optimism, Cramer predicted that the furniture maker would deliver yet another strong earnings report.

Darden: A day “full of controversy” will begin with an earnings report from Darden Restaurants, the parent of Olive Garden. A self-proclaimed Olive Garden fan, Cramer patted himself on the back for telling investors to buy Darden’s stock when it sank to $84 after a not-so-hot quarter.

“It’s now at $119,” he said. “While the odds favor a better quarter like we had last time, I don’t want to be greedy. If you don’t own any of this high-quality domestic chain, you have my blessing to buy a little, but you sure aren’t early to dinner here.”

Thor Industries: RV maker Thor will also issue its earnings report, and it “has seen its stock go ice cold after a tremendous run,” Cramer said.

“You can bet they’ll have a good quarter, but I actually sweat the small stuff here, namely the rising cost of steel and aluminum because of tariffs,” the “Mad Money” host said. “Thor’s too hard to call.”

Micron: The company behind the hotly contested stock of Micron will also report its quarterly results. Shares of the semiconductor maker popped on Thursday after investor David Tepper told CNBC that he is “very, very long” Micron’s stock.

“Micron’s a tough one because I think the quarter’s going to be good, but the outlook, I predict, will be murky,” Cramer warned.

“If they don’t guide down, though, then Tepper will look like a genius,” he continued. “However, if Micron cuts its forecast, which is what the price-to-earnings multiple that’s so low is signaling, I still think the stock goes lower. There is, though, a huge short position down here at $44. Once again, too much of a battleground.”

On Friday, the Institute for Supply Management will release its monthly Purchasing Managers’ Index, a survey focused on levels of inventory, production, orders, supplier deliveries and employment.

“I think the number will be very strong,” Cramer said. “That could push the yield on the 10-year Treasury above 3 percent, a key benchmark which we hit earlier today. That, in turn, would send the bank stocks flying.”

The “Mad Money” host recommended the stock of Goldman Sachs as the cheapest play on this potential move.

“Here’s the bottom line: we’ve got controversy galore next week with lots of risk,” Cramer warned. “That’s why, if you’re going to buy any of the stocks I just said I like going into earnings, you need to leave some room to buy more afterwards just in case they keep going down.”

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