Dell Technologies’ return to the public market comes at a good time for the company and for prospective shareholders, CNBC’s Jim Cramer said Tuesday as the rest of the stock market fell on macroeconomic worries.
“The new Dell Technologies has a lot going for it,” Cramer said, highlighting its move beyond the personal computer. “Now, Dell is a one-stop shop for nearly all your corporate information technology needs, [with] market leading positions in a host of product categories. […] The new Dell is all about enterprise spending on hardware and software, which I think is in secular growth mode.”
And while there are some notable negatives to Dell’s story, particularly its debt-laden balance sheet, the potential for a slowdown in the tech sector and its corporate governance structure, Cramer, host of “Mad Money,” anticipated more upside.
“I think the positives here do outweigh the negatives for one very simple reason: Dell Technologies’ stock is dirt-cheap at these levels,” he told investors. “At these levels, I think the negatives are mostly baked in here and the positives are not, something that’s even more obvious when you consider that Dell’s stock actually managed to rally today even as the rest of the market crumbled.”
Trading at less than six times the earnings estimates for fiscal year 2021, Dell’s stock is giving investors an “insane” value given its trading history, Cramer said.
“Bottom line? Now that Dell Technologies is publicly traded again, I recognize the company is far from perfect, but that darned stock is too cheap to ignore,” he said. “It’s a buy.”
Investors need to practice discipline when deciding how much stock to sell during the stock market’s recent meltdowns, Cramer said Tuesday as stocks sold off on fears of a global slowdown.
“You need to be careful about how much you sell,” Cramer said after the major averages pulled back dramatically, reflecting worries about slowing economic growth in China.
“There are way too many stocks of high-quality companies that are are still way below their 52-week highs, and, after today, are a lot closer to [their] 52-week lows,” he said.
Still, Cramer understood investors’ dilemma.
Click here to read his full analysis.
China’s slowing economic growth could pave the way for its government to reach a trade agreement with the United States, Cramer said.
Stocks fell sharply in Tuesday’s session following China’s announcement that, in 2018, its economy grew at the slowest pace in 28 years. Additional pressure came from the International Monetary Fund slashing its global economic growth forecast for 2019 and 2020 and reports that signaled ongoing tensions between U.S. and Chinese trade officials.
The IMF’s forecast cut said a few things about the state of the world’s economy, Cramer said. In her decision, the organization’s Chair, Christine Lagarde, cited a slowdown in Europe. Beyond the obvious pressure from Brexit, that weakness could be tied to China because of how many European companies do business there, Cramer said.
Either way, “I figure the weakness in China will make it easier for President [Donald] Trump to get an advantageous trade deal,” Cramer told investors.
Click here for his full take.
The stocks of a few top-notch Chinese companies may have already bottomed as a result of the U.S.-China trade dispute and could soon be buying opportunities for investors, a top chartist tells Cramer.
Cramer, who has been steering investors away from Chinese stocks for the better part of the dispute, said he wouldn’t blame anyone for thinking Chinese investments were too risky, especially after China’s announcement on Monday.
But when he checked in with technician Dan Fitzpatrick, the founder and president of StockMarketMentor.com and Cramer’s colleague at RealMoney.com, he started to see things a little differently.
“Fitzpatrick has a really interesting thesis: He thinks the current weakness is already priced into many of the largest, highest-profile Chinese stocks,” Cramer said. “Looking at the charts, he believes they’ve already bottomed [and] they’re not going to take that bottom out, which means dips, like the one we had today, … should be treated as buying opportunities.”
Click here for the full recap of Fitzpatrick’s analysis.
Computer accessories maker Logitech International has had a pulse on the video gaming and esports space for years. These days, that pulse is becoming more of a drumbeat as esports gain traction, Logitech President and CEO Bracken Darrell tells Cramer.
“If you’re under the age of 25, you’re so into gaming relative to any single regular sport,” Darrell said in a Tuesday interview. “Those people are now … spectators of esports online, and, in fact, more people are watching people play esports online than are watching CNN, Netflix, ESPN or HBO combined.”
No matter what, the rise of esports — fueled by mass competition games like Fortnite — isn’t going away, Darrell said.
“Fortnite’s absolutely for real,” the CEO said. “We always believed that there would be game titles that would come in as this esports rise happened and explode, and for the first five, six years I was here, we didn’t see that. We saw a steady, strong increase by League of Legends and Overwatch and the games that were already out there. But Fortnite’s the first one to come in and really explode onto the scene. And I think there’ll be others.”
Click here to watch Bracken Darrell’s full interview.
In Cramer’s lightning round, he tore through his responses to callers’ stock questions:
Microsoft Corp.: “Don’t sell any more. [CEO] Satya Nadella’s doing a great job. We did the same thing [and trimmed a little too much] for the ActionAlertsPlus.com club. We told people to sell some, but we’re done selling. I think Satya should deliver a great number. It’s actually one of the best in show.”
Kimberly Clark Corp.: “They report Jan. 23, which looks to me like tomorrow, and we’ll see the number. [With a] 3.4 percent yield, you’ll be protected.”
Disclosure: Cramer’s charitable trust owns shares of Microsoft.
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