×

Cramer Remix: General Electric could be making a colossal mistake

Jim Cramer watched as billions of dollars were shifted out of healthcare stocks, to technical and industrials, and then out of the market altogether on the news that the FBI is probing new emails related to its investigation of Hillary Clinton.

While Cramer doesn't know what will happen with Clinton, the rapid decline in stocks signaled that investors need more certainty in the current environment.

"I do know that this market seems to want some certainty or it wouldn't have plunged so hard midday," the "Mad Money" host said.

With this in mind, Cramer outlined the stocks and events on his radar next week, starting with news on a potential deal between GE-Baker Hughes. He wants clarity on what General Electric is doing with Baker Hughes and thinks the limbo is torture.

"While my charitable trust owns GE, if it gives away its oil and gas business at the bottom, where I think it is now, I believe that would be a colossal mistake that might make the stock no longer worth owning," Cramer said.

McKesson reported a large miss on the top and bottom lines, and then cut full-year earnings guidance by 8 percent. But it was the commentary on the conference call that truly terrified investors.

"You need to understand that this whole industry seems to be under attack from within," Cramer said.

For years, the drug wholesalers have been a fairly quiet oligopoly. McKesson, Cardinal and AmerisourceBergen control approximately 97 percent of the market and didn't try to compete too hard against one another. That is changing.

So, for a long time there was equilibrium in the drug distribution space as each major player tried not to compete too hard. Now that the supply of branded drugs going generic has shrunk, and the drug wholesalers have started to compete on price, Cramer is worried.

"In that kind of situation, everyone gets hurt and there is no telling when the pain ends. Based on what we heard from McKesson today, I think this could be a very tough situation, which is why you should continue to steer clear of this group, and health care altogether, at least until after Election Day," Cramer said.

On the flipside, Avon Products has made a remarkable comeback this year, up 63 percent. After spending years in a hideous spiral, the stock finally came back to life, leading Cramer to wonder what could be driving the move.

The first catalyst began when Sherri McCoy came from Johnson & Johnson and took over as CEO in 2012. The rebound for the stock gained traction in December of 2015, when McCoy announced a major partnership with private equity firm Cerberus.

The turnaround was clear when Avon reported second quarter results in August and posted an earnings beat, higher than expected sales and took major steps to clean up its balance sheet by issuing $400 million in debt to help pay down $650 million in debt.

However, while the turnaround for the stock is underway, Cramer still advised investors to be careful.

"If you don't own any, I recommend putting on a small position in Avon before it reports next week, and then wait until after the quarter to buy more just in case it gets pounded on some imperfect numbers," Cramer said.


The reality of costly prescription medicine.
David Sucsy | Getty Images

Cramer has faith in Amazon CEO Jeff Bezos, even after the company rocked Wall Street with its aggressive spending plans.

"On Wall Street you don't spring unexpected plans about the need for major spending without expecting a backlash of skepticism," he said.

However, the drop in Amazon's stock merely reflected a pattern of the past for Cramer. Time and again, Amazon's stock has risen and then pulled back when the company finds an opportunity to spend. It tends to spend where it thinks the return on its investment is worth it, though.

"Jeff Bezos doesn't want to cut off his nose to spite his face, or please Wall Street," Cramer said.

Sometimes to get the full picture of an industry, Cramer goes off the tape to look at privately held companies with potentially game-changing technology.

SimpliVity is a technology company that sells hyper-converged infrastructure. It essentially packages up components of servers, networking equipment and storage into one system that is cheaper and more efficient than a traditional server and network infrastructure.

Cramer spoke with SimpliVity's CEO Doron Kempel, who provided further insight on what the company is doing for the technology space.

"It unifies. Instead of having 10 different products on 34 racks, you now have one type of product you can manage from one screen globally. Think about all the space, think about all the power," Kempel said.

In the Lightning Round, Cramer gave his take on a few caller favorite stocks:

Smith & Wesson Holding: "I think that represents great value. I would be a buyer of that company right here."

Blackstone Group: "I feel pretty good about the prospects of the company."