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Cramer Remix: Why the ‘auto slowdown’ thesis is kaput

Key Points
  • "Mad Money" host Jim Cramer explains why auto stocks are revving up for big gains.
  • Cramer also sits down with the CEO of Brunswick to hear about the boating business after Hurricane Irma.
  • In the lightning round, Cramer greenlights two screaming buys.
Cramer Remix: Why the ‘auto slowdown’ thesis is kaput

As the Dow Jones average closed at a record high on Thursday, CNBC's Jim Cramer saw a forgotten sector getting a bit of unexpected love.

"Nothing gives you clues better than the stock market," the "Mad Money" host said. "Remember that peak auto thesis that autos were now headed [down]? Well, that's being disrupted by all those destroyed cars in the Houston area that are insured."

Nearly two weeks after flooding from Hurricane Harvey wreaked havoc on the Eastern coast of Texas, Cramer started seeing some of the most embattled auto stocks breaking out.

"Look at the stock of General Motors. It's finally breaking out. Do you know how many years that thing has been toiling in the House of Pain? That's those insurance checks. They're coming in. Look at the stock of auto parts maker Magna International," he said. "Morgan Stanley had the misfortune of downgrading this one right before the storm. Now it's hitting 52-week highs as the slowdown thesis for the auto industry is kaput and the parts industry is soaring."

But auto isn't the only sector turning around. Cramer also noticed health care stocks starting to come back to the fore and shared his cardinal rule for spotting market rotations.

Analysts' Biggest Mistake on Apple

Apple senior vice president of worldwide marketing Phil Schiller makes speech during the Apple launch event on September 12, 2017 in Cupertino,California. Apple Inc. unveiled its new iPhone 8, iPhone X, iPhone 8 Plus, and the Apple Watch Series 3 at the new Apple Park campus.
Qi Heng | VCG | Getty Images

Cramer is convinced that analysts who weren't thrilled about Apple's new iPhone release are missing something, and it may have something to do with age.

"I think one of the reasons why there was so little 'Wow, got to have it' about the new iPhone, at least among the analyst community, is that the analysts themselves might be too old to get their heads around the way younger people see these products. When new technology comes out, millennials, who tend to be too young to be senior analysts, are far more likely to figure out how to use them and how to adapt to them," Cramer said.

Analyst reports from Credit Suisse, Canaccord Genuity, JPMorgan and Piper Jaffray were tepid, saying the product launch met expectations, while KeyBanc analysts were "disappointed" with the iPhone X.

But Cramer argued that younger people are likely to create buzz around new product features, download key apps and use the phones to engage with and document the experiential economy.

Time to Buy Best Buy?

A Best Buy store in New York City.
Getty Images

Brick-and-mortar retailers may be feeling the heat from Amazon, but Cramer is keen on one chain that's been thriving despite the online giant's domination: Best Buy.

"Five years ago, it looked like this electronics retailer was roadkill, and it was regularly dismissed as merely being a showroom for Amazon. Remember that? You'd go into Best Buy, you'd look at the televisions, computers [or] speakers, then you'd order them off the web for a lot less money. Then Hubert Joly took over as CEO in September of 2012, and ever since then, Best Buy has come roaring back, with the stock nearly quadrupling over five short years," Cramer said.

The stock has been so strong that Cramer was surprised when Best Buy shares fell nearly 12 percent after its latest earnings report. Investors fled the stock after management issued some cautious commentary on the conference call, a reaction Cramer saw as overblown.

"Of course, Best Buy has already started bouncing back, but the stock is still down $5 from its highs and it's got a lot of big catalysts coming up in the next few weeks. That's why I think it's not too late to buy the stock of BBY," Cramer said.

Brunswick CEO Talks Hurricane Protocol

Brunswick Corp Sea Ray SLX – W230.
Adam Jeffery | CNBC

Then, Cramer spoke with Mark Schwabero, the chairman and CEO of Brunswick, the largest manufacturer of recreational boats in the world.

Hurricane Irma took a toll on the coast of Florida, which is home to a large boating community. But Schwabero told Cramer on Thursday that boats are far from Florida residents' first priority.

"If you go back and look at Hurricane Matthew, you look at Sandy, Katrina and now the most recent one, typically, the boat aspect is delayed about 12 to 18 months. The priorities are getting your home, the roof, your life back to normal, getting the checks from the insurance company, all those things," Schwabero said. "The other part is some people return to boating through used boats. They're not all new replacements."

As a company partly devoted to making boat components, Schwabero expected to see owners making repairs to their boats first rather than purchasing new ones.

"I think the first thing we'll see is we've got a huge parts and accessory business, about 25 percent of the company. You'll start seeing some of that as people repair boats, and then over time we'll pick up the new boats," Schwabero said.

Brixmor Property Group CEO Talks Retail Strategy

Finally, Cramer sat down with Brixmor Property Group's new President and CEO, James Taylor Jr. As the head of a retail-oriented real estate investment trust, or REIT, Taylor told Cramer on Thursday that retailers are starting to realize the most effective strategy for staying in business.

"I think what the retailers who are thriving in this environment get is that it's really an integrated approach to serve the customer. And internet is part of the businesses that are going to thrive, but not necessarily a replacement for the physical presence of a store," Taylor said.

The CEO pointed to Amazon's $13.7 billion purchase of high-end grocery chain Whole Foods and said it sent a key message to the entire retail sector.

"The read-through on that, and a very important point, is that in [Amazon's] obsession to serve the customer, they think the store is important," Taylor told Cramer. "And when you see these retailers who are pulling stores away, they lose their online sales."

Lightning Round: Two Screaming Buys

In Cramer's lightning round, he sped through some callers' favorite stocks:

International Flavors & Fragrances Inc.: "I think that last quarter was really good. The one before it wasn't that good. I want to have them back. I really like those guys. Buy, buy, buy."

Lockheed Martin Corporation: "Buy, buy, buy! That is one of my favorite stocks. By the way, I still like Raytheon a little more, though."

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