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Cramer Remix: Wal-Mart is Amazon’s only long-term challenger in retail

  • "Mad Money" host Jim Cramer broke down his view on investing in Wal-Mart vs. Target and their ability to stand up to Amazon.
  • Cramer also spoke to the CEO of Yext about how the software company helping to connect the information generation.
  • In the lightning round, Cramer gave a tepid view on Lam Research.

It's been less than six months since Amazon announced its deal to buy Whole Foods, but for CNBC's Jim Cramer and many of the country's supermarket chains, it's felt like years.

"On that fateful day, June 16, the whole supermarket sector got beaten to a pulp, with many of the grocers seeing their stocks fall 5 to 10 percent in a single session," the "Mad Money" host said.

Initially, the declines were brutal. But lately, the cohort has reversed, with many of the leading stocks, including Wal-Mart and Target, up between 20 and 40 percent from their summer lows.

Simply, Wall Street got ahead of itself, Cramer said. As soon as Amazon made its takeover public, analysts raced to slash their estimates on every possible competitor.

What they didn't account for was the near term, and the grocers' latest earnings results only confirmed that the analysts jumped the gun.

Wal-Mart, for example, hit all-time highs after it upped its forecast and announced a $20 billion stock buyback, a whopping 8.5 percent of its market cap at the time.

"If you want a major player where groceries are just one part of the equation, I definitely favor Wal-Mart over Target," Cramer said. "Long term, Wal-Mart is the only retailer with the heft to truly challenge Amazon. It's also got the leadership to pull it off thanks to CEO Doug McMillon."

'This is not a rally.'

President Donald Trump shows samples of the proposed new tax form at the White House in Washington, DC, on November 2, 2017.
Nicholas Kamm | AFP | Getty Images
President Donald Trump shows samples of the proposed new tax form at the White House in Washington, DC, on November 2, 2017.

Cramer was loathe to accredit the Dow's record day to the fundamentals.

"This is not a rally," the "Mad Money" host said on Monday. "This is really a redistribution. It's not a bet on the future, it's a wager that some earnings estimates are going higher while others just stay the same."

In other words, Monday's market rotation was "100 percent about tax reform," Cramer said. The successful passage of the tax reform bill in the Senate brings domestic companies closer to a large, earnings-additive tax cut.

But more internationally oriented companies, like most of tech, don't get much of a boost except for repatriation, which is why the tech-heavy Nasdaq suffered as the Dow rose, Cramer said.

"It's like Congress has waved a magic wand at every cable company, railroad, retailer and restaurant, as well as a smattering of industrials that have great U.S. exposure, and that wand has radically raised earnings for 2018," Cramer said.

Merger mania

Larry Merlo, CEO of CVS and Mark Bertolini, CEO of AETNA appear on Squawk Box on Dec. 4th, 2017.
Cameron Costa | CNBC
Larry Merlo, CEO of CVS and Mark Bertolini, CEO of AETNA appear on Squawk Box on Dec. 4th, 2017.

Cramer has found that certain companies have started to "change the narrative" with strategic mergers and acquisitions when doubt falls on their well-being.

"Today we got two classic changes of narrative, one from Disney and the other from CVS Health," Cramer said, referring to Disney's revived deal talks with Twenty-First Century Fox and CVS' $69 billion deal to buy health insurer Aetna.

If Disney and Fox's talks prove successful, Disney would acquire Fox's non-news, non-sports assets to bolster its entertainment offerings. CVS plans to integrate Aetna's network into its own to become a massive, one-stop shop for pharmacy benefits and clinical care.

Cramer said that "both are defensive deals," with Disney itching to get out from under its ESPN subscriber weakness and the cord-cutting fears that have plagued the old-line media giant.

Yext CEO on AI business

Howard Lerman, CEO, Yext
Scott Mlyn | CNBC
Howard Lerman, CEO, Yext

Artificial intelligence is revolutionizing how consumers browse the web, and behind the scenes, software company Yext is perfecting the details, Yext co-founder and CEO Howard Lerman told CNBC.

"We are witnessing a major platform shift, the rise of conversational artificial intelligence services like Alexa and Siri and Google Assistant," Lerman told Cramer on Monday. "Each of these services needs knowledge to give you an answer. If you ask Google Assistant how many calories are in a Big Mac, she needs to know the answer to tell you. And Yext lets companies manage all their deep digital knowledge in the cloud and automatically sync it to over 100 services."

While companies can't control Google's interface or A.I. capabilities, they can control the details they provide to the search giant. That's where Yext comes in, particularly for larger companies where managing data can prove exceedingly difficult, Lerman said.

"Volvo just signed up with Yext about six months ago," the CEO said. "They revealed, at our annual user conference, Onward, this year, that we've corrected more than 50,000 data errors since they signed up with us."

Lightning Round: Cooling off on LRCX

In Cramer's lightning round, he flew through his take on some callers' favorite stocks:

Lam Research Corporation: "You've got to go over what Katy Huberty said, from Morgan Stanley. She's saying that flash is going to roll over. Lam makes machines to make flash. If that's the case, then that stock is rolling over, too, and it makes a lot of sense. I happen to think Lam's a great company, but I'm not going to stick my head in the Lam lion's den, not yet. I've got to wait to see it go to where all the sellers are done, and the panicked sellers are still very much in there."

Advanced Energy Industries, Inc.: "I think that what you have to do first is go with the traditionals. You have to buy an Intel or a Texas Instruments before you go down the food chain like this, because that's what's going to bottom first."

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