Cramer Remix: Why this stock could be red hot

  • The struggles of drugstore rivals Rite Aid and Walgreens have paved the way for CVS to shine, even before it closes its deal with Aetna, according to CNBC's Jim Cramer.
  • The Mad Money host also sat down with Tapestry CEO Victor Luis.
  • Cramer's charts show that U.S. Treasuries have a reason to rally.

While the failed merger between Walgreens and Rite Aid has led to the pharmacy chains struggling to find their footing, their rival CVS has had the chance to shine, CNBC's Jim Cramer said.

"When the FTC blocked the Walgreens-Rite Aid merger, they actually laid the groundwork for less competition, because the delay and subsequent confusion ending up crushing Rite Aid," the Mad Money host said. "They thought they were preventing the industry from becoming an effective duopoly, instead they turned it into one. And the biggest winner here is CVS: it's a best-of-breed stock with a lot more room to run."

Walgreens announced its acquisition of Rite Aid in 2015, but it became clear in the following year that the Federal Trade Commission had its concerns about the deal for anti-trust reasons. Instead, Walgreens settled for buying almost 2,000 Rite Aid stores.

Rite Aid then tried to sell itself to Albertsons, but that deal went up in smoke last week.

In the meantime, CVS has become the most vertically integrated drugstore chain, and its acquisition of insurance provider Aetna will only increase its clout in the healthcare industry.

Watch why Cramer has tapped CVS as his favorite pharmacy chain here.

Millennials' unique spending habits

Customers carry Coach Inc. shopping bags after shopping at a store during a charity preview event on the eve of the grand opening of the Outlet Shoppes of The Bluegrass in Simpsonville, Kentucky.
Luke Sharrett | Bloomberg | Getty Images
Customers carry Coach Inc. shopping bags after shopping at a store during a charity preview event on the eve of the grand opening of the Outlet Shoppes of The Bluegrass in Simpsonville, Kentucky.

Tapestry and Home Depot both reported second-quarter earnings before the bell on Tuesday, and CNBC's Jim Cramer thinks that the numbers reveal a lot about consumer spending patterns.

"Despite an incredibly strong job market, we're seeing a decisive shift in how the consumer spends her money: houses are out, clothes and accessories are in," the "Mad Money" host said.

Tapestry — which owns Coach, Kate Spade and Stuart Weitzman — reported earnings that beat Wall Street analysts' expectations and also offered strong estimates for the future. Tapestry's peers in the retail sector, such as Michael Kors, Ralph Lauren and VF Corp, have also posted strong second-quarter numbers.

On the other hand, Home Depot beat expectations but reported conservative guidance that gave investors pause. Considering the company's solid performance, Cramer wondered, "if they're being cautious, what does that mean for everyone else?" Along with Home Depot, he pointed to online real-estate brokerage Redfin, whose CEO warned investors last week of a slowing housing market, as a sign that "the housing industry has hit a wall."

Read more about Cramer's take on the two companies here.

Tapestry CEO on the year's 'terrific' growth

Victor Luis, CEO of Tapestry 
Adam Jeffery | CNBC
Victor Luis, CEO of Tapestry 

Tapestry CEO Victor Luis attributes the company's earnings and revenue beat to the "terrific" growth that the accessories category has seen in the last year, driven by consumers' need to express themselves.

"The past year has seen really terrific growth with high single digit, low double digit growth globally, truly driven by the fact that accessories remain the most important category for how consumers express their individuality," Luis told CNBC's Jim Cramer on Tuesday.

The holding company of Coach, Kate Spade and Stuart Weitzmanbeat analysts expectations for its top and bottom lines for the fourth quarter. Tapestry earned 60 cents per share for the quarter, up 3 cents from the 57 cents per share expected by Wall Street. The company reported revenues of $1.48 billion, beating analysts' estimates of $1.47 billion.

Its strong quarterly performance was driven in part by Kate Spade, which exceeded the company's own expectations. Though the death of brand's namesake founder in June stoked nostalgia and contributed to the rise in sales, Tapestry said that it does not expect the higher revenues to be ephemeral.

Read more about the exclusive interview with CEO Victor Luis here.

US Treasury bonds have a reason to rally

Douglas Sacha | Getty Images

U.S. Treasury bond yields have been on a tear this year, and with the Federal Reserve on track to continue raising short-term interest rates, it looks like the trend will continue. But when bond yields rise, prices fall, which has investors worried. "The conventional wisdom on both Wall Street and Main Street is that U.S. Treasuries are one of the worst possible asset classes to own right now," said CNBC's Jim Cramer.

However, Cramer thinks that investors shouldn't be too quick to follow the crowd. The "Mad Money" host enlisted the help of technician Carley Garner, co-founder of DeCarley Trading and author of "Higher Probability Commodity Trading," to reassess the state of the bond market. Garner believes that "the bears in the Treasury complex have gotten overconfident," said Cramer.

Taking a look at the weekly chart of the 10-year U.S. Treasury futures, Garner's analysis shows that large speculators, who are professional money managers, are betting against Treasury prices at never-before-seen levels.

To read more about what Cramer's charts are telling him about Treasuries, click here.

Tesla skeptics should skip shorting

An employee cleans a Tesla Model 3 electric vehicle on display at the company's showroom in Newport Beach, California, U.S., on Friday, July 6, 2018.Patrick T. Fallon/Bloomberg via Getty Images
Patrick T. Fallon | Bloomberg | Getty Images
An employee cleans a Tesla Model 3 electric vehicle on display at the company's showroom in Newport Beach, California, U.S., on Friday, July 6, 2018.Patrick T. Fallon/Bloomberg via Getty Images

Tesla bears are saying that now is the time to short the stock, but skeptical shareholders should stick to selling, according to CNBC's Jim Cramer.

"If you don't like Tesla, you should sell it," the Mad Money host said. "But don't short it. Shorting Tesla has been a recipe for disaster."

Ever since CEO Elon Musk tweeted that he had secured funding to take the electric car maker private, the company's critics have claimed that his time is up, Cramer said. For short-sellers, the valuation of $420 per share seemed outrageously high for a company that they believe is running out of cash.

The short sellers have been encouraged by reports that the SEC is looking into whether or not Musk's tweet about having secured funding to possibly take Tesla private was truthful. It's unlikely that his announcement that he is working with Goldman Sachs and Silver Lake to take Tesla private will dissuade them.

But Cramer urges investors to take a deep breath and think about how the law actually works.

Read more about Cramer's advice for Tesla skeptics here.

Lightning Round:

In Cramer's lightning round, he shared his take on callers' favorite stocks:

Scotts Miracle-Gro: "You're right to be concerned because, frankly, they've missed quarter, missed quarter, missed quarter and enough is enough is enough. I don't know if I want to sell it here, it'll maybe get a bounce, but you're absolutely right."

Johnson & Johnson: "Under 130 - it got there. [CEO] Alex Gorsky is doing a magnificent job. You finally got a break to be able to buy that. I'd buy some here and at 127."

Aspen Technology: "It is up huge. I'm a Salesforce, VMWare kind of guy, but that is generous. It kind of reminds me a little bit of Autodesk. I like it."

Stratasys Ltd: "We had a really good call from 3D Systems, the stock is up in a straight line, but it's really good. And let's not forget what they've been building at HP Ink – they've got terrific 3D. Those are my two favorites. I don't need to go anywhere further."

Watch the full lightning round here.

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