Cramer's 'Mad Money' Recap: Get Out of HP, Best Buy Now
When asked about the day's news regarding Hewlett-Packard's acquisition gone bad, Benioff said Salesforce has done over 2,000 acquisitions in recent years, mostly to acquire next-generation technology or forward-thinking entrepreneurs. He said Salesforce is working with HP to help its sales and service teams collaborate and innovate.
Do Your Homework
Don't trade on the headlines, Cramer told viewers, do the homework. Headlines can be misleading, as was the case with Urban Outfitters (URBN) , which was widely reported as delivering an earnings miss of only one cent a share on light revenue and with only a 1% increase in same store sales.
Under these headline numbers, Urban Outfitters actually did quite well, and is poised to have a great holiday quarter. Cramer said the 1% increase in same-store sales was actually a 7% increase, but that number was dinged due to merchandise ordered online that was returned at stores.
In addition to strong sales both in-store and online, Cramer noted that the company's margins are up, inventories are lean and management expects the fourth quarter to be "less promotional," which is code for selling more items at full price.
Cramer also noted his unofficial "congratulations quotient," which measures analyst sentiment by counting the number of "congratulations" management receives on their conference call. Of 19 analysts asking questions, a full 11 of them offered such kudos.
Urban Outfitters struggled last year after the company had the wrong merchandise for its customers, but Cramer said now that a solid management team is back in place, Urban Outfitter's business is once again on fire. Shares trade at 19 times earnings with a 17% growth rate.
Off the Charts
In the "Off The Charts" segment, Cramer went head to head with colleague Carolyn Boroden over the direction of the overall market.
According to Boroden, a daily chart of the S&P 500 shows some key Fibonacci indicators, ones that indicate the downward trend in the markets may be about to change. She noted the S&P's decline from April 2 through June 4 lasted 43 trading days. The current decline from Sept. 14 through last Friday was also 43 trading days.
In addition to this correlation, Boroden also said showed the market's rally from June 4 through Sept. 14, when multiplied by 61.8%, a key Fibonacci number, also translates to 43 days.
Boroden said she remains cautious on the markets, however, because it still must pass resistance levels at 1,391 and 1,453 on the S&P 500 before it would be completely out of the woods. If the index can hold these levels and rally beyond 1,453, she said, then it could surge to 1,510 for an 8% gain.