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Cramer introduces the ‘cloud kings,’ tech’s hottest new stock group



Since CNBC’s Jim Cramer is in San Francisco this week, he wanted to go over a new stock group in technology space that’s just refusing to quit.

“I’m calling them ‘the cloud kings,’ the seven software companies that are transforming the way their customers do business,” the “Mad Money” host said on Monday. “I’ve been telling you about the cloud revolution for years now, … but the truth is it’s still in its early stages, which is why I still like the seven kings of the cloud: Adobe,, ServiceNow, Red Hat, VMware, Splunk and Workday.”

In addition to their cutting-edge tech, these companies’ stocks have been wildly strong performers, Cramer said. Shares of all seven have rebounded between 17 and 30 percent since the market’s Feb. 9 lows.

Here are their one-year gains:

“In many cases, their stocks are indeed expensive up here. The kings come at a cost,” Cramer acknowledged. “Regular viewers know I do hate to chase. But on the rare occasions when these names give you a dip, they have been fabulous outright buys.”

To convince investors why macro-economic or geopolitical worries shouldn’t weigh on this part of the cloud, Cramer went over each cloud king’s track record and explained what made it a worthy buy.

He began with Adobe, the design-oriented software giant making strides in various artificial intelligence and cloud-based applications.

“When it comes to digital media and marketing software, Adobe is in a league of its own,” the “Mad Money” host said. “This company has a terrific long-term track record, but the stock really took off a couple of years ago after Adobe began to transition from an old-school, on-premises software company to a modern, cloud-based, software-as-a-service business.”

Adobe’s transformation to charging its customers on a subscription basis has “turbocharged” its earnings growth, Cramer said.

He hoped that the company’s Thursday report would miss on a minor line item so that investors could buy into the stock, which hit a new all-time high on Monday, at a lower level.

Next, Cramer turned to Salesforce, which he called “the king of the cloud.” The company helps enterprises better understand their customers with a range of tools spanning marketing, e-commerce, community management, analytics, application development and professional cloud services.

With its latest quarter, Salesforce became the fastest enterprise software company to hit a $12 billion annual revenue run rate, seeing double-digit sales and unbilled deferred revenue growth.

“I wouldn’t be surprised if the future looks just as bright now that Salesforce is using artificial intelligence to better predict consumer behavior,” Cramer said, referencing the company’s Einstein tech. But, he warned, “the stock has run dramatically and I’d like it a heck of a lot more on a pullback.”

Cloud king No. 3, ServiceNow, focuses largely on efficiency, helping companies build applications that reduce labor costs by automating jobs in areas like human resources, legal, finance, security and facilities management. In its latest quarter, ServiceNow’s subscription revenue grew by 44 percent.

“Right now, the company gets a ton of credit for its IT services division, but I think the rest of ServiceNow, all the auxiliary businesses that involve automating back-office jobs, is the real future of the company,” Cramer predicted. “However, this is another one that just made a record high today, so please be patient. Put it on your shopping list. Wait for a better entry point.”

Red Hat, the fourth on Cramer’s list, is the top open-source enterprise software provider in the world, assisting companies in their transitions to the cloud.

Recently, Red Hat has started helping enterprises build out their own private cloud networks, which offer faster, more secure access to their information.

“The growth has really taken off since they made this move,” the “Mad Money” host said. “Red Hat reports in two weeks and Wall Street has a history of misunderstanding this company’s results, causing the stock to get hit. It got hit really badly last time. Let’s hope that happens again. These dips have made for excellent buying opportunities.”

In an aside, Cramer said that he would anoint VMware, another cloud onboarding play, to his list of cloud kings if the company wasn’t publicly involved in deal talks with Dell.

The last two cloud kings were “phenomenal growers” Splunk and Workday. Splunk helps companies analyze and use their data in the best way possible, while Workday, like ServiceNow, focuses on making human resources and finance departments more efficient.

“The bottom line? When you identify a powerful theme that’s revolutionizing the way we do business, find the biggest winners, wait for a good entry point and then hang on for the ride,” Cramer said. “Adobe, [with CEO] Marc Benioff, ServiceNow, Red Hat, VMWare, a little convoluted ownership structure there, Splunk and Workday — they are the kings of the cloud and they all belong on your stock market shopping list.”

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Sears is dead meat walking




From Wolf Street:

Sears Holdings — the storied and once dominant retailer turned into the biggest tragedy in US retail history — reported fourth quarter earnings [March 14]. The quarter, ended February 3, covered the crucial holiday sales period. Revenues plunged 27.7% year-over-year to 4.4 billion.

Over the same period, total retail sales across the US by all retailers, including online, rose 5.2%.

In fact, Sears’ revenues were so bad that in the crucial holiday quarter they were about flat with Q1 and Q2. In other words, Q4 was an unmitigated fiasco-disaster quarter.

In Q4 2012, Sears still had $12.3 billion in revenues.

The chart below shows just how miserably terrible revenues were in Q4, with no holiday pickup whatsoever, likely the first quarter in Sears’ post-World War II history where holiday revenues were about flat with Q1 and Q2 of the same year:


Taking the revenue trend-line of all Q4s going back to 2012 and extending that line as a projection of where revenues might be over the next few years, we discover that revenues will hit zero sometime in 2019 and drop below zero in 2020 – a numerical joke because Sears will be liquidated in bankruptcy court long before then…

Continue reading at Wolf Street…

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Is it time to sell America’s largest retailer?




From Steve Sjuggerud, Editor, True Wealth Systems:

Walmart just finished its best year since 1999…

The company soared 47% in 2017. And it continued that trend in January, jumping another 11%. Then the stock came back to earth.

Walmart wiped out four months of gains in February, falling 16% in total. And not surprising, a 16% one-month loss is a rare extreme for the country’s largest retailer.

In fact, falls like this have only happened four other times since 1980… And history says this could be reason for Walmart investors to sell.

Let us explain…

We last wrote about Walmart on October 25. And back then, we told you about a major opportunity in the company…

Walmart had spiked 9.5% in a week. And that meant 26% upside was possible, based on history.

History turned out to be right… as Walmart rallied 25% through its January peak.

But again, things have reversed since then.

The stock wiped out more than half of those gains in one month. Take a look…

This is an ugly chart… Unlike the overall market, Walmart’s shares haven’t recovered since the correction. Instead, they’ve continued to hit new lows.

But while the chart is ugly, history says it could get uglier.

You see, after previous 15%-plus one-month falls, Walmart has dramatically underperformed over the next year. Take a look…

Walmart has been a home-run investment since 1980, returning roughly 19% a year. But buying after the company has fallen 15%-plus in a month greatly diminishes those returns.

Specifically, similar extremes have led to a 4% loss in one month… a 0% return in three months… and just a 6% return over the next year.

That’s still a positive return. But it’s much worse than you’d typically do in Walmart shares. And simply owning the S&P 500 Index would have doubled this annual return over the same period.

Remember, this extreme has only happened four times since 1980… so our sample size is small. But all four instances led to less-than-stellar returns going forward.

Buying after today’s extreme is a bad idea. And if you’re a Walmart shareholder, history says the next year or so may be rough.

Good investing,

Steve Sjuggerud and Brett Eversole

Crux note: Steve and Brett always have an exit plan…

In fact, their True Wealth Systems computers recently issued five “sell” signals to subscribers. They closed out for an average gain of 25% in just 11 months. 

Right now, Steve’s looking for new opportunities as the “Melt Up” approaches… when a huge run-up in stocks will offer triple-digit gains before the bull market ends.

To access his research, sign up for a risk-free trial subscription right here.

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Volatility is ready for an encore




From Jeff Clark, Editor, Jeff Clark’s Market Minute:

The Volatility Index (VIX) has been cut in half over the past month. But it’s still the top-performing index of the year so far. And it looks ready to surge higher again.

The VIX started the year below 10. That’s a historically low level of volatility – which, given the relatively quiet action in the stock market for all of last year, seemed appropriate. But, as I warned back on January 1

Low levels of volatility are always followed by higher levels of volatility. That’s why I suspect we’ll have lots of opportunities to profit off of wild movements in the VIX in 2018.

As it turns out, the VIX closed at its lowest level so far this year on the following day. It marched steadily and methodically higher all through January. Then, as sellers clobbered the stock market in early February, the VIX spiked to 39.

Yesterday, the VIX closed just below 19. That’s down 50% over the past month. But it’s still 90% higher than where it started the year. And, by the look of the following chart, it looks like volatility is ready to spike higher again…

When the VIX spiked higher in early February, it was trading well above its 50-day moving average (MA). And all of the various technical indicators you see on the chart jumped into “extremely overbought” territory.

Since then, the VIX has moved back down towards its 50-day MA – which should now serve as support. In other words, the VIX should hold above the 16 level. At the same time, all of the technical indicators have recycled back to neutral. So, there’s plenty of energy stored up in these indicators to fuel a move higher.

Of course, a higher VIX usually accompanies a lower stock market. So, all of this lines up with my argument that the S&P 500 will soon retest its 2581 closing low.

To me, it looks like the VIX could be headed higher – soon. Traders ought to prepare for it.

If you’ve profited off the market’s bounce over the past few weeks, then consider taking some gains off the table, or at least tightening stop losses on those positions. Aggressive traders should consider adding some short exposure.

Best regards and good trading,


P.S. No matter which direction the markets go, my Market Minute subscribers are always up to date on the trends taking shape – and the best ways to profit on them – hours before the opening bell rings.

Sign up for the Market Minute for free right here… and get your next issue at 7:30 sharp tomorrow morning.

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