Cramer: 5 Stocks That Turned Negatives Into Positives

 | Oct 03, 2017 | 5:25 AM EDT
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In a true bull market like this one, negatives melt into positives. Here's five stocks that demonstrate exactly that.

Not that long ago, Intel (INTC) paid $15.3 billion for Mobileye, the Israeli company with good autonomous driving technology. At the time, the acquisition was panned as another in a long line of what might turn out to be dubious purchases, which is how Wall Street views the McAfee and Altera (ALTR) deals that preceded this one. We kept hearing that there are only 600 employees and that it had been bounced from Tesla (TSLA) for Nvidia (NVDA) .

Intel's purchase of Mobileye is currently widely being hailed as the savior for Intel, now that its personal computer chip business has no growth and there are some question marks about the growth of its data center business. A negative melts into a positive.

When Cisco (CSCO) last reported, it disappointed. It also traced out a course that left many thinking the turn, so necessary because of the decline in the core switching and routing business, is dragging out too long. But the company, with $70 billion in cash, most of it held overseas, is now being regarded as the principal beneficiary of a change in the repatriation laws. It suddenly doesn't even seem to matter that the core business might not be as strong as we thought. It's a Trump stock!

LuluLemon (LULU) had been derided for having its own brick-and-mortar stores while Nike (NKE) and UnderArmour (UA) had no real brick-and-mortar exposure. But both the latter are considered no longer in control of their destiny, because they are sold into brick-and-mortar stores and the discounting has become horrendous. LULU, on the other hand, is using its stores as lucrative showrooms for its fast-growing online business. A negative becomes a positive.

The long knives had been out for Illinois Tool Works (ITW) not that long ago, because 20% of its business was in auto. Even though 80% of its businesses were strong, the selling was relentless and it took this incredibly high-quality company's stock down 10 straight points from $147 to $137. I know I was taken aback by the decline and mentioned in the monthly club call that I couldn't believe how punished this company's stock is, given the peak auto rap.

Now, with half a million cars needing to be replaced, that 20% has gone from being something to detest to something that has become a magnet for investors looking for ancillary ways to trade an auto resurgence.

Last month, both Johnson & Johnson (JNJ) and 3M (MMM) got hit with sell recommendations. Goldman Sachs, in recommending the sale of JNJ, said its valuation was stretched. JPMorgan knocked 3M to a sell on a similar thesis.

Now, though, with investors frantic to find something to buy, they are coming back to these two because they have fallen behind their cohort, in part because of these sell recommendations. In other words, JNJ may have been expensive when the rest of the group was lower, but now it's lower and the rest of the group is higher, so why not scoop some up?

The averages have gone up so much in the last few years, that it's hard not to call the action during those days bullish on a percentage basis.

But this is different. This is the kind of action you get when you have a real bull market, like we had in the 1990s when you are searching for things to buy that haven't moved.

It's again why I suggest that any selloff not related to individual equities is a reason to buy stocks. The opportunities are that great, and the objections just keep being rebutted.

___________________  

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