When it comes to mega-cap technology companies, Alphabet (GOOGL) truly stands apart, Jim Cramer told his Mad Money viewers Wednesday, after the company reported blowout earnings that sent shares soaring up 7.5% by the close.
Alphabet's conference call was jam-packed with new technologies that most people don't even understand, Cramer explained, but it seems that every single one of them is making the company a ton of money. Not only did the parent of Google deliver on earnings, they also purchased $50 billion worth of their own stock, representing 5% of the total share count.
But more important than earnings, or buybacks, was Alphabet's announcement that they will be splitting their stock 20:1 to make it more accessible to individual investors. While stock splits in and of themselves create no value whatsoever, Cramer applauded the move. Splits are a sign to investors that things are going well, and they appeal to investors who don't want to buy fractional shares or risky options.
Over on Action Alerts PLUS, co-portfolio managers Bob Lang and Chris Versace say Alphabet's December results point to a strong start to 2022 for the company, and in response they're boosting their price target. Find out what they think of the stock split, too, and get in on the conversation at Action Alerts PLUS.
Splits also eliminate institutional bias. The main reason to keep your share price high is because big money managers pay commissions on a per-share basis. Bigger shares make them more affordable to them, but less affordable for you.
These reasons may not sound like much, but the stock market runs on emotions, Cramer said, and that's why splits matter. If Google can split their stock, everyone can. And after today, they probably will now that someone has taken the lead.
Executive Decision: Waste Management
In his "Executive Decision" segment, Cramer spoke with Jim Fish, president and CEO of Waste Management (WM). Shares of Waste Management are up 31% over the past year but have fallen 11.2% so far in 2022.
Fish said that labor inflation is among their biggest challenges at the moment. His company saw 9% wage inflation last quarter, on top of an even bigger number in the preceding quarter. That's why Waste Management is investing heavily into automation and technology to help reduce their labor dependence. They are replacing rear-loading trucks with automated side-loading vehicles and investing in optical sorting machines at their facilities to help sort recyclables.
Fish said Waste Management doesn't get enough credit for their environmental efforts. Nearly 70% of their vehicles now run on natural gas, Fish explained, and since many of their landfills now generate natural gas, those trucks can refuel after they drop off their loads.
Waste Management also generates a lot of free cash flow, and the company is committed to returning that cash to shareholders with dividends and share buybacks.
Looking at Coterra Energy
Energy has been among the best performing sectors during the pandemic, but there is one name in particular that's been overlooked, and that's Coterra Energy (CTRA).
Cramer said he's still a fan of Chevron (CVX), along with oil producers like Pioneer Natural Resources (PXD), Devon Energy (DVN) and Diamondback Energy (FANG), but Coterra, which was formed by the merger of Cabot Oil & Gas and Cimarex, may be even better.
Unlike Pioneer and Devon, which are mostly oil producers, Coterra is 75% a natural gas producer, one with great acreage in the Marcellus Shale region, but also exposure to the lucrative Permian Basin. Like its peers, Coterra has moved to a disciplined production plan that includes a variable dividend. Right now, that dividend is 5.2%, but Cramer felt that upwards of 7% is possible.
But what Cramer liked most about Coterra is its enterprise multiple, which sits at just 4.2 times earnings. This compares to multiples of 5.6 times and 6.1 times for Pioneer and Devon, making Coterra one of the best producers with the best valuations.
Executive Decision: Thermo Fisher Scientific
For his second "Executive Decision" segment, Cramer also spoke with Marc Casper, chairman, president and CEO of Thermo Fisher Scientific (TMO), the tools and diagnostics provider for the life sciences industry.
Casper said that Thermo Fisher had a spectacular year in 2021 and grew over 20%, including the largest acquisition in the company's history.
When asked what our country needs to get past this pandemic and get ahead of the next one, Casper said America needs a holistic approach that includes surveillance and sequencing to quickly identify threats.
It needs diagnostics and testing to prevent the spread. And it needs most therapeutics that can treat patients and lower anxiety levels. Fortunately, Thermo Fisher is well positioned to assist in all of these areas and even has the capacity to help manufacture vaccines as well.
Casper noted that Thermo Fisher should not be thought of as just a pandemic company, however. The first thing it did with the pandemic windfall was dramatically increase investments outside of vaccines and testing. His company has ramped research and development from $1 billion to $2.5 billion to fuel a robust pipeline of new products that will power Thermo Fisher for years to come.
Lightning Round
In a shortened Lightning Round, Cramer was bullish on Graphic Packaging Holding (GPK) and bearish on Boxed BOXD.
Opportunities Can Follow Disappointments
In his No-Huddle Offense segment, Cramer told viewers that not all disappointments are created equal. Some are buying opportunities, while others are reasons to head for the exits.
That's why shares of Starbucks (SBUX) fell when the company disappointed, but quickly rebounded, and why shares of PayPal (PYPL) collapsed more than 25% and still haven't found the bottom.
The difference between Starbucks and PayPal is that Starbucks' disappointment was in the past, but PayPal's was all about the future. Omicron forced Starbucks to close stores -- stores which are now beginning to reopen. Rising costs have been offset by price increases that should start to pay dividends next quarter.
PayPal is a different story. The company had a good 2021, which included 20% growth. But now Omicron and inflation are crimping online sales, causing PayPal's growth to slow. With its former estimates out the window, the company must retool quickly or make acquisitions to reignite its growth. So far, we don't know which direction they are likely to head, causing investors to panic.
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