Analysis: DHR GE CVS

In today's Daily Rundown, Jim breaks down this morning's huge Danaher (DHR) -General Electric (GE) deal (which we also wrote about in our Alert here), discusses what to make of CVS Health (CVS) after last week's earnings report, talks about what a trade deal could mean for the broader market, and more!

Katherine Ross: Hey y'all. I'm Katherine Ross with Action Alerts PLUS. I'm here on the floor of the NYSE with Jim Cramer. Jim welcome back.

Jim Cramer: Thank you.

Katherine Ross: I want to kick this off because I just teased in our Facebook Live Video. How can members make money off of this GE-Danaher deal?

Jim Cramer: Well, look I think that GE has gone from being expensive to cheap because expensive is when you're worried about a company's financials to cheap when you're much less worried. Now you see it as an aerospace play. Danaher stole a lot of the upside. I mean now when you see a stock up that much my first instinct is to say let's sell some. But my second instinct is to say when a stocks up nine, ten wait til tomorrow. More people upgrade, more people button numbers, and then maybe let a little bit go. But obviously we're frozen and we'll talk about that with the team.

I would buy GE. I would buy GE ahead of the March 5th meeting with Steve Tusa, who has been a very big critic, ahead of the March 7th teach in on long term care which is the last big worry. Then a further layout of vision at the end of March by Larry Culp, who of course steered Danaher to greatness, one of the reasons why we like Danaher so much. So, GE's not expensive anymore.

Katherine Ross: You were taking a well earned vacation when CVS-

Jim Cramer: Oh my god thank you so much.

Katherine Ross: When CVS reported earnings. Now, I'm wondering ... let's recap.

Jim Cramer: Yeah, I spent a lot of time on that.

Katherine Ross: What's going on?

Jim Cramer: I spent a lot of time on that when I was away because our group, because Jeff and Zev do such a good job, and it was very disheartening. Because I really felt that the company had not disclosed the way I would have, let's say. It's long-term care division problem, now it's not long-term care in terms of health insurance. But just some issues into selling into that market, that was something that was opaque, in they had earlier alluded to it being bad, talked about the weakness. Then it did it again. So, like let's get behind this.

I thought Larry Merlo let a lot of people down including the analysts who want so much to like him. If it weren't for the fact that I like Aetna so much I would say that we were wrong. I can't say that because Aetna is the cheapest of the ... you know we have United Health. Aetna's going from being one that it was kind of finite value to being one that's in play again. It's being inexpensive. Mostly because of miscues, missteps by CVS and Merlo. I should have realized when the Aetna team just vanished after the acquisition that there were things that were awry. But at this price with 3% yield and a belief that I think that it's been derisked, it's good. It will go up. I believe we're in good shape. But you know what? I have to call out Merlo as really taking some ill-advised positions and I'm disappointed in the man.

Recently I had a situation where an executive had come on Mad Money. No need to name him. Talked pretty positive. Then reported some things on the quarter that weren't that good although his core business was good and the stock fell big. And I said that it was a suboptimal situation and he emailed me and said, look, Jim I think that was grossly unfair basically he said. I came back I said you're absolutely right. What I left out was what an ill-advised position that I personally had taken because I believed. I believed. So, it's on me. I mean this used to be the attitude of my old hedge fund. This one was on me CVS because I should have seen ... you know I was dealing with a lot of good analysts. We all thought that Merlo would guide down to seven. We didn't think he'd go under seven.

I trusted Merlo. Now I question my judgment about why I trusted this man. I do like the combination but obviously ... not unlike like DowDupont. I jumped the gun. Dow Dupont I jumped the gun. I had no idea plastics would fall apart. No idea that it would take so long to do the deal. Jump the gun on CVS and wanted to get in ahead of when the company described the synergies and that was bad. I should have waited. I didn't think it would be this bad because look you know there's an era of good feelings about of lot stocks. But we screwed up on CVS. We screwed up on DowDupont and I'm redoubling my effort on CVS. But I do come back and say I wish I could more right now.

Katherine Ross: I actually have a member question about CVS. So, I'm going to go ahead and ask it.

Jim Cramer: Sure, sure.

Katherine Ross: Cary is wondering, he said and I'm quoting him directly, "I was wondering if you could address the potential competition of Amazon going into the pharmacy business and what impact you think it would have on the business of CVS?"

Jim Cramer: Look I think that that's one of the reasons why they bought Aetna. It's one of the reasons why I liked it so much is that they were going minimize what's hurt Walgreens so much, which is just the kind of commoditization of a lot of what they offer. I think CVS prescription business we kind of knew that there would be a problem with the rebates. That was flagged. But the front of the store did okay. So, I'm not as worried about Amazon because you're paying an incredibly low multiple that's been reduced by the miscues of Merlo, the CEO and fear of Amazon. I'm willing to take on that fear in the same way that I like Target here and the same way that I like Kohls here and the same way like Walmart.

Katherine Ross: My question of the week last week was all about headlines because we saw so many different trade headlines. And I want to ask you about that and I'm going to ask you the same question which is should these trade headlines be impacting markets?

Jim Cramer: Yeah, sure. Why not? Now there's surety about Boeing perhaps. One out of four planes goes there. About Caterpillar which is really been kind of a, more of a play on mineral growth and that's been sluggish because of China. Emerson matters tremendously. A big holding of ours, Honeywell matters. United Technologies matters. Semiconductors, Skyworks Solutions, Nvidia. These are all stocks that are continuing to trade up as long as we believe that a deals in play and then I think trade up again because there's so many people ... I was watching a very fine analyst this morning on Brian Sullivan's show, talk about that she didn't trust the rally because there's so much money coming out while stocks go up. I look at it, I turn that on its head and say, I trust the rally because when there's this much money coming out, there'll be fear of, as we've talked about FOMO, the fear of missing the next leg. I mean if you want to see what the next leg could look like, look at Xilinx which is a stock we featured on Mad Money.

Katherine Ross: And your dog's name.

Jim Cramer: And my dog's, Marley, that's what my wife now calls him, Bob Marley. That stock is about 5G. So, 5G is a whole new thesis to like, semis. And whether it be Broadcom, whether it by Skyworks, Qualcomm, and that's next. You know and it's like, you buy them, and you say, Okay, well listen I missed the move. Well, look you could argue that we shouldn't buy Lam, but we don't feel we've moved the move at all. So, I like these stocks and I like the fact that the industrials like a Dow could get a nice bump on China which it sorely needs. I see a lot to like and I know that the markets moved up tremendously and I think like many people I've been saying, "We'll keep some powder dry." But up it's up nine straight weeks. That's a rather strong streak.

But there's still groups like the financials that haven't moved. The retailers that haven't moved. Could they be next? I think so. I like Goldman. I like JP Morgan. I like this M&A wave that's pretty good. The drug stocks have had a good run maybe they pull back on fears of congressional negativity. But wow, a lot of people don't believe and that's good.

Katherine Ross: You just broke down all of these different sectors and I'm wondering is there anything else you're watching this week?

Jim Cramer: I don't want to be in the food stocks. I'm kicking myself about Proctor, about the cloud kings not owning more than sales force.

Katherine Ross: Which reports next week.

Jim Cramer: Yes, and I think could be good. I look a Splunk and how great is and ServiceNow how great that ... and Workday. These stocks were down and out. The other things is that just as I talked about on the Mad Dash, this Mark May note and I like him very much, Mark May note on Facebook, very positive. I like the fact that what he's saying is that Capex ... he can kind of like, you know and dispassionate about it. If Capex goes down, then Facebook's margins just goes up. That's the theme no one's looking for. So, it's very very positive.

Then the other thing is that Goldman, advisor to GE which is a company that's doing a huge amount and there's been a lot of M&A, there's going to be a huge number of equity offerings. GE's going ... Goldman's going to have a chair. Stocks done nothing because of worries about Malaysia. Now you can say, Well, listen Jim it's up from 165, but the fact is, is that's done nothing but go down. It's the cheapest stock in that whole sector and that's kind of nutty given all the good things that could happen there.

Katherine Ross: All right Jim, thanks for joining me.

Jim Cramer: Thank you.

Katherine Ross: And welcome back.

Jim Cramer: Thank you.

Katherine Ross: All right guys we'll see you tomorrow.