Analysis: UPS

In today's Daily Rundown, Jim Cramer discusses the United Parcel Service (UPS) quarter and tonight's big slate of earnings.

JEFF MARKS: Happy Tuesday, everyone. This is the Daily Rundown exclusive for members of Action Alerts Plus. I'm standing on the floor of the New York Stock Exchange with Jim Cramer. Jim, we've got to go right into it. UPS reported better than expected revenues, better than expected earnings, but once the conference call started and CEO Carol Tome and the CFO started talking about domestic margins.


JEFF MARKS: For the second half of the year, the stock started to tumble.

JIM CRAMER: Well, everyone is focused on margins. You're supposed to guide up on margins. The companies that are guiding up the margins, whether it be Raytheon or GE are hanging in there or go higher. Companies that are guiding down like the PPG got hit. I think that this is a case, sometimes you got to look at the owners. And the panic of the owners tends to last the full day. When you have this much decline, that means there are multiple people who want to get out usually ahead of a downgrade. So my advice is you do buy some. If you don't own any United Parcel, you buy some. And then you can buy some tomorrow. Lockheed Martin bounced today after being down badly, but let me just say about how the stock market works.

When you have someone like Carol Tome, and she's incredibly straightforward, and she doesn't want to predict things. If you think she doesn't deserve the benefit of the doubt, then get out. And that's what's happening. I think people are saying, who is this Carol Tome? She didn't come up in the business. She did an analyst day and that went badly. Now she does a quarterly conference call. That went badly. The stocks up a lot. Maybe it shouldn't have gone up a lot. Some of the trends are not so great, which I don't really see as the case, but I would say just go buy it now except for the fact that the sellers, who are selling are all most-motivated sellers. They've got to get out. They're afraid of something. They're going to have more stock left, and it trades like a Chinese stock. It's kind of completely nuts. So buy some today, and then buy some tomorrow.

By all means, don't sell it. That would be foolish, and the people who are selling it are rookies. They will probably get a chance to buy it back higher. Their lack of respect about the way the process works is extraordinary. At the beginning of the call, she talked about how she wasn't going to do buybacks, and when she saw the stock go down 20, suddenly she's talking about doing buybacks. This is a fluid situation, and it could be down 25 today. When I see somebody motivated like this, they seem to almost want to take the stock lower.

And what happens if you're on a trading desk. I've been on many trading desks. Someone comes in and says, look, I got I got 5 million United Parcel. I can't-- get it off. Get it off my sheet. And the trader will say, well, at what price? And the portfolio man say, I don't care. I just don't want to see it. Now that's happening probably to 10 different funds right now. They're all going into the trading desk, and say, listen, just get the darn thing off. I never want to look at United Parcel again. I am so sick of Carol Tome after that analyst meeting. Fool me once, hey, shame on her. Fool me once, shame on me. Second time, shame on me. So that's what's happening.

They want it off their sheets, and the traders are probably trying to get you the best price, but they realize it's hopeless. So what they're now trying to do is get out so they're not yelled at by the portfolio managers. I've seen this a million times, people. It's the way it works. It's why you subscribe. Obviously, like it to be up for heaven's sake. But that's what's going on, and it's a fool's errand to sell the stock right now.

JEFF MARKS: Now to your point, Jim about the psychology of the portfolio manager. Yesterday we did learn Cathie Wood is exiting her positions in Chinese companies and those stocks. Is that kind of like the similar thing we're she's just saying--

JIM CRAMER: Very similar.

JEFF MARKS: --just get me out.

JIM CRAMER: Yes, very similar. Exactly, get me out. And then people are saying, well, you know what? I'd rather be in something stable, and get me the CVS, which, of course, was unstable at one point. Get me in something that-- get me in Merck, get me in Citi. Because I've had it, and I've had it with her. She killed us at the analyst meeting. Now she's killing us today. And they don't like to be killed so I think that this is just Carol Tome not recognizing the power of her words. She was CFO for Home Depot for a long time. And not recognizing that the subtle change between jobs. You should not be out to destroy your stock. If things are really bad, then preannounce, but there was nothing to preannounce. It was a good quarter.

JEFF MARKS: And I do want to relay the fact that although they walked down domestic margins for the second half of 2021, the company is well on their way to achieving their 2023 goals. They've already increased domestic margins by I want to say 240 basis points year over year, and they're halfway there to that 2023 target just from that alone. So again, it's a short term misstep, but maybe the long term structure thesis is intact.

JIM CRAMER: Very much so, and I think that it's hard to-- you have to clear your mind when you see a stock down 20 and recognize again. I'm going to say it again. It could be down 25 because of the way I just described it. The portfolio manager just wants out. They don't care what price they went out. Maybe they bought it when she came in and the stock's up a lot. But a guy who sells it down 19 is a guy who will sell it down 30, all right? Now my experience is to take the other side of the trade when a stock goes down that much if the business is it all intact. And clearly the business is intact. The call was poorly handled. I've got her on later tonight.

I am not used to myself getting gob smacked twice. I didn't like the fact that the analyst meeting was downbeat. This call was downbeat. I could have given the same call, the exact same call she did, and the stock would be up $5, and that's something to think about.

JEFF MARKS: And no one's on more conference calls than you are.

JIM CRAMER: Nobody. If you want to destroy your stock, I can show you how to do it, but I think I may have just seen the champ.

JEFF MARKS: All right, so what do you do here? So we sold some stock 150 shares at around 220.

JIM CRAMER: We bought 50 back.

JEFF MARKS: We bought back 50 at 198 right after that.

JIM CRAMER: Now you buy another 50 back right here, and then tomorrow, you buy another 50 back, and then you start buying the stock for real.

JEFF MARKS: All right, I do want to move on from UPS because there is still a lot of things going on in the portfolio. Later tonight, a big night of earnings. Apple, Alphabet, AMD, Norton LifeLock, more, and then we're going to get more tomorrow and more tomorrow night so just how are you thinking about big tech into earnings?

JIM CRAMER: OK. Well, Norton LifeLock I'm hoping they flesh out the--

JEFF MARKS: What the potential acquisition. Of course.

JIM CRAMER: Yeah. The stocks down badly because of that. That's just stupid, but that's the way it is if you're going to offer stock. Alphabet has run a great deal, but it should be inexpensive. Apple runs every single day, which is very disappointing because you hate that when it comes in so hot like that. AMD, the stock is rallying today. That usually is a sign that people feel very confident ahead. These stocks all have their own personalities. Stocks have personalities. Like United Parcel, it has a personality. It's a stock that goes down horribly at any bad news. AMD is not that kind of stock. Apple is. So let's look at the personalities of these stocks and make a decision. The personality of Apple used to be rambunctious and fractious, and now it's placid and cool.

JEFF MARKS: All right, so I believe there's five companies in the portfolio reporting tonight. We'll be out with our analysis on every single quarter before you go to bed.

JIM CRAMER: We will have it better and faster and smarter than everybody.

JEFF MARKS: So we look forward to doing that. That's the show for today. We'll see you tomorrow.