Are we at the beginning of the fabled V-shaped economic recovery? Not so fast, Jim Cramer told his Mad Money viewers on Wednesday. There are certainly signs of strength in the stock market, Cramer said, but he remained skeptical that a V-shaped rebound is possible until the financial sector shows one.
He found that the stock market is out of sync with the current economy, but it can be a forecasting machine.
Cramer said he has been encouraged by a number of positive data points lately. We’re seeing strength in commodities, strength in residential real estate, and the Nasdaq continues to climb on Apple̵
With Walmart, we also see strength in big box retail ((WMT) – Get the report, Target ((TGT) – Get the report, Home Depot ((HD) – Get the report and Lowes ((LOW) – Get the report All report strong yields. But Cramer said if you look closely at Target’s conference call, you begin to understand why. Target reported $ 5 billion in market share gains at the expense of any retailer that was deemed immaterial. Target also noted that sales slowed as stimulus checks decreased.
Cramer said these data points mean the rally in the stock market could be short-lived without additional government incentives, additional COVID-19 therapeutics, or a vaccine.
For the market rally to be real, Cramer needs to be reflected in the financials, a group that has not recovered but instead prepared for a wave of defaults and bankruptcies. Without the finances, he said, this rally is either digital or artificial and it might not last.
Cramer and the AAP team are investigating everything from revenue and tariffs to the Federal Reserve. Find out what they are saying to their investment club members and have fun with a free trial subscription to Action Alerts Plus.
Don’t Miss Out on Cramer’s Best Every Day With Quick, Actionable Strategies: StreetLightning.
Executive decision: Linde
In his first “Executive Decision” segment, Cramer spoke to Steve Angel, CEO of industrial gases supplier Linde ((LIN) – Get the report.
Linde has different business areas, explained Angel. Linde’s oxygen is used for medical supplies and steel production, nitrogen is used in semiconductors and hydrogen is used in oil refining and as a fuel source.
In the past six months, Linde’s Lincare medical department has grown from zero to over 25,000 COVID-19 patients. Angel said Lincare is an essential tool for home airway management and treatment for hospitals and Lincare is a complete solution for home airway care.
Angel was also optimistic about hydrogen. He said Linde has the ability to produce, store, transfer and liquefy hydrogen, and also operates hydrogen filling stations. The company is also investing in “green” hydrogen, which is made with no carbon footprint, rather than from natural gas as is made today.
Angel added that just 1% off all long-haul trucks converted to natural gas in the U.S. would create a $ 20 billion market for Linde.
On Real moneyCramer provides an overview of the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.
The analyst’s dilemma
What do you do if a stock you recommend hits your price target? Are you taking a winning lap and downgrading to sell? Or are you increasing your target with a price increase?
Cramer said these questions are the analyst’s dilemma. At his charitable foundation, Action Alerts PLUS, Cramer said he’ll split the difference, take profits, and let the rest go. But for analysts, the answer too often follows dynamics.
Just today we saw price increases for Walt Disney Co. ((DIS) – Get the report, Palo Alto Networks ((PANW) – Get the report, Nike ((NKE) – Get the report, Target and home depot. But Cramer said all these analysts are just chasing hot stocks that have been bouncing for weeks.
Unless something new is at work, Cramer advised ignoring these numbers. Those blind cops won’t be there for you when it’s time to sell, he concluded. That is why it is up to you to secure your profits when your goals are met.
Executive decision: At Home Group
For his second “Executive Decision” segment, Cramer also spoke to Lee Bird, Chairman and CEO of At Home Group ((AT HOME) – Get the report, the home decor superstore with stocks over 1,500% above their March lows. At Home’s shares are still only trading for 13x profit.
According to Bird, consumers are still nesting. As they spend more time at home, they spend more on their home, he said, which has resulted in a 40% increase in sales in the same store. At Home’s stores are large, with wide aisles, excellent bathroom facilities, and staff wearing masks. All of this ensured that customers felt comfortable while shopping.
In addition, At Home has implemented roadside pickup and delivery options to compliment its online operations, Bird said. However, most customers prefer to see their items in-store before purchasing any home decor.
When asked about tariffs, Bird noted that At Home has been effective with tariffs from the start, but continues to diversify manufacturing and sourcing outside of China.
Executive Decision: Analog Devices
For his final “Executive Decision” segment, Cramer checked in with Vince Roche, President and CEO of Analog Devices ((ADI) – Get the report, the semiconductor maker that has agreed to take over rival Maxim for $ 68 billion.
According to Roche, Analog Devices is well positioned for the upcoming 5G wireless rollout. His company has been a leader in 2G, 3G, and 4G wireless and has the know-how and expertise to increase performance while reducing costs and space requirements.
Roche added that each wireless generation is more complex than the last and requires more channels and antennas, creating tremendous opportunities for analog devices.
Analog Devices is also a major player in automotive technology. Roche said that semiconductors and software will determine the future of cars. In the electric car sector, his company is very active in the field of battery management technologies.
Here’s what Jim Cramer said about some of the stocks callers offered during Wednesday night’s Mad Money Lightning Round:
SmileDirectClub ((SDC) – Get the report: “If you want telemedicine, you want Livongo Health ((LVGO) – Get the report. “
2U ((TWO) – Get the report: “Why not just buy Spotify? ((JOB) – Get the report? “
PetMed Express ((PETS) – Get the report: “I don’t think you’d be wrong about pets. I like Chewy too ((CHWY) – Get the report. “
1Life Healthcare ((ONEM) – Get the report: “There are so many of these companies. I don’t want that right now.”
Tyson Foods ((TSN) – Get the report: “I think you made a mess. I don’t recommend it.”
counter ((SWCH) – Get the report: “Data centers are where you want to be.”
Sonos ((SONO) – Get the report: “This is a good company, but you will have to wait until the next quarter.”
Activision Blizzard ((ATVI) – Get the report: “I think they will have a fantastic holiday season. It’s a wild dealer so buckle up for the ride.”
Aphria ((APHA) – Get the report: “This one is fine, but these Canadian stocks are hard to own.”
Browse Jim Cramer’s “Mad Money” trading recommendations with our exclusive recommendations “Mad Money” Stock Screener.
To watch reruns of Cramer’s video segments, visit Mad Money page on CNBC.
To sign up for Jim Cramer’s free booyah! Newsletter with all of his latest articles and videos Please click here.
At the time of publication, Cramers Action Alerts PLUS was in AAPL, AMZN, MSFT, DIS.