Are we at the beginning of the fast-paced 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 recovery is possible until the financial sector shows one.
He noted that the stock market does not synchronize with the current economy, but it may be a forecasting machine.
Cramer said he has been encouraged by a number of recent positive data points. We see strength in commodities, strength in housing, and the Nasdaq remains sworn on Apple’s heels (AAPL) – Get report, Amazon (AMZN) – Get report, Microsoft (MSFT) – Get report and everything to do with the cloud.
We also see strength in wholesale, with Walmart (WMT) – Get report, Purpose (TGT) – Get report, Home Depot (HD) – Get report and Lowe’s (LEECH) – Get report all reported strong incomes. But Cramer said that if you look closely at the Target conference call, you will begin to understand why. Target reported $ 5 billion in market profits, profits that came at the expense of every retailer that was considered non-essential. Target also noted that sales began to slow as stimulus controls declined.
Cramer said these data points mean the stock market rally could be short-lived without additional government incentives, additional COVID-19 therapies or a vaccine.
To make the market rally real, Cramer said it needs to be reflected in the finances, a group that does not rally because it is instead preparing for a wave of failure and bankruptcy. Without the finances, he said, this rally is digital as well as artificial and it cannot last.
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Executive decision: Linde
In his first segment “Executive Decision” Cramer talks to Steve Angel, CEO of industrial gas supplier Linde (LIN) – Get report.
Linde operates a number of different business units, Angel explained. Linde’s oxygen is used for medical care and for the production of steel, nitrogen is used in the manufacture of semiconductors and hydrogen is used in oil refining and as a fuel source.
In the past six months, Linde van Linde’s medical unit has gone from zero treatment to more than 25,000 COVID-19 patients. Angel said Lincare offers hospitals a critical tool for respiratory care and in-home treatments, and Lincare is a full-service solution for respiratory care at home.
Angel was also Bullish on hydrogen. He said Linde has the capacity to produce, store, transfer and liquidate hydrogen and also operates water stations for tanks. The company also invests in “green” hydrogen, which is produced without carbon footprint, instead of natural gas as it is produced today.
Angel added that if just a 1% discount on all US-based long-haul trucks converted to natural gas, it would create a $ 20 billion market for Linde.
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The analyst’s dilemma
What do you do when a supplier you recommend meets your price target? Do you take a win round and give a downgrade to sell? Or do you increase your goal with a price tag?
Cramer said these questions are the analyst’s dilemma. On his charitable trust, Action Alerts PLUS, Cramer said he splits the difference, taking profits while letting the rest run. But for analysts, the answer too often follows momentum.
Just today we saw lots of price target for Walt Disney Co. (DIS) – Get report, Palo Alto Networks (PANW) – Get report, Nike (NKE) – Get report, Target and Home Depot. But Cramer said all of these analysts are simply chasing hot dogs that have been rallying for weeks.
Unless there is any news at work, Cramer advised ignoring these figures. These blind spots will not be there for you when it’s time to sell, he concluded, so it’s up to you to lock in your profits when your goals are reached.
Administrative decision: Home group
For his second segment “Executive Decision”, Cramer also spoke with Lee Bird, Chairman and CEO of At Home Group (BACK HOME) – Get report, the superstore for home decoration with shares above 1,500% up from their March low. Shares of At Home are still trading for 13 times earnings.
Bird said consumers are still nesting. While they spend more time at home, they spend more on their home, he said, which has led to a 40% increase in sales from the same store. At Home’s stores are large, with wide walkways, great sanitation and staff wearing masks, all of which keep customers comfortable shopping with them.
In addition, At Home has implemented edge storage and delivery implementation to complement its online operations, Bird said, but most customers still want to have the preference to see their items in-store before making a home decor purchase. to make.
When asked about tariffs, Bird notes that At Home has been dealing effectively with tariffs since the beginning, but they also continue to spread production and sourcing outside China.
Executive decision: analog devices
For his definitive “Executive Decision” segment, Cramer checked in Vince Roche, President and CEO of Analog Devices (ADI) – Get report, the semiconductor maker that has agreed to acquire rival Maxim for $ 68 billion.
Roche said Analog Devices is well positioned for the upcoming 5G wireless release. His company stood at the forefront of 2G, 3G and 4G wireless and has the expertise and expertise to increase power and efficiency while reducing cost and footprint.
Roche added that each generation of wireless is more complex than the last, requiring more channels and antennas that translate into enormous opportunities for analog devices.
Analog devices are also a major player in autotechnology. Roche explained that semiconductors and software will define the future of cars. In the field of electric cars, his company is very active in battery management technologies.
Lightning
Here’s what Jim Cramer had to say about some of the stocks that callers offered during the Mad Money Lightning Round Wednesday night:
SmileDirectClub (SDC) – Get report: “If you want telemedicine you want Livongo Health (LVGO) – Get report. “
2U (TWO) – Get report: “Why not just buy Spotify (PLAK) – Get report? “
PetMed Express (PETS) – Get report: “I do not think you go wrong with pets. I love Chewy too (CHWY) – Get report. “
1Life health care (ONEM) – Get report: “There are so many of these companies. I do not want that now.”
Tyson Foods (TSN) – Get report: “I think they made a mess of things. I can not recommend it.”
Switch (SWCH) – Get report: “Datacenters are where you want to be.”
Sonos (SONO) – Get report: “This is good business, but you have to wait until next quarter.”
Activision Blizzard (ATVI) – Get report: “I think they’m going to have a fantastic holiday season. It’s a wild trader, so strap yourself in for the ride.”
Africa (APHA) – Get report: “This is OK, but these Canadian shares are poorly owned.”
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At the time of publication, Cramer’s Action Alerts PLUS had a position AAPL, AMZN, MSFT, DIS.
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