Bulls and bears can’t lead at the same time, Jim Cramer reminded his Mad Money viewers on Wednesday. Cramer reiterated his call for investors to take some profits and raise cash as negative news continues to put pressure on stocks.
New cases of COVID-19 are emerging in several states, a disturbing trend that forced New York, New Jersey and Connecticut to implement quarantines for travelers from high-risk areas. Market leaders like Facebook (full board) – Get report, Apple (AAPL) – Get report, Amazon (AMZN) – Get report and Microsoft (MSFT) – Get report they all saw their shares fall on Wednesday, adding further downward pressure on the markets.
Investors also weighed a rise in the polls for Joe Biden, the presumptive Democratic presidential candidate, in November. Biden has advocated for higher corporate taxes, which is bad for profits and therefore bad for stocks. Meanwhile, gold prices continue to rise and crude oil continues to decline as investors fear the economy will slow down.
Cramer said stocks are still the only game in town and that he remains optimistic for the long term. But in the short term, we are likely to see continued declines, especially after the July 4 holiday, which is why taking profit and raising cash will be the prudent move, so investors can buy the next weakness.
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What does Cramer think of ‘popular’ actions?
Novice traders and momentum seekers have built up in low-dollar stocks, but Cramer said it’s time to set the record straight for many of these popular names. According to a recent group summary, here are the top 10 most traded stocks.
Topping the list was Penn National Gaming (PENN) – Get report, which recently appeared on Mad Money. Cramer said he likes Penn in the long term, but with the increase in COVID-19, the sport seems less likely. Modern (MRNA) – Get report It came in at number 2, but of all the vaccine manufacturers, it has the most to lose. Tesla (TSLA) – Get report It was next on the list and was the only group in the group that Cramer continued to recommend.
Also on the list were a couple of cruise lines, Royal Caribbean (RCL) – Get report and Norwegian Cruise Line Holdings (NCLH) – Get reportand Spirit Airlines (SAVE) – Get report. Cramer was not a fan and recommended Southwest Airlines. (LUV) – Get report if investors have to own an airline. He was also not a fan of MGM Resorts (MGM) – Get report, which will be disabled for a long time.
Completing the list was Snap (SNAP) – Get report, the actions of social networks and GoPro (GPRO) – Get report, the fighter manufacturer of action cameras. Finally, marathon oil (MRO) – Get report made the list, but Cramer advised going with Parsley Energy (PHYSICAL EDUCATION) – Get report if investors have to own oil.
In general, Cramer would only hold on to Tesla and, in the long term, Penn National, until we have a COVID-19 vaccine.
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Know your IPO
In his “Know Your IPO” segment, Cramer examined Albertsons’ upcoming IPO, the grocery chain that will soon be marketed under the ticker ACI.
Albertsons Companies has 2,250 locations in 32 states under various brands, including Acme and Safeway, as well as Albertsons, but this is not the first time the company has attempted to go public. Albertsons attempted, and failed, an IPO in 2015 and 2018. But investors rejected his debt-laden balance sheet and his failed merger with RiteAid. (RAD) – Get report in 2018
But since then, the company has a new CEO, has spent billions to renovate its stores, and has developed an omnichannel strategy that includes delivery, which has proven to be perfect for our new world COVID-19. The company had 2% sales growth at the same store last year and has reduced its debt considerably.
Cramer said he likes the Albertsons story and would be a buyer on the IPO.
Special interview: Rhode Island Governor Gina Raimondo
In a special interview, Cramer spoke with Gina Raimondo, governor of Rhode Island, to find out how her state has been able to handle the coronavirus outbreak so well while other states have struggled.
Raimondo credited Rhode Island’s fast action, innovation, and partnerships for success. She said her state is densely populated and located between Boston and New York City, two critical points of COVID-19. But after much hard work, Rhode Island is the only state that has evaluated 20% of its population with a positive rate of 2%.
Rhode Island quickly partnered with Saleforce.com (CRM) – Get report for contact tracking and CVS Health (CVS) – Get report for testing, among others, said Raimondo, and that helped them provide them with the data they needed to implement practical solutions for citizens.
Raimondo said he is concerned about travelers at current hot spots, but has not yet decided on the best course of action to protect his condition from reinfection. Rhode Island deployed the National Guard to enforce its rules, which include wearing masks in public. She said they are seeing over 90% compliance and that is making a big difference.
“This is not magic,” concluded Raimondo, “it is the good execution of a good plan.”
Stay away from SPACs
In his “No Huddle Offense” segment, Cramer again warned viewers to stay away from risky SPACs, or special-purpose acquisition companies like the ones that brought the Draft Kings (DKNG) – Get report and Nikola Motors (NKLA) – Get report I publish recently.
Cramer said DraftKings is a great long-term story, but with the return of the sports in question and stocks up 29% in the past month, the company’s assessment is unwarranted. The company has just issued 33 million shares in a secondary offering and those shareholders are already underwater.
Nikola is a manufacturer of product-less, non-selling hydrogen fuel cell trucks with a valuation of $ 27 billion. The company also hit the market by merging with a SPAC and is now planning to offer 77 million shares in a secondary offering that is still priceless. Cramer said experts are already calling Nikola, which is not a good sign.
SPACs are risky and highly speculative, Cramer concluded. There are 33 SPACs with more than $ 10.5 billion in capital so far in 2020, which means these two deals will not be the last we see.
Ray round
Here is what Jim Cramer said about some of the actions that callers offered during the Mad Money Lightning round on Wednesday night:
Marriott Vacations Around the World (HOLIDAYS) – Get report: “The timeshare business is good. When it shrinks, it will be quite good.”
ZoomInfo Technologies (ZI) – Get report: “I like companies that facilitate sales.”
H&R Block (HRB) – Get report: “I like Intuit (INTU) – Get report“
Ulta Beauty (ULTA) – Get report: “Everyone wants to look good at their Zoom meetings. That’s a good one.”
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At the time of publication, Cramer’s Action Alerts PLUS had a position in FB, AAPL, AMZN, MSFT, CRM, CVS.
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