Wednesday was a day to celebrate owning some of the best stocks around, Jim Cramer told his Mad Money viewers. It wasn’t a day to be contrarian and short-change them.
Love them or hate them, the shortsellers are here to stay, Cramer explained. But as exciting as it is to choose the other side of the trade, shorting a stock can be a dangerous game. Example: advanced microdevices (AMD) – Get Report.
On real money, Cramer writes, “I’m grateful to those who say they like to short-circuit anything I like, because crow is a dish best tasted cold, and they eat a ton of it once.” Read the full column and get more of his investment ideas and strategies.
Back when Intel (INTC) – Get Report ruled the chip world and AMD was trading near $5, Cramer admitted he hadn’t thought much about the company. But when Lisa Su took over as CEO, Cramer turned things around. Su transformed AMD into a tech powerhouse that has largely left Intel years behind the curve, and its stock has surged to nearly $100 a share. With AMD likely to close on its Xilinx (XLNX) – Get Report acquisition by the end of this year, Cramer said AMD still has a long way to go.
The same goes for other stocks that investors like to bet against. Many investors are shorting Alphabet shares (GOOGL) – Get Report at own risk. Google is constantly improving every aspect of their operation, from YouTube to the cloud and beyond.
Then there’s Boeing (BA) – Get Report. Between the grounding of the 737Max and Dreamliner’s continued delays, it looks like Boeing would be an easy win for the shorts. But China needs planes, a lot of them, and there are only two companies that can supply them. That means Boeing’s stock is also rising, with problems and all.
So the next time you think about shorting a large company, think again, Cramer concluded, the chances of you being right are smaller than you might think.
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Executive Decree: Wingstop
In his first ‘Executive Decision’ segment of the evening, Cramer spoke with Charlie Morrison, Chairman and CEO of Wingstop (WING) – Get Report, the restaurant chain that has just completed 17 straight years of positive same-store sales growth.
Morrison said Wingstop invested heavily in digital sales even before the pandemic, putting it in a prime position to weather that storm. During the most recent quarters, 65% of revenue came from digital and that number is increasing every quarter. Wingstop also goes beyond just chicken wings, Morrison added. The company is planning major promotions around tomorrow’s “National Wing Day,” including chicken thighs.
Cramer was excited about Wingstop’s plans to enter Manhattan. Morrison said their first location will open in a few weeks and 25 locations are planned by 2023, all of which will be company-owned. Wingstop doesn’t stop at New York, Morrison said. They are already a global brand that is also growing rapidly in Europe.
All this growth comes at a time when chicken prices have risen by 60%. Morrison said he believes prices will stabilize in 2022, giving the company even more profits.
Executive Decree: Rockwell Automation
For his latest “Executive Decision” segment, Cramer contacted Blake Moret, Chairman and CEO of Rockwell Automation (YEAR) – Get Report, the industrial automation provider that just posted 26% organic growth. Stocks reacted 1.9% higher to the news.
Moret said Rockwell’s mission is to provide a highly skilled and engaged workforce with state-of-the-art factory automation technologies and systems. The recent acquisition of Plex Systems by Rockwell for $2.2 billion will expand their capabilities to include all new cloud-native software solutions.
Moret added that Rockwell currently has recurring revenues between 5% and 6% of total sales. Plex adds another 2% to that figure, bringing them back to about 10% by the end of the year.
It’s not just factories that use Rockwell, Moret continued. E-commerce and warehouses also need conveyor belts, sorting machines and communication systems to operate efficiently. And while Amazon (AMZN) – Get Report is a major Rockwell customer, Moret added that many retailers are also upgrading their operations to receive, sort and replenish their omnichannel operations more efficiently.
Rockwell even has tire manufacturing technologies. Moret said they provide a single control platform that can mix materials, form tires, cure and handle the whole process.
Don’t Think Too Much About Big Tech
When it comes to big technology, don’t think too much about it, Cramer told viewers. All the major tech giants have made monster gains this quarter, and while Wall Street may have sent their stocks lower, they still deserve to be bought.
Cramer said that Apple’s (AAPL) – Get Report revenue has been spectacular, with this Action Alerts PLUS exceeding revenue and revenue estimates in every category, including iPhone, iPad, Mac, services and wearables. But that didn’t stop the stock from selling after Apple warned of supply restrictions on the horizon. Cramer told viewers that people are more than willing to wait when their favorite Apple devices slow down, which is why stocks should be bought in weakness.
Next up was Microsoft (MSFT) – Get Report, which would have seen a massive rally had it been reported any time other than today. Like Apple, Microsoft beat estimates in every segment and received multiple analyst upgrades. Microsoft is also a bargain, according to Cramer.
Finally, Alphabet remained a favorite. As our economy reopens as advertiser dollars flow back into Google and YouTube, and the company’s cloud offerings pick up steam as businesses continue to digitize their operations.
Companies can’t win by losing
In his No-Huddle Offense segment, Cramer said the future is hard to predict right now. For much of the second quarter, it looked like we were beating COVID. But then the situation changed in July, when the Delta variant boomed, China began to tackle capitalism, and we learned how great our semiconductor shortage had become.
With all this going on, how should companies talk about their prospects? It doesn’t seem to matter which route they take, Wall Street hates them all. If you are bullish and you miss your numbers, you lose. If you’re conservative and you get the numbers, you lose. And if you don’t give guidance at all, well, you lose too.
That puts companies in an impossible position, Cramer concluded, and even our best companies are not immune.
Here’s what Jim Cramer had to say about some of the stocks that callers bid during Wednesday night’s “Mad Money Lightning Round”:
Roblox (RBLX) – Get Report: “The last quarter was not as good as we thought, but I think it will come back.”
Fast acquisition (FST) – Get Report: “You want to be with them, not against them. I bless it.”
Cassava Sciences (SAVA) – Get Report: “This is a difficult field. If they succeed, it’s worth a lot, but if they fail, it’s worth a lot less. That makes it too difficult.”
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At the time of publication, Cramer’s Action Alerts PLUS had a position in AMD, GOOGL, AAPL, MSFT, AMZN.