When COVID eventually burns itself out, you’ll want to own all the stock you’d sell in the nightmare scenario, Jim Cramer advised his Mad Money viewers Monday, outlining the stock market’s lingering duplicity.
There doesn’t seem to be much middle ground in the stock market right now. Investors are either preparing for the worst or anticipating a roaring bull market. This is how you can have shares like Boeing (BA) – Get Report open sharply lower, only to end the day at 1.9%. In a “doom-or-boom” scenario, the winners can change hourly.
On real money, Cramer looks at what’s happening with AMC Entertainment. (AMC) – Get Report, Apple (AAPL) – Get Report and Walt Disney Co. (DIS) – Get Report as they relate to COVID, herd immunity and a turnaround of fortunes. Check out his investment analysis and trading strategies.
So what’s the nightmare scenario? Cramer said investors are concerned about COVID variants, the upcoming debt ceiling debate in Congress, ongoing inflation and mounting geopolitical tensions with China as the communist regime continues to lash out at its biggest companies.
On the other hand, optimistic investors are looking past the latest wave of COVID cases and looking to what comes next. Somehow the US will achieve herd immunity. When that happens, things start to look better for many companies and industries, especially as kids go back to school and many parents can finally get back to work.
That’s why this market tug-of-war happens on a daily basis, Cramer concluded, because the stocks that work in the nightmare scenario and the very ones you’d sell in the other scenario.
Executive Decree: Otis Worldwide
In his “Executive Decision” segment, Cramer spoke with Judy Marks, president and CEO of Otis Worldwide (OTIS) – Get Report, the elevator manufacturer that just posted earnings of eight cents a share, including a 15.4% increase in organic sales growth.
Marks said Otis’ business model is very resilient and end markets around the world remain strong. Otis is taking market share and saw a 5% increase in order book for the quarter.
When asked about the company’s success, Marks added that Otis has worked “near perfect” this quarter, with a strong focus on customers and innovation. Everything from new contracts to service and support got stronger in the quarter. Marks was excited to introduce Otis’ latest generation of products with new technologies, new driving experiences and new design options for architects adding Otis elevators to projects.
Shares of Otis Worldwide are up 32% this year.
In a Monday edition of his “Off The Charts” segment, Cramer and colleague Bob Lang checked the charts of restaurants, one of the hardest hit sectors of our economy. Lang examined three stocks, McDonald’s (MCD) – Get Report, Starbucks (SBUX) – Get Report and Yum brands (YUM) – Get Report.
Lang noted that McDonald’s daily chart shows the stock moving sideways for three months, building a base, until it made an upward move last week. Just before that move, the MACD momentum indicator signaled a bullish crossover.
A similar pattern was found in Starbucks’ daily chart, which also broke up with strong volume last week, with confirmation from both the MACD and Chaikin Money Flow, which was strong.
Yum Brands’ chart was similar to McDonald’s, Lang said, with the stock making a series of lower highs and lows before breaking out of the pattern with an 8.8% rise last week.
Cramer said these stocks are exactly what investors want to own, even as the economy reopens thanks to the Delta variant.
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From the band: masterpieces
In his “Off The Tape” segment, Cramer sat down with Scott Lynn, founder and CEO of privately-owned Masterworks, a company committed to democratizing investment in the visual arts.
Lynn explained that if you wanted to invest in fine art traditionally, you would need tens of millions of dollars to build a portfolio, but Masterworks allows private investors to pick individual works and buy stocks. He said investors should view these as 3- to 10-year investments, although there are now secondary markets for trading stocks.
When asked how they choose which works to offer on their platform, Lynn said their research team has a huge database of art market returns and they’ve found that the vast majority of risk and volatility is below $1 million. . That’s why Masterworks only focuses on high-end pieces.
Housing: too much of a good thing?
In his “No Huddle Offense” segment, Cramer asked, “Is it possible to have too much of a good thing?” In the case of homebuilder DR Horton (goat) – Get Report, the answer is yes.
DR Horton is in too much demand and the company is running out of houses to sell. Horton rejects buyers, especially in states like fast-growing Texas. Horton delved into the company’s conference call, citing supply chain issues for critical components such as windows and appliances, as well as shortage forecasting issues.
No one could have predicted the recovery of our economy, nor how the new work-at-home workforce would turn out, nor how supply chains would be disrupted by a rising Delta COVID variant. If you are a homebuilder, you have to be conservative. Cramer says that when the Fed meets this week, it will be vital that, despite all the seers of Wall Street and hedge funds not building houses, they keep interest rates the same. It’s too tight otherwise. Why not choose prosperity over recession? That’s the real takeaway from the Horton trip in 2021.
Here’s what Cramer had to say about some of the stock callers bid during Monday night’s “Mad Money Lightning Round”:
AT&T (t) – Get Report: “I’ve learned that if you don’t have anything nice to say, don’t say anything, so…”
Alibaba (BABA) – Get Report: “This is a great capitalist company in a communist country. I would stay away.”
i robot (IRBT) – Get Report: “I’m going to take over.”
23andMe (ME) – Get Report: “This company doesn’t really want to profile itself as a healthcare company. I think there are better ones.”
NRx Pharmaceuticals (NRXP) – Get Report: “Let’s stay away from this… It’s bad.”
Brooks automation (BRKS) – Get Report: “This is a really good company. I don’t know how they are still an independent company.”
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At the time of publication, Cramer’s Action Alerts PLUS held a position in AAPL, BA.