The late September swoon is here and it’s time to take evasive action, Jim Cramer warned his Mad Money viewers Friday. That means investors must lock in profits, raise cash and even short sell their positions to protect their positions from what has historically been a tough time for stocks.
The good news is that the big averages have already been reached, easing the pressure. A market that is negative is also easily impressed.
On real money, Cramer explains why oil keeps flowing. “Let’s see why the rally can pass for oil and natural gas and look at that striking Diamondback Energy buyback.” Read the full story and more about Cramer’s investment insights.
Cramer’s game plan for next week began with a view to China, where Evergrande, a massive $350 billion debt conglomerate, could default and impact US markets. We also hear from home builder Lennar (LEN) – Lennar Corporation Class A Report Received, which will provide an update on the housing market.
Next Tuesday we will hear if there is good news at FedEx (FDX) – Get FedEx Corporation Report. Cramer is also looking at Adobe (ADBE) – Get Adobe Inc. Report and working day (WDAY) – Workday, Inc. Get (WDAY) report, two of his favorite cloud stocks.
The Federal Reserve will make a decision on interest rates on Wednesday, and Cramer expects the market to react negatively to anything they say, especially regarding the federal debt ceiling.
Thursday brings revenue from Costco (COST) – Get the Costco Wholesale Corporation Report, Nike (BY) – Buy NIKE, Inc. (NKE) Report and Darden Restaurants (DRI) – Get a report from Darden Restaurants, Inc. along with an analyst meeting from Dell (DELL) – Dell Technologies Inc Class C Report Received. Cramer said viewers should be careful with Nike, but said he would buy Costco after they signed up and Dell after the meeting.
Finally, on Friday, Fed Chairman Jay Powell will speak, but like Wednesday, nothing he says is likely to be portrayed in a negative light.
Executive Decree: Builders First Source
In his first “Executive Decision” segment, Cramer spoke with Dave Flitman, president and CEO of Builders FirstSource (BLDR) – Get the report from Builders FirstSource, Inc., the building materials supplier with 550 locations in 39 states.
Flitman said Builders FirstSource operates in 84 of the top 100 US markets, with the majority of their revenue coming from building single-family homes. About 12% of sales come from multi-family homes, he said, and another 12% from the professional repair and remodeling markets.
Asked about the state of the housing market, Flitman explained that the US has been underfunding for years, but in 2020, homebuilders started to pick up the pace. When the pandemic hit and housing heated up even more, suppliers just weren’t ready to cope, especially when the COVID shutdowns started. This has led to shortages and cost inflation in many categories, from lumber to doors and windows and much more.
However, there are still opportunities. Flitman said Builders FirstSource is going digital and moving its 700 designers and engineers to all-digital workflows, which could represent a $1 billion opportunity for the company.
The stock market faces many challenges, from inflation and negative earnings to supply chain problems and an impending debt ceiling debate, Cramer told viewers. But one sector that is more sustainable than most is real estate investment trusts, or REITs. Cramer offered his 10 favorites in the group.
The 5G wireless revolution continues, and that means cell tower REITs are still in high demand, with American Tower (GOVERNMENT OFFICE) – Get the American Tower Corporation Report and Crown Castle (CCIA) – Crown Castle International Corp Report Received the two best in this sector. When it comes to retail, look for Simon Property Group (SPG) – Get the Simon Property Group, Inc. Report for malls and Tanger Outlets (SKT) – Get the Tanger Factory Outlet Centers, Inc. Report with a dividend yield of 4.2%.
Cramer suggested Prologis (PLD) – Get Prologis, Inc. Report and Equinix (EQIX) – Get Equinix, Inc. Report when it comes to data centers and technology, Ventas (video recorder) – Received Ventas, Inc. Report for seniors and innovative industrial real estate (IIPR) – Get an Innovative Industrial Properties Inc Report for special industrial real estate. All these names have stability and great yields.
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Finally, Cramer recommended Iron Mountain (IRM) – Report from Iron Mountain, Inc. (IRM) receive, which is transforming itself for physical to digital record storage and has a 5.5% return, along with Starwood Property Trust (STWD) – Get the Starwood Property Trust, Inc. report, which has an even greater yield of 7.7% that is rock solid.
Update on vaccine boosters
For an update on the state of the pandemic, Cramer again contacted Dr. Eric Topol, founder and director of the Scripps Translational Science Institute.
Topol explained that while Pfizer (PFE) – Pfizer Inc. Report Received asked permission for anyone to take booster shots, the data just didn’t support them, at least not yet. So the compromise was to allow them for high-risk people and people over 65.
Topol added that all the “happy talk” about the virus is not helping anyone. He said we are seeing more asymptomatic cases causing a lot of complications. Vaccines were always planned to be three shots, so boosters will be inevitable. But for most people, we’re not there yet.
When asked about Europe’s “Green Pass” vaccination passports, Topol said they would be a big help to increase vaccination rates in the US if we just allowed them here.
Oil barrels along
In his “No Huddle Offense” segment, Cramer looked at the price of crude oil, which once again moved above $70 a barrel. He said recently $70 was the tipping point where OPEC stepped in and increased supply to ease price pressures. But this time it’s different.
Cramer said US shale producers have changed their playbook and are no longer drilling like crazy, giving the Saudis a chance to reap higher profits. Even the most undisciplined producers, such as Diamondback Energy (CANINE TOOTH) – Report from Diamondback Energy, Inc. receive has suddenly become religious and does not open the oil tap.
That means oil prices could go a lot higher in the near future.
Here’s what Jim Cramer had to say about some of the stocks that callers were offering during Friday night’s “Mad Money Lightning Round”:
Palantir Technologies (PLTR) – Get the Palantir Technologies report: “This is a purchase. I wish we knew more about them, but they are a good company.”
Las Vegas Sands (LVS) – Get the Las Vegas Sands Corp. (LVS) report: “The only casino you should buy is Wynn Resorts (WYNN) – Wynn Resorts, Limited (WYNN) Report Received. Las Vegas Sands has too much exposure to Macau.”
Clearway Energy (WHEN) – Clearway Energy, Inc. Received Class C Report: “You have a good stock there.”
Energy transfer (AND) – Power Transfer, Get LP Report: “This is a recklessly run business and that’s a shame.”
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At the time of publication, Action Alerts PLUS had a position in COST.