What is the best way to make money in the stock market? Find out what millennials want and give it to them, Jim Cramer told his Mad Money viewers on Monday. Services like “buy now, pay later” are hot with millennials, which is why Square’s (SQ) – Get Report takeover of an Australian payment rival was so well received.
Square said “buy now, pay later” represents a huge opportunity for the company, as deferred payments still make up just 2% of total online sales. While the shares initially fell on the news, they closed a staggering 10.1% towards the end.
Cramer called the acquisition “brilliant,” noting that the analysts also love the deal. Millennials eschew traditional banks, credit cards, and brokers targeting the wealthy in favor of services like Square and Robinhood (CAP) – Get Report, which target less-wealthy customers with less than perfect credit. He said Square, PayPal (PYPL) – Get Report, to confirm (AFRM) – Get Report and Robinhood can all be bought, especially Robinhood, which itself could make a similar acquisition.
On real money, Cramer says the truth is, “You can’t catch these people the way traditional marketers work because a lot of the customers of these companies just hate anything traditional in the financial space.” Read his Real Money column for more investment insights and trading ideas.
In addition to finance, there are many products and services for millennials. Cramer said he is a fan of Roku. stays (YEAR) – Get Report, Chipotle Mexican Grill (CMG) – Get Report and DoorDash (DASH) – Get Report, to name a few.
Cramer and the AAP team look at everything from revenue and politics to the Federal Reserve. Find out what they’re telling their investment club members and start the conversation with a free trial of Action Alerts Plus.
A second look at social media revenue
When Twitter (TWTR) – Get Report and Snap (SNAP) – Get Report reported gains last week, shares skyrocketed. But when Facebook (FB) – Get Report and Pinterest (PINS) – Get Report released their earnings, things got confusing. Now that all the social media results are in, Cramer told viewers it’s time to take another look at the group.
After years of stumbling, Snap has found its niche, with revenue growing 116% and earnings of 10 cents per share. Cramer said Snap told a great story and has more room to run.
Twitter also reported strong gains, including earnings of 13 cents per share. But as impressive as the numbers were, Cramer said Wall Street was just unimpressed.
Then there’s Facebook, which saw 100% earnings growth but gave investors cautious guidance that noted slowing growth and headwinds. Cramer said Facebook is a bargain at just 22 times its profit.
Finally, Cramer said Pinterest was the hardest quarter to evaluate. The company’s active users shrank, and it continues to see headwinds for engagement after the pandemic. Cramer put Pinterest in the penalty box, saying it shouldn’t be purchased until further notice.
In the “Off The Charts” segment, Cramer checked in with colleague Larry Williams to find out where the market is likely to go.
Williams was bearish on stocks and noted the strong bearish seasonal pattern in August. He also noted that the S&P 500’s downward trend and on-balance volume painted a disturbing picture. With each recent rally, the width of that rally has narrowed. This is not a healthy trend.
However, Williams has long been gold but said August is not only a great time to own gold, the precious metal is currently undervalued.
Executive Decree: Newell Brands
In his first “Executive Decision” segment, Cramer spoke with Ravi Saligram, president and CEO of Newell Brands (NWL) – Get Report, the family of household brands with shares up 52% over the past year.
Saligram said Newell has all the brands people were looking for during the pandemic. They have everything for the home from Yankee Candles to Calphalon and Mr.Coffee in the kitchen and Coleman for your outdoor adventures.
Newell has been hit by cost inflation, especially in shipping, Saligram noted, though he expects much of that inflation to be transient as the economy reopens and rebalances for changing consumer needs.
Saligram assured Cramer that items such as Ball jars will be easier to find in the future as they ramp up production to meet the growing demand for canning and home storage.
Stay away from Chinese stocks
In his “No Huddle Offense” segment, Cramer warned investors to avoid Chinese stocks, saying he was highly skeptical of the Chinese government’s recent pro-communist actions.
Cramer said you’re kidding yourself if you think China’s actions against Didi are Global (DIDI) – Get Report and the private tutoring industry are isolated events. Free-market China no longer exists, he said, and more gigs will follow.
The problem with China is that we have no idea which industries or companies they will hit next, Cramer warned. And with the Chinese economy slowing, many factors are at work. So while some money managers are willing to dive back into Alibaba (BABA) – Get Report and Baidu (GET STARTED) – Get ReportCramer said he’s taking a pass.
Here’s what Jim Cramer had to say about some of the stocks that callers bid during Monday night’s “Mad Money Lightning Round”:
New York Community Bancorp (NYCB) – Get Report: “It has a good dividend, but no growth. I prefer growth over dividend.”
coupang (CPNG) – Get Report: “I like the company, but it’s speculative.”
Energy transfer (AND) – Get Report: “I don’t like the MLPs. I say take some profit and sell.”
Plug power (PLUG) – Get Report: “They report quickly and they have to deliver. They have let us down the last few times.”
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At the time of publication, Cramer’s Action Alerts PLUS had a position in FB.