Don’t take your investment cues from the daily action, Jim Cramer warned his Mad Money viewers Tuesday. Every day, the market views stocks through a different prism, Cramer said, which is why you need to do your own homework and pick stocks that work for more than just today’s news cycle.
The prism through which the market views the world plays an important role in the valuation of stocks, explains Cramer. On Monday, that prism was positive. It wasn’t Tuesday. Tomorrow? Who knows?
Viewed from the negative point of view of the CDC’s new mask guidelines and warnings, even the biggest gains seemed ho-hum. That’s why investors turned down good news from 3M (MMM) – Get Report, Raytheon Technologies (RTX) – Get Report and General Electric (TO GIVE) – Get Report. Similarly, the results weren’t good enough for Apple’s shareholders (AAPL) – Get Report, Starbucks (SBUX) – Get Report or advanced microdevices (AMD) – Get Report.
With a negative prism, great only becomes good and good is never seen as good enough. But Cramer reminded viewers that how the market views stocks today doesn’t change the underlying fundamentals, nor does it affect how the same result will be viewed tomorrow. Therefore, doing your own homework, making your own decisions and buying on weakness like today has always been a winning strategy.
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Executive Decree: Mattel
In his first “Executive Decision” segment, Cramer spoke with Ynon Kreiz, chairman and CEO of toymaker Mattel (MAT) – Get Report, which delivered spectacular gains on Tuesday with a 40% increase in sales.
Kreiz said Mattel exceeded expectations, proving that the fundamental transformation has put the company firmly in growth mode. He said Mattel is now an intellectual property-driven, high-performing company.
The key to Mattel’s success is unlocking the full value of the company’s intellectual property to provide family entertainment in more than just toys. Mattel can now deliver movies, television, music, online games, live events and more. Kreiz said they currently have 13 projects in development.
Mattel’s success is enhanced by its continued focus on cultural relevance and design innovation. Even iconic brands like Barbie are seeing new life with movies on Netflix (NFLX) – Get Report and even a new musical is coming in September.
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Executive Decree: UPS
For its second “Executive Decision” segment, Cramer welcomed UPS CEO Carol Tome (UPS) – Get Report, to discuss the company’s earnings and outlook, as well as Tuesday’s 7% drop in stock.
Tome said e-commerce is clearly here to stay and the way consumers shop has changed forever. However, the growth rate this year is not the same as last year, at the heart of the pandemic, as the company had forecast.
Despite the slowdown, UPS continues to make progress and address the needs of small and medium-sized businesses that value the services only UPS can provide. Small packages remain a growth market for UPS, Tome added.
UPS also continues to focus on profitability and shareholder return. The company remains on track to achieve an operating margin of 12% by 2023, and from the end of 2021, UPS will return 50% of its revenue to shareholders.
Cramer said all of these positives were completely lost to investors during Tuesday’s ultra-negative session.
Executive Decree: Logitech International
For his latest “Executive Decision” segment, Cramer contacted Bracken Darrell, president and CEO of Logitech International (LOGY) – Get Report, the computer peripheral maker that made a profit of 26 cents a share, hit with a 66% increase in sales. Shares reacted by falling 10.2% on the news, along with the broader markets.
Darrell said Logitech saw a lot of strength in the quarter and delivered great results. In a perfect world, investors would probably have liked the company to raise guidance, he said, but after raising estimates just two months ago, they weren’t ready to raise again.
When asked about video collaboration, Darrell said the category remains very strong, but not as strong as it was during the pandemic when the company saw backlogs. Video products are still growing at 72%, he noted, and the company remains very excited about the category.
Darrell was also optimistic about e-sports, which are growing in popularity, especially with this year’s Summer Olympics. He said new product innovations, such as Logitech’s Ultimate Ears headphones, which mold to your ear in less than 60 seconds, are one of the many hidden gems within Logitech.
Sink your stock
In his No-Huddle Offense segment, Cramer said there’s a new game on Wall Street, and it’s called “sink your favorite stocks.”
That’s what it felt like to listen to Tome’s cautious remarks, Cramer explained. Tome’s conservative tone gave investors everything they needed to move toward the exits, despite UPS posting fantastic gains.
Then there is the Chinese government, which suddenly remembers that it is a communist country. Cramer said China’s crackdown on its education companies is a warning shot to all Chinese investors. Communism is bad for capitalism.
Finally, Cramer said Tesla’s (TSLA) – Get Report Elon Musk tempered expectations by reminding investors how hard it is to make cars. If Tesla has problems, it doesn’t bode well for any of its competitors. Shares of Tesla fell 2% towards the end.
Here’s what Cramer had to say about some of the stocks that callers were offering during Tuesday night’s “Mad Money Lightning Round”:
gogo (GOGO) – Get Report: “They’re just so-so. I’m not a fan.”
Chargepoint CHPT: “I’d buy it under $20. This whole industry is trading down right now.”
Taboola.com TBLA: “This is an interesting company, but I would buy The Trade Desk (TTD) – Get Report.”
Digital Turbine (APPS) – Get Report: “This is selling at such a high multiple. I don’t think that’s a great stock to be in right now.”
Astra Space (ASTR) – Get Report: “It’s a busy space, but for $8 you can buy it to speculate.”
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At the time of publication, Cramer’s Action Alerts PLUS held a position in AAPL, AMD UPS.