Next week’s income is all about consumer spending, Jim Cramer told Mad Money viewers on Friday. However, before you start buying what is likely to be strong sales, consider where your favorite retail stocks are coming from. Some stocks have already made big gains while others have a lot of catching up to do.
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Cramers Mad Money Recap: Constellation Brands, Walmart
Cramer’s schedule begins Monday with two electric vehicle inventories, Lordstown Motors and Fisker. Lordstown has come under fire for over-promising, but Fisker has a better story to tell.
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Next, on Tuesday, retail profits begin in earnest with Walmart, Home Depot, and Macy’s, as well as game maker Take-Two Interactive. Cramer was optimistic about Walmart and Home Depot, but felt it was early days for Macy’s. He said Take-Two won’t go away anytime soon.
Wednesday we hear from Lowes, Target and TJX Companies, as well as Analog Devices and Cisco Systems in the tech space. Cramer expected all of these results to be spectacular.
Then on Thursday we hear about Kohl’s, one of the best retail stories. Cramer was more optimistic about Ralph Lauren and Petco. Also reported is Hormel Foods, which is ahead of earnings, Applied Materials, and the week’s best earnings, Palo Alto Networks, as cybersecurity continues to be paramount instead of recent attacks.
Finally, on Friday, we’ll hear from Deere and Co., which may not be fantastic with grain prices falling. Cramer was also skeptical of VF Corp and Foot Locker, which have already made big profits.
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Executive decision: Constellation Brands
In his first “Executive Decision” segment, Cramer spoke to Bill Newlands, President and CEO of Constellation Brands, and Donae Burston, founder of La Fete du Rose, one of the first companies to receive funding from Constellation’s new venture capital program, which is owned by a minority.
Newlands said women and minorities are in the liquor and wine business and they hope to change that. Only 1% of risk funding went to black entrepreneurs, a statistic that has to change.
Burston said many people don’t drink rosé, but La Fete du Rose’s mission is to make rosé more inclusive and add to its appeal. The brand was founded in 2019 and Burston plans to use the capital inflow to hire employees and increase production. He said it was very difficult for small brands to break into the industry, but with Constellation’s help, they had a chance.
Executive decision: Five9
For his second “Executive Decision” segment, Cramer also spoke to Rowan Trollope, CEO of Five9, the virtual call center platform.
Trollope said the market is brand new and Five9 no longer needs to convince people to move to the cloud. The customers just dive in. Now is the time to rethink the customer experience, he said, and business-to-business is dropping the traditional phone tree for new cloud technologies.
According to Trollope, telephone trees are just too limiting, which is why the future is intelligent virtual assistants that use natural language to give you the information you need or guide you where you need to go. Best of all, virtual assistants work by phone with voice or text.
Customers are demanding better experiences, Trollope concluded, and Five9 is set to grow rapidly.
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Elliott Capital’s activism
When a talented activist starts asking about changes in a company, the smart thing to do is listen. Such was the case with a number of recent deals with Elliott Capital, most recently of which were interested in Duke Energy.
Cramer said when Elliott dealt with cell tower operator Crown Castle, management initially resisted. But over the next several months, as Elliott suggested, they lowered their investments and made other changes that revived the stock.
The same pattern was seen with public warehousing, which followed Elliott’s instructions and made some strategic acquisitions that also rewarded shareholders.
Finally, there’s Elliott’s stake in Twitter, which also led to changes on its board of directors that saw shares jump from $ 33 to $ 55 per share.
Why Cramer recommends staying the course
In his No-Huddle Offense segment, Cramer reminded viewers that it is always darkest before dawn. And if you are too pessimistic you will often miss out on big wins.
It actually looked bleak earlier in the week. Inflation rose, the consumer price index was not as expected and the Colonial Pipeline was closed by a ransomware attack. But now, just days later, lumber prices are down 7%, the pipeline is back in operation, and the flurry of new IPOs that overwhelmed demand has slowed to a trickle. And that doesn’t even count the news that people who have been vaccinated can take off their masks, according to the CDC.
The problem with selling, when things get ugly, is often there isn’t enough time to get back in, Cramer said. If you sold on Tuesday or Wednesday of this week, you likely found this on Thursday and Friday.
Lightning round
Here’s what Cramer had to say about some of the stocks callers offered during Friday night’s Mad Money Lightning Round:
RADA Electronic Industries: “I like Raytheon Technologies with better growth and better technologies.”
Zynga: “It’s finally the right time to buy Zynga. It’s a decent situation.”
Mastermind: “I’m not sure about that. The brain is a difficult area.”
Hyatt Hotels: “It’s fine, but not great. I loved that Airbnb call.”
Sports Entertainment acquisition: “This is an incredible situation. This stock is a buy.”
Boot Barn: “This is an underserved market and they are doing a great job.”
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At the time of publication, Cramers Action Alerts PLUS held a position in DIS, WMT.
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