Monday’s stock market rally was fueled by the approval of Pfizer’s COVID vaccine, although that FDA approval was expected by pretty much everyone, Jim Cramer told his Mad Money viewers. The market is so hungry for good news, Cramer said, and that even the most obvious news can keep stocks rising.
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Cramer’s Mad Money Recap: Pfizer, Chipotle, Southwest
But there’s a lot more to Monday’s rally than just a 2.4% surge in Pfizer stocks. More vaccines mean less COVID, and less COVID means more travel and leisure, which is good news for a variety of sectors. For example, as people go out they will want more Estee Lauder products and they will eat more at the Chipotle Mexican Grill.
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Travel is on the rise, which is good news for airlines and cruise lines. Cramer recommended keeping things simple with Southwest Airlines, which is up 2.8% today. He was optimistic about both Mastercard and Visa.
In addition to travel, investors can also consider cyclical stocks like Boeing, Honeywell, Caterpillar, and Eaton.
Finally, Cramer said that with FAANG, investors, especially Amazon, can get back to technology, all of which have gained momentum after falling below averages earlier in the year. FAANG is Cramer’s acronym for Facebook, Amazon, Apple, Netflix, and Alphabet.
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Executive decision: Lyft
In his first “Executive Decision” segment, Cramer spoke to John Zimmer, President and Vice Chairman of Lyft, whose ridesharing rates are up 2.9% from the broader average.
Zimmer said Lyft had a strong quarter with solid fundamentals and he’s as confident as ever about the business for the future. He said demand is strong and is coming back as more people get vaccinated and travel return. Lyft continues to focus on consumer transportation, he added, giving it an edge over the competition.
Zimmer also commented on the recent California court ruling regarding Prop. 22, which could force Lyft and others to treat their contractors as employees. He remained confident that Prop. 22 would ultimately be upheld. The appeal process is expected to make a final decision within the next six months. Zimmer found that the vast majority of Lyft drivers use the platform for extra income and work less than 20 hours a week. Only 2% of Lyft drivers reach a full-time employment threshold of over 40 hours per week.
Finally, when asked about the state of the consumer, Zimmer confirmed that travel is increasing and Lyft is seeing more trips to and from airports, which is a promising sign.
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Separations can release values
Breakups are a great way for companies to unleash a lot of value, Cramer reminded viewers. This was certainly the case with XPO Logistics, which was recently spun off from GXO Logistics, and with the former L Brands, which split into Victoria’s Secret and Bath & Body Works.
Cramer has long been a fan of XPO Logistics, which has grown by more than 400% since 2014. He said splitting his transportation unit, XPO, and warehouse operations, GXO, made it easier to follow the company and added a ton of value. GXO’s shares are up 73% since the spin-off in early August. Cramer said he would continue to buy both companies.
Cramer said Victoria’s Secret is a mall-based turnaround story with easy comparisons. The stock is also cheap with a nine-fold gain. He said the company doesn’t need to be blown away, it just needs to show modest improvements in the future. As for Bath & Body Works, this half of the company has difficult comparisons to last year but remains a quality retailer for the long term. Bath & Body stocks trade for 15x earnings and are worth every penny.
Video: Nucor and what it means to have a bad year: Cramer’s outlook 2022 (TheStreet)
Nucor and what it means to have a bad year: Cramer’s outlook for 2022
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Board decision: Palo Alto Networks
For his second segment, Executive Decision, Cramer spoke to Nikesh Arora, Chairman and CEO of Palo Alto Networks, the No. 1 provider of cybersecurity software.
Arora said that Palo Alto spent three years preparing for what she believed the future would be. That future included the cloud, artificial intelligence, and a more security-conscious business environment. Fortunately, all of these three things came together on a grand scale, and that’s how Palo Alto has remained a leader in this area.
How does Palo Alto stay one step ahead of cybercriminals? Arora said the key is to stay agile, find solutions quickly, and deploy them even faster. You’ll never get it right all the time, he said, but Palo Alto perfects the process every year.
When asked how the company is retaining so many of its customers, Arora found that Palo Alto is now consistently rated the best provider in six different categories and “nobody gets fired for buying the best.”
Attention, ‘inflationistas’
In his “No Huddle Offense” segment, Cramer had a note to the “inflationists” who proclaim that our economy is doomed to fail because of hyperinflation. That is what these bears are missing.
First, commodity prices are already collapsing. It started with sawn timber, but today it also includes copper, oil, iron ore and soon also natural gas and plastics. Second, the increased productivity resulting from digitization lowers many costs, as companies can do more with less.
Third, Cramer found that the Delta variant delayed the return to the office, but did not eliminate it. That means office rents, car and home prices will eventually decline.
Finally, Cramer said that once COVID is contained and government benefits expire, more people will return to work, putting wages under pressure.
So next time an expert on the news announces that inflation is going to kill us all, keep in mind that inflation is already falling and will only retreat further when the pandemic subsides.
Lightning round
Here’s what Cramer had to say about some of the stocks callers offered during Monday night’s “Mad Money Lightning Round”:
The Beachbody Company: “I think they are good, but there are too many in the field so I have to say no.”
Futu Holdings: “Chinese stocks will rebound and if they do you will have to sell.”
Amyris: “This looks like a junior from International Flavors and Fragrances, so why not buy IFF?”
Citizens Financial Group: “I like this one and I’ll throw in First Horizon National.”
Ammunition POWW: “There are too many hunting games. How many guns and ammunition supplies can you buy?”
Lam Research: “I think Lam is great.”
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At the time of writing, Cramer’s Action Alerts PLUS held a position in EL, MA, BA, HON, AMZN, AAPL, FB, and GoogL.
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