With the COVID Delta variant continuing to keep America on the run, Jim Cramer told his Mad Money viewers on Tuesday that it was time to dust off the spring 2020 playbook and invest in the pseudo-lockdown stocks. What is a pseudo lockdown stock? It’s the kind of business that thrives in a “get worse before it gets better” economy.
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Cramers Mad Money Recap: Walmart, Amazon, Apple
In retail, that means investing in WATCH, Cramer’s acronym for Walmart, Amazon, Target, Costco, and Home Depot. All of these retailers have handled the pandemic with flying colors and are the ones that consumers trust the most.
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Investors should also check out UPS and FedEx, the latter being Cramer’s favorite of the couple.
When it comes to apparel and apparel, Lululemon Athletica, Ralph Lauren and Nike were among Cramer’s favorites. Ralph Lauren’s shares were up 6.1% by Tuesday’s close of trading.
Other standouts included Domino’s Pizza, which was just reporting another blowout quarter, along with Apple, an Action Alerts PLUS investment, and the newly formed Robinhood, which was booming after its weaker-than-expected IPO.
Cramer and the AAP team are reviewing everything from revenue to politics to the Federal Reserve. Find out what they are saying to their investment club members and join the fun with a free trial of Action Alerts Plus.
Executive decision: Clorox
On the Executive Decision segment, Cramer welcomed Linda Rendle, CEO of Clorox Co., the consumer goods company that slumped 9.4% after the company suffered massive losses in sales and profits amid rising costs and fluctuating demand as our economy struggles Curb the delta variant.
After record quarters last year, Rendle said Clorox expected moderate sales. Looking over the year, however, all four segments of the company posted double-digit sales growth and, even with recent declines, are still well above pre-pandemic levels.
Clorox is emerging from the pandemic stronger than it was at the beginning, added Rendle. The company has invested heavily in digital channels and learned a lot about the new behaviors and desires of consumers. Clorox remains committed to its dividend and shareholders even in these volatile times, added Rendle.
Cramer said the next quarter will be a pivotal quarter for Clorox as we learn what post-pandemic sales will really look like.
The IPO problem
There are a lot of things to worry about in the market, but what worries Cramer most isn’t the Delta variant or China or the looming debt crisis. What worries him the most are IPOs.
When new stocks come public, it puts pressure on everything. So far this year we’ve seen 304 IPOs totaling $ 105 billion. This makes 2021 a record year at eye level … with five months left. And those IPO numbers don’t even take into account over 300 deals published through SPAC.
IPO fatigue is getting closer, Cramer warned, as some deals have already been canceled or postponed. The highlight was Didi Global, which was banned from Chinese app stores just a day after the company’s IPO here in the US
IPOs have always been for the benefit of investors, Cramer said, and were designed to always see a spike on the first day. But lately, your first day of trading has been a coin toss, Cramer said, and the days that follow are all you can guess at. Even the much-vaunted Robinhood could not free itself from the downward spiral of the IPO.
Fortunately, deal flow seems to be finally slowing down a bit, concluded Cramer, and not a moment too soon.
Video: Jim Cramer’s Playbook on Approaching a Potential Market Sell-off (CNBC)
Jim Cramer’s playbook on approaching a potential sell-off
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Outside of normal readings
In his “Off The Charts” segment, Cramer asked his colleague Tom DeMark where the markets are likely to go next. According to DeMark, it doesn’t look good.
DeMark first looked at a daily chart of the S&P 500 and found that this rally is quickly running out of breath after 12 new highs. According to DeMark’s 13-day sales countdown, the rally will be over if the S&P closes above 4,430 on Wednesday.
The same pattern can be seen in the Nasdaq 100 index, which is also on day 12 of the 13-day cycle. If both indices hit another high tomorrow and complete the cycle, things could get very ugly.
Even the Dow Jones Industrial Average isn’t immune, as DeMark picks up on an expanding fan pattern of higher highs and lower lows that is eerily similar to what it was before the 1929 crash.
For those who think cryptocurrency might be immune, think again. DeMark also disliked the Bitcoin chart, noting that the recent low was not accompanied by significant bad news to confirm the move.
Great companies mix things up
In his No-Huddle Offense segment, Cramer said that good companies are usually risk averse and rarely change, but great companies aren’t afraid to shake things up. Case in point is today’s news that PepsiCo is spinning off Tropicana and Naked Beverages for $ 3.3 billion.
Tropicana may still be a cult brand, but it’s starting to fall out of favor with younger consumers who prefer drinks with less sugar. Cramer said spinning out these brands is what PepsiCo is doing. How to Increase Your Revenue.
Other great companies, according to Cramer, include McCormick, Hormel, and Constellation Brands, all of which are constantly restructuring their product portfolios and often making difficult decisions to reinvigorate growth.
Lightning round
Here’s what Jim Cramer had to say about some of the stocks callers offered during Tuesday night’s Mad Money Lightning Round:
MKS Instruments: “I don’t understand why this stock is so cheap.”
Aurinia Pharmaceuticals: “You should be better off. I want to be careful with this stock.”
Sorrento Therapeutics: “I think this stock is overvalued and I don’t like the way they handled themselves.”
Palantir Technologies: “This is a cult stock. Nobody knows what they’re doing, but people still like them.”
Gritstone Oncology: “You want to own NovoCure. That’s the way to go. Not this one.”
SoFi Technologies: “I think they’re doing a great job and you should buy this stock.”
Spirit AeroSystems: “I’d rather own Boeing. That’s what you buy, not the suppliers.”
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At the time of publication, Cramer’s Action Alerts PLUS held a position in AAPL, AMZN, COST.
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