Demand is what will determine the next stage of the bull market, Jim Cramer told his viewers at Mad Money on Wednesday. Now that COVID-19 vaccines are around the corner, everything that was retained during the pandemic will soon be back in vogue.
For most of 2020, pandemic stocks led the market higher. Everything from housing and home repairs to personal computers, used cars and entertainment is growing. But as the world slowly returns to normal, Cramer said there will be a whole new set of leaders in the market.
Boeing (BA) ̵
Kramer said there would be grace in the ad, which portends good for Alphabet (GOOGL) – Receive a report. Business costs will increase, which makes American Express (AXP) – Receive a report purchase. And demand for oil will increase, making Chevron (CVX) – Receive a report and Pioneer Natural Resources (PXD) – Receive a report big winners.
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Executive solution: PVH
In his first Executive Decision segment, Cramer spoke with Manny Chirico, chairman and CEO of PVH (PVC) – Receive a report, a clothing manufacturer that has just reported significant profits despite the pandemic. Shares of PVH have risen 39% in the last month.
Chirico said strong PVH brands combined with strong international sales helped achieve their results this quarter. He called on Europe and China as pockets of power, despite the closure of stores in Europe due to COVID-19.
When asked about sales in the United States, Chirico noted that international tourism accounted for 35% to 40% of PVH sales in North America, so that with a 95% reduction in tourism, their sales suffered. However, some of these losses were offset by gains in digital sales, where online partners such as Macy’s (M) – Receive a report and Amazon (AMZN) – Receive a report helped to bridge the gap in tourism.
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Know your IPO
In his “Know Your IPO” segment, Cramer focused on Luminar, manufacturers of LiDAR sensors for autonomous driving systems, which will go public tomorrow through a merger with a special acquisition company. Luminar will trade under the LAZR ticker.
Kramer explained that Luminar was founded in 2012 by a 17-year-old child and the company now has partners such as Volvo and a book with orders totaling $ 1.3 billion. LiDAR sensors are an integral part of any self-management system, without Tesla (TSLA) – Receive a report, and helps provide critical object detection and scope information.
Kramer said Luminar has great prospects and stocks are actually cheap at current levels. He said the stock was definitely worth owning, but he suggested you start with a small position and add it slowly over time.
Executive solution: XPO Logistics
For his second Executive Decision segment, Cramer also spoke with Brad Jacobs, chairman and CEO of XPO Logistics XPO, which splits into two companies in a bid to unlock shareholder value.
Jacobs explained that XPO has been on a value unlocking mission for more than a year. While some in the logistics space trade up to 19 times profit, XPO trades only nine times profit. When they asked shareholders what could correct this discrepancy, business simplification and investment grade debt are the two key factors. That’s why XPO will split into two companies, allowing them to simplify and reduce their leverage in the process.
Jacobs said XPO is a major player in the hottest parts of logistics right now, from e-commerce to cold chain logistics services. He noted that while XPO is not a direct player in Operation Warp Speed, which will distribute the COVID vaccine, they are ready and expecting a flow of secondary business that will inevitably be part of the distribution effort.
Asked for some clarity about these vaccination efforts, Jacobs said that while the world is chaotic and disorganized in so many areas right now, there are many companies doing everything possible for our country and for humanity to help save live as long as possible.
Kramer said XPO shares should be “significantly higher” just for their earnings, not to mention their efforts to unlock the company’s hidden value.
Prospects for trade with China
In his hug-free crime segment, Cramer said President Trump had made some real progress in the trade war with China, and it would be a real shame to give it all up.
Today we learned that President-elect Biden does not plan to immediately lift Trump’s tariffs on Chinese goods. Instead, Biden said he supported strategies that put all our allies on the same page.
Kramer said that while the tactics sound good on paper, in reality our allies have little incentive to align their interests with ours. China required a firm approach to start making concessions. Kramer said they would probably need just as strong Biden policies to continue the concessions.
Here’s what Cramer had to say about some of the promotions that callers offered during the Round Crazy Lightning on Wednesday night:
Jumia Technologies (JMIA) – Receive a report: “I recommended this stock and it doubled. If you’re big, take a profit.”
GrowGeneration (GROUP) – Receive a report“This is another one that has doubled. I want rocket ships to cool down before you buy them.”
Emergent BioSolutions (EBS) – Receive a report: “This stock is too low. It’s good to buy.”
Interpublic group of companies (IPG) – Receive a report: “This stock is still cheap. This one is good.”
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At the time of publication Cramer’s Action Alerts PLUS had a position in DIS, GOOGL, AMZN.