We need to acknowledge the rockiness of this market, Jim Cramer told his Mad Money viewers Friday. Don’t be a hero, Cramer said. Put a small amount of cash to work on the way down while we wait for that Santa Claus rally we’re all hoping for.
Friday was all about the bulls and the bears once again fighting it out. If you’re in the first camp, you’re worried the whole market will meltdown, so you’re raising cash.
Fears of the Omicron variant on the economy, triple-witching day and the shadow of Evergrande’s (EGRNF) default have the Action Alerts PLUS team watching closely for market volatility and risk next week. Find out what they’re telling club members and get more trading strategies and investing ideas with Action Alerts PLUS.
If you’re in the second camp, you have faith that Fed chief Jay Powell will gently raise interest rates, and you’re buying safety stocks like PepsiCo (PEP) – Get PepsiCo, Inc. Report and Eli Lilly (LLY) – Get Eli Lilly and Company Report. And if you’re in the third camp, you’re already planning for the end of COVID, betting on tech names like Amazon (AMZN) – Get Amazon.com, Inc. Report and Advanced Micro Devices (AMD) – Get Advanced Micro Devices, Inc. Report. Today, the first camp won the day, but that could all change during next week’s action.
Speaking of next week, Cramer said he’ll be watching Micron (MU) – Get Micron Technology, Inc. Report and Nike (NKE) – Get NIKE, Inc. Class B Report on Monday. Micron is a secular grower, he said, but Nike has gotten too hard to predict.
Next, on Tuesday, Cramer will be watching both General Mills (GIS) – Get General Mills, Inc. Report, a star among the consumer staples, and Blackberry (BB) – Get BlackBerry Limited Report, a stock he said “don’t touch.”
Finally, on Wednesday, we’ll hear from three Cramer favorites, CarMax (KMX) – Get CarMax, Inc. Report, uniform supplier Cintas (CTAS) – Get Cintas Corporation Report and Paychex (PAYX) – Get Paychex, Inc. Report. With the used car shortage continuing and small businesses roaring, Cramer was bullish on all three.
Executive Decision: Stem
In his “Executive Decision” segment, Cramer spoke with John Carrington, CEO of Stem (STEM) , the energy storage company that just announced the acquisition of Also Energy, a solar asset management company, for $695 million. Shares of Stem rallied 3.3% on the news.
Carrington said even without the acquisition, Stem is operating at record levels with both revenues and its backlog of work having never been higher. Adding Also Energy to their company allows them to expand their footprint even further. Also Energy currently has 32.5 gigawatts of assets under management and only 30% of their customers overlap with Stem.
Also Energy providers solar operators with the complete picture of their facility, giving owners, investors and vendors total visibility into operations, output and maintenance needs. The company currently has $23 million in recurring software revenues.
Cramer Does His Homework
In his “Homework” segment, Cramer followed up on two stocks that stumped him during earlier shows. He started with Origin Materials (ORGN) , a SPAC deal that came public in June and has fallen from $14 to $6 a share. Origin is a chemical maker for a variety of end markets, but what sets it apart is that it’s a sustainable chemical maker, using wood chips and bio materials rather than petroleum and plastics.
Cramer said Origin has a great long-term story, but it’s totally wrong for this market. The company’s first plant isn’t scheduled to open until late 2022 and its second isn’t slated until 2025. But while investors in this current market don’t have an appetite for speculation, Cramer said at $6 a share, he does.
Next was restaurant chain Portillo’s (PTLO) , makers of Chicago street food with 69 locations in nine states. Portillo’s is only in its infancy, Cramer said. It has impressive 7% same-store sales growth and throughput, and delivery that would make Domino’s Pizza (DPZ) – Get Domino’s Pizza, Inc. Report jealous.
Cramer said this is another case of a great story that’s totally wrong for a market that won’t tolerate a company trading at 55 times earnings. But, like Origin, if you can wait for the long term, it may be worth speculating.
Am I Diversified?
In the “Am I Diversified” segment, Cramer spoke with callers and responded to tweets to see if investors’ portfolios have what it takes for today’s markets.
The first portfolio included Apple (AAPL) – Get Apple Inc. Report, Public Service Enterprise Group (PEG) – Get Public Service Enterprise Group Inc Report, Tesla (TSLA) – Get Tesla Inc Report, Amazon and Walmart (WMT) – Get Walmart Inc. Report. Cramer said he’s been a seller of Walmart and he’d add Eli Lilly to diversify this portfolio.
The second portfolio’s top holdings included Amazon, Visa (V) – Get Visa Inc. Class A Report, Advanced Micro Devices, AbbVie (ABBV) – Get AbbVie, Inc. Report and Uber (UBER) – Get Uber Technologies, Inc. Report. Cramer suggested swapping Uber for Ford (F) – Get Ford Motor Company Report, but said this portfolio was also diversified.
The third portfolio had Apple, Tesla, JPMorgan Chase (JPM) – Get JPMorgan Chase & Co. Report, Costco (COST) – Get Costco Wholesale Corporation Report and Visa as its top five stocks. Cramer blessed this portfolio perfectly diversified.
Don’t Jump Ship Too Early
In his “No Huddle Offense” segment, Cramer said investors have been getting too negative too quickly recently, and giving up on great companies.
Case in point, steelmaker Nucor (NUE) – Get Nucor Corporation Report, which saw its shares fall $15 earlier this week after the company’s conservative mid-quarter update that mentions margin pressures. Investors immediately freaked out over the news, but just days later, shares are trading right back where they were, including another 3.6% gain Friday.
Nucor is a well-run company with a terrific dividend, Cramer said, and it has the catalysts of infrastructure spending and the reemergence of the auto sector to look forward to. There was no reason to sell the stock so hard, he said, but when others panic, that’s your chance to pounce.
To sign up for TheStreet’s free Daily Booyah! newsletter with all of the latest articles and videos please click here.