“It may now be time to buy,” Jim Cramer said on Mad Money Thursday, after another dramatic turnaround on Wall Street that saw stocks open lower only to rally by the close
What’s the point of all this optimism?
According to Cramer, investors are now ready to disregard negative news and consider weaknesses as opportunities for certain companies in specific scenarios. Let’s call it the power of the asterisk in the press release.
Case in Point: Thursday NASDAQ: MSFT, that’s certainly bad news. But the caveat was that the change wasn’t due to Microsoft’s commercial failure but rather a currency pressure. As word spread about the company’s turnaround, the stock price rose as more investors bet on the software giant.
For the second year in a row, Microsoft has lowered its revenue expectations due to currency challenges, following in the footsteps of Salesforce.com (CRM). As a result, the stock’s popularity skyrocketed, and it hasn’t looked back since.
The same was true for semiconductor maker Nvidia (NVDA). According to the NVIDIA Corporation Report, they also lowered their revenue expectations. This was due to Chinese lockdowns, which are now ending.
These theories seem to be accepted by Wall Street due to how cheap these stocks have become. Cramer also speculated that if Cisco Systems (CSCO) or Best Buy (BBY) had revealed their deficiencies earlier in the week rather than later, their shares might have increased rather than decreased sharply.
Does this imply that all stocks are good buys? Not at all. These tendencies, however, suggest that the bottom may be near.
Management’s Choice: Dow
As part of his inaugural “Executive Decision” segment, Cramer spoke with Jim Fitterling, chairman and CEO of Dow Chemical (DOW)
Inflation is not a problem for the Dow, according to Fitterling. A $3 billion share repurchase program is still on the table, although the corporation has decreased and refinanced its debt. As a result, the Dow Jones industrial average is up 20% this year.
Fitterling noted that 80 percent of Dow’s inputs are natural gas, which isn’t as volatile as oil when questioned about input costs. An advantage Dow has over its European rivals is that it has operations in the United States, Canada, and the Middle East.
To aid the environment, Dow has unveiled a new ESG strategy to achieve net-zero carbon emissions by 2050.
Digging into the Deere
What’s going on with the shares of Deere & Co.? Deere’s stock had been steadily rising, but when the firm released its last earnings report two weeks ago, shares plummeted, dropping 14% in a single session.
It was only last week that a strong rebound reversed almost all of those previous losses. As Cramer pointed out, when Deere released its results, investors were concerned that the company’s losses had tainted profits.
Investors were also worried that Deere’s earnings were influenced by the company’s sizable stock buyback and not by growth.
When Deere conducted an analyst day a week ago, the situation was resolved. The corporation clarified its prior projected reductions and demonstrated that its business was performing well.
In a flash:
Raytheon Technologies (RTX) was one of Cramer’s favorite stocks during the round’s lightning-fast trading. Get a report on Raytheon Technologies Corporation, Airbnb (ABNB), Expedia (EXPE), Upstart (UPST), and Expedia Group, Inc. (UPST). You can also get the Upstart Holdings, Inc. report and the Hertz Global Holdings (HTZ) report.
Cramer was pessimistic about Rocket Lab USA (RKLB), Joby Aviation (JOBY), Allegiant Travel (ALGT), Trade Desk (TTD), Kosmos Energy (KOS), and indie Semiconductor (INDI).
Consider Home Builders anew
As the devil’s advocate in his “No-Huddle Offense” segment, Cramer argued for the purchase of a homebuilder, against the advice of every Wall Street playbook.
“What is truly different this time?” Cramer asked. Working from home is here to stay, but housebuilders struggle to keep up with demand. Like automobiles, new houses rise in value when they are purchased. It might be years before the supply of houses matches the demand, given the high number of residences currently getting multiple bidding. Stocks in house construction companies are dropping in price daily.