When COVID finally burns itself out, you’ll want to own all of the stocks you’d be selling in the nightmare scenario, Jim Cramer advised his Mad Money viewers Monday, as he outlined the continuing duplicity of the stock market.
There doesn’t seem to be much middle ground in the stock market at the moment. Investors are either preparing for the worst or anticipating a roaring bull market. That’s how you can have stocks like Boeing (BA) – Get Report open sharply lower, only to end the day up 1.9%. In a “doom-or-boom” scenario, the winners can change by the hour.
Over on Real Money, Cramer looks at what’s happening with AMC Entertainment. (AMC) – Get Report, Apple (AAPL) – Get Report and Walt Disney Co. (DIS) – Get Report as they relate to COVID, herd immunity and a reversal of fortunes. Check out his investing analysis and trading strategies.
So what’s the nightmare scenario? Cramer said investors are worried about COVID variants, the pending debt ceiling debate in Congress, prolonged inflation and rising geopolitical tensions with China as the communist regime continues to lash out at its biggest companies.
On the flip side, optimistic investors are looking past the latest surge in COVID cases and onto what comes next. One way or another, the U.S. will reach herd immunity. When that occurs, things start looking up for a lot of companies and industries, especially as kids go back to school and many parents can finally get back to work.
That’s why this tug-of-war in the market is playing out daily, Cramer concluded, because the stocks that work in the nightmare scenario and exactly the ones you’d sell in the other scenario.
Executive Decision: Otis Worldwide
In his “Executive Decision” segment, Cramer spoke with Judy Marks, president and CEO of Otis Worldwide (OTIS) – Get Report, the elevator maker that just posted an eight-cents-a-share earnings beat that included a 15.4% rise in organic sales growth.
Marks said that Otis’ business model is very resilient and its end markets continue to be strong around the globe. Otis is taking market share and saw a 5% uptick in its backlog for the quarter.
When asked about the company’s success, Marks added that Otis operated at “near perfection” this quarter, with a strong focus on customers and innovation. Everything from new business to service and support got stronger in the quarter. Marks was excited for the introduction of Otis’ latest generation of products which features new technologies, new ride experiences and new design options for architects adding Otis elevators to projects.
Shares of Otis Worldwide are up 32% for the year.
Off the Charts
In a Monday edition of his “Off The Charts” segment, Cramer checked in with colleague Bob Lang over the charts of restaurants, one of the hardest-hit sectors of our economy. Lang examined three stocks, McDonald’s (MCD) – Get Report, Starbucks (SBUX) – Get Report and Yum Brands (YUM) – Get Report.
Lang noted that the daily chart of McDonald’s shows the stock moving sideways for three months, building a base, until breaking out to the upside last week. Just ahead of that move, the MACD momentum indicator signaled a bullish crossover.
A similar pattern was found in the daily chart of Starbucks, which also broke out to the upside last week on strong volume, with confirmation from both the MACD and Chaikin Money Flow, which was strong.
The chart of Yum Brands was similar to McDonald’s, Lang said, with the stock making a series of lower highs and lows until snapping out of the pattern with an 8.8% rise last week.
Cramer said these stocks are exactly what investors want to own, even if the economy is hitting a reopening pause thanks to the Delta variant.
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Off the Tape: Masterworks
In his “Off The Tape” segment, Cramer sat down with Scott Lynn, founder and CEO of the privately-held Masterworks, a company working to democratize investing in fine art.
Lynn explained that traditionally, if you wanted to invest in fine art, you needed tens of millions of dollars to build a portfolio, but with Masterworks, retail investors can pick and choose individual works and buy shares. He said investors should think of these as 3- to 10-year investments, although there are now secondary markets for trading shares.
When asked how they choose which works to offer on their platform, Lynn said their research team has a huge database of art market returns and they’ve found that the vast majority of risk and volatility occurs below $1 million. That’s why Masterworks only focuses on high-end pieces.
Housing: Too Much of a Good Thing?
D.R. Horton has too much demand and the company is running out of houses to sell. Especially in states like fast-growing Texas, Horton is turning away buyers. Digging into the company’s conference call, Horton cited supply chain issues for critical components like windows and appliances as well as forecasting issues for the shortfall.
No one could have predicted our economy’s rebound, nor how the new work-from-home workforce was going to play out, nor how supply chains were going to be disrupted by a surging Delta COVID variant. When you’re a homebuilder, you need to be conservative. Cramer says that when the Fed meets this week, it is vital that, despite all of the non-homebuilding Wall Street and hedge fund seers, they keep rates the same. It’s too dicey otherwise. Why not err on the side of prosperity than recession? That’s the real takeaway of the Horton journey in 2021.
Here’s what Cramer had to say about some of the stocks that callers offered up during the “Mad Money Lightning Round” Monday evening:
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At the time of publication, Cramer’s Action Alerts PLUS had a position in AAPL, BA.