It’s impossible to make sense of this market, Jim Cramer admitted to his Mad Money viewers on Tuesday. The sooner we all recognize it, the better. Until the market decides, all we can do is hurry up and wait, Cramer said. When the market finally makes its decision, we can make ours.
Normally, when inflation is raging, the fund manager’s handbook says to sell treasury bills, as well as any stock with a high price-earnings multiple. This is because future profits are worth less in an environment of high inflation. But in this market, none of these strategies work, and everyone is confused.
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Cramer had a few theories as to why the markets are recovering despite rising inflation. First, he said that the US bond market is still very attractive, relatively speaking, and continues to attract money from all over the world. It’s easy to forget that as bad as inflation is at home, abroad, it’s much worse.
It is quite possible that the bond market is mistakenly indicating an economic slowdown. Rather, they might signal what we all expect, which is that most of the inflation we have is transient.
So while Cramer expects Wednesday’s Consumer Price Index to be shockingly high, he’s not worried as these estimates are riddled with issues and don’t accurately reflect what the things in today’s economy.
With all of these mixed signals, all we can do is wait for clarity. The PayPal slowdown today (PYPL) – Get the report from PayPal Holdings Inc would generally be a buying opportunity. But in today’s market, Cramer was unwilling to recommend the purchase. So also with Nvidia (NVDA) – Get the NVIDIA Corporation report and advanced micro-devices (AMD) – Get the Advanced Micro Devices, Inc. report, two stocks Cramer loves, but wasn’t ready to recommend in such a mixed market.
Executive decision: DoorDash
In his first segment “Executive Decision”, Cramer spoke with Tony Xu, co-founder and CEO of DoorDash (HYPHEN) – Get the DoorDash report, the food delivery service with shares up 8.3% after posting strong earnings. DoorDash shares have risen 88% in the past year.
Xu said business is stronger than ever at DoorDash, even with the return of in-store meals. His company is seeing rapid growth internationally, while nationally, three million Dasher earned more than $ 2.8 billion in the last quarter alone.
There’s a lot going on at DoorDash, Xu continued. The company remains the # 1 delivery service in the food space, but it continues to enter new categories such as convenience stores and grocery stores and has just partnered with Wolt to strengthen its international presence.
DoorDash’s mission continues to help local businesses succeed, while taking care of all stakeholders in the business, he said. This was clearly evident during the pandemic, when DoorDash focused on the health and safety of its drivers while simultaneously reducing restaurant commissions to help them stay alive.
Executive decision: Roblox
For his second segment “Executive Decision”, Cramer spoke with David Baszucki, President, President and CEO of Roblox (RBLX) – Get the Roblox report, the online gaming platform which saw its shares climb more than 42% on Tuesday as investors completely misjudged the company’s earnings potential. Roblox shares have risen 57% so far this year.
Baszucki said the Roblox platform continues to grow even as people return to their normal lives. The platform now hosts over 50 million users every day who learn, work and play together in their online worlds.
Roblox started with younger users, Baszucki explained, and that’s why he’s totally committed to the safety and civility of the platform. He had a great starting point and has since built great experiences for users.
Roblox is more than just gamers, added Baszucki. The company has more than two million developers making money from their rich virtual economy. Roblox has been building the Metaverse for over 16 years and has the ability to take trends and memes in just a matter of days and bring them to life.
Executive decision: Avnet
For his latest “Executive Decision” segment, Cramer checked out Phil Gallagher, CEO of Avnet (AVT) – Get the Avnet, Inc., the supplier of electronic components that trades for less than eight times its profits, although it is in demand by just about every manufacturer.
Gallagher said he’s been in the industry for a long time, but this time it’s really different. He said the combination of increased demand and COVID-induced supply disruptions had created incredibly complex supply chain issues.
It only takes one part to disrupt an entire assembly line, Gallagher noted, and some components are now seeing delivery times of up to 40 to 50 weeks.
When asked if component suppliers are ramping up to meet the challenge, Gallagher said many factories are indeed operating around the clock and many others are making big investments to increase capacity. Unfortunately, new factories can take up to 24 months to produce significant results, so we still have a ways to go.
Why GE’s breakup makes sense
In his No-Huddle Offense segment, Cramer shared his thoughts on today’s announcement of General Electric’s split. (GE) – Get the General Electric Company (GE) report.
If you were to start a business today, you would never put aerospace, health, and energy under one roof. It just doesn’t make sense. And that’s why GE’s break-up makes sense.
The conglomerates just aren’t getting the love they once had on Wall Street, Cramer explained. In order for an analyst to cover a stock, they have to understand the business, and that’s much easier as pure play than as a complicated conglomerate.
Cramer said CEO Larry Culp has been very smart. He first cleaned up GE’s balance sheet, which will leave the three new entities in excellent financial shape. This means that when the breakup occurs, shareholders will be rewarded for their patience.
Here’s what Cramer had to say about some of the actions callers came up with during the Mad Money Lightning Round on Tuesday night:
Poshmark (CHIC) – Get the Poshmark report: “They missed the quarter badly and it’s very disappointing.”
Innovative industrial properties (IIPR) – Get the Innovative Industrial Properties Inc report: “This is the way to play the cannabis industry.
Large 5 (BGFV) – Get the Big 5 Sporting Goods Corporation report: “They hit the ball out of the park. Dicks Sporting Goods (DKS) – Get the report from Dick’s Sporting Goods, Inc. is doing well too. Sporting goods are on fire. “
Nokia (NOK) – Get Nokia Oyj Sponsored ADR Report: “I love Nokia. They are making a comeback and doing well.”
Valley (VALLEY) – Get the ADR report sponsored by Vale SA: “No, I don’t buy iron ore this late in the cycle. I’ll let Vale go.”
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