“The cop is dead, long live the cop,” Jim Cramer yelled to his Mad Money viewers on Thursday. The stock market turns, he said, and you have to turn with it, whether you like it or not.
The lesson of this exchange is simple. When the Federal Reserve aggressively raises interest rates, two things are true. First, what has always worked will no longer work. Second, everything that didn’t work has been given a new life.
Case study, Amazon (AMZN) – Get the report from Amazon.com, Inc., the leading tech company that’s down 5% for the year while still making great gains. You can learn a lot about a stock by learning what happens after it’s reported. When the numbers are great but investors just don’t care, that’s a problem for a $1.6 trillion company.
Compare that to stocks like Eli Lilly (LLY) – Get Eli Lilly and Company Report or Conagra Brands (KAG) – Get the report from Conagra Brands, Inc. or Church & Dwight (CHD) – Get the Church & Dwight Co., Inc. report. These are all recession-proof names and the market is eating them up, even if the gains aren’t that spectacular.
There were only two tech names Cramer felt worth considering: Alphabet (Google) – Get Alphabet Inc. Class A Report and Meta (FB) – Get Meta Platforms Inc. Class A report. Businesses depend on Google in good times and bad, he said, and as far as meta goes, no one knows how to copy the best features of everyone as well as Facebook.
So while you might still want to hold onto this formerly red-hot tech name, do yourself a favor and buy some Target (TGT) – Get Target Corporation report, which is up 5.6% today, once again proving why it’s a key retailer.
Executive Decision: Best Buy
In his first “Executive Decision” segment, Cramer sat down with Cory Barry, CEO of Best Buy (BBY) – Get the Best Buy Co., Inc. report, the electronics retailer with stocks trading at just 10x earnings.
Barry said Best Buy’s purpose is to enrich the lives of its customers through technology. It’s not just a slogan, she added. Everyone at Best Buy wants to help their customers achieve things with technology.
Best Buy has low employee turnover, a fact Barry attributes to competitive pay, extensive benefits, and career paths for each employee. “Your work must be important,” she said.
When asked about the continued growth, Barry explained that the pandemic has led to persistent consumer behavior. People are spending more time at home. They stream more content, play more games, and cook a lot more at home.
The future of work is hybrid, Barry added. That means you don’t just need one setup at home and at the office, those setups need to work together and be constantly updated with new technology as it arrives.
Barry announced Best Buy’s new “Total Tech” membership, which provides tech support for all devices in your home and additional benefits for those purchased from Best Buy, all for just $199 per year.
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Best Buy also targets the health tech industry. With so many connected devices, from fitness trackers to hearing aids to blood pressure monitors and home EKGs, people need help to keep loved ones living at home for as long as possible.
How’s your golf game?
The world revolves around golf with the start of The Masters golf tournament this week in Augusta, Georgia. But with the rising costs of metals, plastics and resins and the increasing number of rounds of golf, Acushnet Holdings is worth owning (GOLF) – Get the Acushnet Holdings Corp. report or Callaway Golf (ELY) – Are you retrieving the Callaway Golf Company Report?
Cramer said Acushnet had been a great company, but when it last reported it saw a bigger loss than expected. And while the company maintained its guidance, it also warned of further headwinds. Despite this, Cramer said he’s still bullish on Acushnet because of the strength of their brands like Titleist and FootJoy.
Callaway is a complicated story. The company used to be simple, Cramer said, but after several acquisitions, including Top Golf, an adventure golf experience, Callaway’s story is now much harder to understand and not right for this market. Callaway stock is trading at 34 times earnings.
Executive Decision: Conagra
In his second “Executive Decision” segment, Cramer also spoke to Sean Connolly, President and CEO of Conagra Brands (KAG) – Get report from Conagra Brands, Inc.
Although inflation was much higher than expected, Connolly said Conagra’s fundamentals remain strong and its brands’ innovation is resonating with consumers. Younger consumers in particular are spending more time at home and seeing the value of cooking at home. That’s why Conagra’s meals and snacks are in such high demand.
Speaking of inflation, Connolly admitted that inflation is not only higher than originally forecast, but higher than ever. “All we can do is react,” he said, hoping there will be some relief in the future.
blitz round
In the blitz round, Cramer was only bullish on Hertz Global Holdings (HTZ) – Get the Hertz Global Holdings Inc report. It was bearish on AC Moore Arts & Crafts (ACMR) – Get ACM Research, Inc. Class A Report and UiPath (AWAY) – Get UiPath Inc Class A report.
Buffett’s love for HP
In his “No Huddle Offense” segment, Cramer commented on Warren Buffett’s 11 percent stake in HP (HPQ) – Get HP Inc. report. In hindsight, he said it’s easy to see why Buffett fell in love with HP. The company makes a lot of money, pays a big dividend, and buys back its own stock. Most importantly, HP represents value and trades at just eight times earnings.
Cramer openly admitted he’d been pessimistic about HP, following in the footsteps of analysts who thought demand would fall once remote workers outfitted their home offices. But as we heard from Best Buy, consumers are always upgrading to the latest technology.
Buffett is right, Cramer concluded, HP is a great investment.
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