Why is Jim Cramer so fond of tech stocks? That’s because they are always innovating, he told his Mad Money viewers on Monday.
During Monday’s session, we saw two more examples of innovation, one from semiconductor manufacturer Nvidia NVDA) – Request report and one from tech titan Microsoft MSFT) – Request report
There are two ways to excel in technology, Cramer explained. One way is to innovate, something Jensen Huang, CEO at Nvidia is known for. On Monday, the company updated analysts with not only new products, but also a pre-announcement of better-than-expected earnings. Cramer said Nvidia isn’t just challenging Intel INTC) – Request report and advanced micro-devices AMD) – Request report, it has become the most valuable semiconductor company of our time. Nvidia remains a value game even after Monday’s 5.6% run in stocks.
Then there’s Microsoft, showing investors the other way to excel in technology acquisitions. Microsoft announced the purchase of Nuance for $ 16 billion. CEO Satya Nadella said Microsoft and Nuance will help doctors speed up their paperwork to improve patient care.
Stocks of Microsoft, trading for 35 times earnings, suddenly seem a lot cheaper, Cramer said, thanks to smart thinking and impeccable timing.
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Eyes on the industry
Not all industrial stocks are created equal, Cramer reminded viewers. Some are great companies, he said, but others have big stocks.
Example: Boeing BA) – Request report versus Honeywell THEY) – Request report, two stocks that Cramer owns for its charity trust, Action Alerts PLUS. Honeywell struggled during the pandemic last year, but the company was buoyed by a 30% growth in its safety division, which includes personal protective equipment. With the economy resuming, Honeywell is benefiting from increased sales in the HVAC, Aerospace and Specialty Chemicals divisions. The stock received a few analyst upgrades and sent stocks to new all-time highs.
Then there’s Boeing, which announced a new grounding of its troubled 737Max planes that only recently got back on the air after 18 months on the ground. While the headlines from this latest recall may seem bad at first glance, Cramer said they are exactly what we want to see from Boeing. The electrical problem is minor, affecting only 90 planes, but the company advises an abundance of caution, even though the problem can be inspected and fixed in just a few hours.
That’s why Cramer said Boeing should be bought based on this latest weakness. Like Honeywell, it will benefit from the economic reopening with strong orders and low interest rates.
Last restaurant that stands
Because smaller companies are forced to file for bankruptcy, the bigger ones are reaping the benefits, Cramer told viewers. That’s how restaurants like Chipotle Mexican Grill CMG) – Request report can receive multiple analyst upgrades and price increases in one day.
It’s been called the “last man standing,” Cramer said, and while it’s horrifying for the American worker, it’s great for those companies with the balance sheets and technology to run in our new world. Hundreds of thousands of restaurant closings have put Chipotle in a strong market position. The company was already a strong digital player, and now that dining halls reopen it will get even stronger.
The same goes for Yum Brands YUM) – Request report, Darden Restaurants DRI) – Request report and Cheesecake Factory CAKE) – Request report, Cramer added, along with Starbucks SBUX) – Request report, another winner in the digital world.
In retail, Cramer said Costco COST) – Request report is one of the last companies to stand. The retailer just posted sales in the same store which were up 11%, shocking analysts who assumed sales would slow. Cramer also recommended Amazon AMZN) – Request report for e-commerce and Planet Fitness PLNT) – Request report as one of the last fitness players still standing.
From the band
In his “Off The Tape” segment, Cramer sat down with Zach Bruch and Trevor George, co-founders of the privately-owned RECUR, a company taking advantage of the new trend of NFTs, or non-replaceable tokens.
Bruch explained that NFTs are digital assets that use blockchain technology to prove ownership. They are one-of-a-kind pieces of digital goods that are one-of-a-kind and last forever. George added that NFTs can represent anything collectible, but their usefulness will come later as communities are built around these assets.
When asked about the possibility of a bitcoin-style crash in NFTs, Bruch noted that a build-up and crash is likely to occur as NFTs are new assets with much speculation. But, he noted, as they age, brands will begin to figure out how best to use them and will eventually represent real value.
The Fed vs. inflation
In his “No Huddle Offense” segment, Cramer took the view that the Federal Reserve would raise interest rates to dampen inflation. He said that sooner or later the time will come when Jay Powell will have to get involved. But if that happens, it doesn’t mean that stocks will be wiped out.
While it is true that when Janet Yellen hiked interest rates prematurely in 2015, markets were hit hard. But sometimes it took months, even years, for the stocks to start to respond. That was the case in 2004 and 2008, he said, and it could be the case again this time.
But it’s way too early to worry about interest rates. With no tangible signs of permanent, non-temporary inflation, there is simply no need to raise interest rates, which is exactly what Powell has told us every chance he gets.
Lightning round
Here’s what Cramer had to say about some of the stocks that callers were offering during Monday night’s “Mad Money Lightning Round”:
Cisco systems CSCO) – Request report: “I think they are going higher.”
AT&T T.) – Request reportTo: “Sell, sell, sell.”
Ruth’s Chris Steakhouse RUTH) – Request report“I’d be a buyer. That’s one of the survivors.”
Graphic packaging GPK) – Request report: “No, that’s too much commodity.”
Fuel cell energy FCEL) – Request report: “No, it is too speculative.”
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At the time of publication, Cramer’s Action Alerts PLUS had a function of NVDA, MSFT, AMD, BA, HON, COST, SBUX, AMZN.