Home Depot – A Market of Stocks: Cramer’s ‘Mad Money’ Recap (Monday 1/25/21)
We’re in a stock picker’s market, Jim Cramer told his Mad Money viewers Monday. This is a market that rewards individual companies that are doing well and seems impervious to fears of a COVID slowdown.
While some investors and pundits warn that the economy will collapse under the weight of prolonged vaccinations and deadly new COVID mutations, Cramer said there is, in fact, a lot going right in our economy.
First, Cramer said as the COVID news worsens, consumers are staying at home, which means they have more money to pay down debt and invest in the markets. That’s good news for technology and all of the stay-at-home stocks like Amazon (AMZN) – Get Report, Zoom Video (ZM) – Get Report and Netflix (NFLX) – Get Report. Next, we’re in the middle of one of the best housing markets ever as people upgrade to homes away from the city with plenty of space for home offices and studies. That’s great news for all of the home builders and home-related stocks like Home Depot (HD) – Get Report and Stanley Black & Decker (SWK) – Get Report. There’s also a bull market in autos, as cars are the safest way to travel.
Cramer said if you’re thinking of selling stocks because you think the economy is crumbling, you’re making a big mistake. There’s a lot to like.
The second factor in today’s market was the wild trading action in highly-shorted stocks like GameStop (GME) – Get Report. Cramer said there’s a new trend where hordes of bullish investors piling into heavily-shorted stocks, forcing the short sellers to get crushed. Today’s action in GameStop, which at one point had 148% of its shares sold short, is also happening in other names, like B&G Foods (BGS) – Get Report, Bed Bath & Beyond (BBBY) – Get Report and Rocket Companies (RKT) – Get Report. There’s nothing illegal going on, Cramer noted, but these moves are merely sideshows and aren’t big enough to move the market overall.
Meanwhile, there are companies that are posting great earnings, like Kimberly-Clark (KMB) – Get Report, up 3.2% today. Kimberly’s earnings are big enough to move the market, taking Clorox (CLX) – Get Report up a quick 4.5% by the close.
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Executive Decision: Boot Barn
In his first “Executive Decision” segment, Cramer spoke with Jim Conway, president and CEO of Boot Barn (BOOT) – Get Report, the western-themed apparel retailer that just posted incredible same store sales up 20%. Shares of Boot Barn rallied 2.5% by the close and are up 41% over the past year to new all-time highs.
Conway said there are a number of factors contributing to Boot Barn’s popularity. He said the underlying business remains strong and many of their internal initiatives are beginning to bear fruit, and the company is also benefiting from consumers spending their stimulus checks on new work apparel.
When asked about competition from smaller retailers, Conway explained that Boot Barn had been taking market share from smaller vendors for years and that trend was only accelerated by the pandemic. New Boot Barn locations hit the ground running and pay for themselves in less than three years on average, he added. They remain bullish on increasing their store count both in new and existing markets.
When asked about the future, Conway said there’s a lot to look forward to once the pandemic begins to fade. He said the supply of inventory will be better and consumers will have rodeos and concerts to attend, which means they’ll want new boots and apparel.
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Executive Decision: COVID Testing Update
In a special “Executive Decision” segment, Cramer once again spoke with Dr. Michael Mina, assistant professor of epidemiology at the Harvard School of Public Health, for an update on in-home COVID testing.
Mina explained that paper tests are being produced right now that can be administered at home, by anyone, in as little as a minute, with results in just 15 minutes. The tests will tell you whether you are infectious or not and if you are, you can stay home and avoid infecting others.
Cheap, rapid, in-home testing is not only fast and accessible, Mina said, it’s also equitable, especially if the government picks up the $5 cost and makes them available to everyone.
Mina added that the main hold-up right now is the FDA, which compares these paper tests to more complex and accurate PCR tests. But the goal is not perfect accuracy, Mina said, the goal is keeping infectious people at home and allowing everyone to test themselves. But removing the red tape, these tests could be in the hands of everyone in just weeks.
It’s time to keep with the science, Mina pleaded.
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Charging up EV Stocks
Investors looking to add an EV charging stock to their portfolio now have a few to choose from, as special purpose acquisition companies are about to bring three of them to market via reverse merger. The three are Climate Real Impact Solutions CLII, which will be merging with EVgo, Switchback Energy (SBE) – Get Report, which will be merging with ChargePoint, and TPG, which will be merging with the EVbox network.
Cramer said he loves comparison shopping and there’s a lot to like about these three charging networks as EVs take the spotlight under Joe Biden. ChargePoint has 115,000 locations and provides hardware, software, services and an app for consumers. EVbox started in Europe and has 190,000 locations in 70 countries using a similar hardware and services models. EVgo is the smallest of the three, with only 900 fast-charging stations, but the company owns them all and plans 2,700 stations in the next five years.
All three companies have real revenues and high growth rates. Based on estimated valuations, ChargePoint will trade at 18 times earnings, EVgo at 28 times earnings and EVbox at just seven times earnings, making it the winner in Cramer’s eyes.
In his No-Huddle Offense segment, Cramer circled back on the battleground that has become GameStop.
GameStop has been written off as dead for years, Cramer explained. After all, in a world where games are downloaded over the Internet, who needs a video game retailer? That’s how GameStop became one of the most heavily shorted stocks in America, with 148% of their shares sold short. Prices have fallen from $47 a share to lows near $3 just last year. But then, a funny thing happened.
This year, new consoles began arriving, bolstering sales — and interest in GameStop. The GameStop bulls, mainly younger investors, flocked to Reddit and other forums to sing the company’s praises and began buying en masse. That sent shares soaring as the shorts were forced to cover their positions at market prices. The result? Shares rocketed from $17 to $80, with a stop as high as $159 earlier Monday.
Cramer said the bulls have every right to make their case and buy shares of companies they believe in. As long as there is full disclosure and no fraud, there’s nothing wrong with forcing the shorts to close their positions.
That said, Cramer said shares of GameStop are overvalued at current levels and their outlook remains bleak.
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At the time of publication, Cramer’s Action Alerts PLUS had a position in Amazon.