There are many things that a stock rally can do, Jim Cramer told Mad Money viewers Thursday. It’s the day we saw hopes for more momentum, a helpful Federal Reserve, and positive comments from Delta Air Lines, to name a few. But there’s another, more investable reason to buy a stock – bottlenecks.
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Reasons for the rally: Cramer’s “Mad Money” review (Thursday, 01/14/21)
Cramer said there was a shortage of products, for example when Taiwan Semiconductor announced an increase in its capital expenditure budget to build more chips to meet demand. The semiconductor maker’s shares rose 6% on the news.
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There are also IPO bottlenecks, a tactic investment bankers use to cap stocks to ensure a positive first day of trading. It happened today with Petco (plus 63%), Poshmark (plus 141%) and Affirm (18% after going public on Wednesday).
After all, Cramer said, there is a shortage of stocks when short sellers are squeezed. Video game retailer GameStop’s shares have been slashed for years as the industry moves online. But with an activist investor and strong demand for the PlayStation 5 and Xbox, the shorts came under pressure and stocks rose 121% over the past week.
Similar short-busting can be seen at Beyond Meat, which closed 13% on Thursday, and Bed Bath & Beyond, which rose 18.7% at the end of the day.
These are just a few reasons individual stocks are higher, Cramer explained, even if they’re harder to spot.
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Executive decision: Signet Jewelers
In his first “Executive Decision” segment, Cramer spoke to Gina Drosos, CEO of Signet Jewelers, the jewelry chain with 2,900 locations and booming online sales, which rose 6.1% on Thursday. Signet’s shares are up 288% over the past six months.
Drosos said Signet cracked the online jewelry sales model with two initiatives. The first are better visualizations that allow customers to really “see” their item online. The second is expert advice, just like you would get in stores. Signet now has 700 virtual sales reps to assist customers with their online purchases. The company also introduced the “buy online, in-store pickup” options that customers love.
Signet also focuses on their bottom line. Drosos found that the company had paid off debt and used data and analytics to reduce inventory by making sure only the right items were in the right places.
When asked about their retail presence, Drosos said they migrated from locations in malls to locations outside of malls with a higher sales profile and they still see plenty of growth opportunities.
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Executive decision: Honeywell
For his second “Executive Decision” segment, Cramer spoke to Darius Adamczyk, Chairman and CEO of Honeywell, about his company’s plan to vaccinate one million North Carolinians over the next six months.
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Adamczyk stated that the vaccine manufacturers did an excellent job developing and manufacturing their vaccines, and now it is up to all of us to get those doses into everyone’s arms as soon as possible. He said the challenge is not easy. Bulky vaccination encompasses storage, distribution, administration, supply chains, and records, which is why Honeywell works with other companies to get the job done.
What Honeywell is hoping, Adamczyk said, is to build a model that other states and other partnerships can follow to get the supplies, staff and technology needed to large venues that can handle the massive flow of people. In the case of their efforts in North Carolina, they will use the Carolina Panthers Stadium to vaccinate tens of thousands of people every day.
Executive decision: Cisco Systems
For his final executive decision segment, Cramer has also checked in Chuck Robbins, chairman and CEO of Cisco Systems, the network equipment maker that has just signed a new deal to acquire Acacia Communications for $ 115 per share.
Robbins said the Acacia deal was a long time coming, but he still feels that Cisco is getting a fair price and they are ready to welcome the Acacia team to the Cisco family. He said the 5G wireless buildout is now happening and companies will soon be ready with brand new applications to run on. Because of this, it was critical for Cisco to combine the forces with Acacia.
Cramer then asked Robbins how a CEO of a Fortune 500 company is coping through these troubled economic and political times. Robbins said the role of CEO has changed a lot in recent years and changed again last week due to the violence in Washington, DC. He said it was wrong to use technology to incite violence or encourage hatred and racism, and that is something that the tech industry is grappling with. CEOs need to be a unified force for everyone.
Not just profits
In his No-Huddle Offense segment, Cramer proclaimed that new investors have changed the market landscape forever, and not just with their high-risk, high-reward strategies.
Cramer stated that he interviewed Petco’s CEO the Thursday before. In the past few years, Cramer would have focused on earnings and sales growth. However, younger investors wanted to learn more about the company’s social responsibility efforts, including removing shelters and helping animal cancer research.
While older investors may make fun of environmental stewardship, PepsiCo recently announced it would double its carbon footprint reductions and its stake in the Northern Genesis acquisition continues to rise before the SPAC reverse merges with Lion Electric.
These are all trends that are not going to go away anytime soon, Cramer concluded, and all investors need to watch out for.
Lightning round
Here’s what Jim Cramer said about some of the stocks callers offered during Thursday night’s Mad Money Lightning Round:
Ballard Power Systems: “Ballard is good, but Plug Power is my favorite.”
Romeo Power RMO: “I think this one has come down a lot and I think it is attractive.”
Occidental Petroleum: “This is a deal in the short term, but you have to get out at some point.”
Salesforce.com: “People don’t like this acquisition, but I think they are having a good year.”
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At the time of publication, Cramers Action Alerts PLUS held a position in CRM.
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