Jim Cramer's Mad Money Recap
Jim Cramer's 'Mad Money' Recap: Running With the Bull Market
05/27/14 - 08:17 PM EDT
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NEW YORK (TheStreet
) -- This is what a bull market is supposed to look like, Jim Cramer proclaimed on Mad Money
Tuesday after a strong showing on Wall Street. Cramer said a bull market isn't supposed to be a walk in the park, it's supposed to transcend negativity -- which is exactly what this market has finally been able to do.
Cramer said he actually likes when the high-profile bulls start getting "cautious" and begin predicting a big correction. That's the time when all of the weaker holders get shaken out, he said, leaving only the true believers to march the markets market even higher.
Every bull market needs leadership from the transports, Cramer continued, and that was also on display today with UPS
on the move. Cramer said investors need to pick up some American Airlines
Bull markets also need strong retail, but investors shouldn't take their cues from Wal-Mart
, two big disappointments this quarter. Instead, focus on the dollar and the drug stores, which are taking share. Also on the mend: high-end retail including Tiffany
and Michael Kors
Even the high-growth stocks were able to post a rally with Workday
ending higher. Cramer said he likes Seattle Genetics
and ISIS Pharmaceuticals
to name a few.
Finally, don't forget the oil drillers such as EOG Resources
and Pioneer Natural Resources
, Cramer concluded. This rally is legitimate, and investors need to be taking advantage of it.
Off the Charts
In the "Off The Charts" segment, Cramer went head to head with colleague Mark Sebastian over the chart of CBOE Volatility Index
, commonly known by its ticker, the
, to see where the markets might be headed next.
Using a chart of the S&P 500
and the VIX, Sebastian noted the VIX is now at its lowest level since 2008, which bodes well for the markets, as a low VIX led to a nice rally for the markets from 2002 through 2007.
What do investors need to be cautious about? Sebastian noted that spikes in the VIX aren't in and of themselves worrisome, unless the index doesn't return to its former lows and stabilizes at higher levels. That's what occurred in early 2007, just as the rally came to an abrupt end.
Sebastian cautioned that the CBOE Russell 2000 Volatility Index
, or RVX, is displaying this pattern currently, a spike up followed by a return to higher levels. That's why all eyes are on the VIX to see if it follows suit.
Check the Bloodlines
When it comes to IPOs, a company's bloodlines -- or where its management comes from -- is an important data point, Cramer reminded viewers. But in the case of the newly public Parsley Energy
the term bloodlines takes on a whole new meaning because the company's CEO, Bryan Sheffield, is the son of Pioneer Natural Resources
CEO Scott Sheffield.
Cramer said while both companies operate mainly in the Permian Basin, Parsley is only a $3 billion company with 100,000 acres compared to the behemoth Pioneer, which is valued at $29 billion and with 825,000 acres in the Permian and more in the Eagle Ford, Barnett and other lucrative shale regions.
When it comes to production growth, however, it's all Parsley. The company is operating from a small base and tripled its production last year to 5,000 barrels a day. Pioneer is also growing like a weed, pumping out 130,000 barrels a day, but it's growth is no longer tripling on an annual basis.
Cramer said both companies have solid balance sheets to fund their operations but Parsley has a slightly lower enterprise value ratio of 8.5 compared to Pioneer's 9.5. However, Cramer said he still prefers Pioneer, given the senior Sheffield's 14 years of experience. He said investors who are looking for a faster-growing, albeit less-tested oil play won't go wrong investing in Parsley.
Executive Decision: Steve Bromley
For his "Executive Decision" segment, Cramer sat down with Steve Bromley, CEO of organic food maker SunOpta
, which just posted a two-cents-a-share earnings beat on 16% organic sales growth. Shares of SunOpta are up 35% so far in 2014.
Bromley said SunOpta's business is being driven by two groups -- the baby boomers turning to healthier foods to live longer, and the millennials, who are well informed and connected and demand to know where their food comes from. He noted the millennials in particular are the first generation to actually read food labels.
Bromley noted SunOpta is not a branded food maker. It got its start sourcing raw materials, he said, which transitioned into the value-added services of blending those ingredients into products. Most of those products carry other brand names, however, and four of SunOpta's top 10 clients are private-label brands.
When asked for an example of its products, Bromley said IHOP restaurants get all its fruit toppings from SunOpta. Gone are the days of sugary canned toppings, he said -- the public now demands fresh, organic alternatives.
Cramer said as the trend toward healthy eating continues, SunOpta is a great way to play the movement.
In the Lightning Round, Cramer was bullish on Stratasys
, Morgan Stanley
, Berkshire Hathaway
, Kansas City Southern
, Union Pacific
, Cedar Fair
, SandRidge Energy
and Universal Insurance
Cramer was bearish on 3D Systems
No Huddle Offense
In his "No Huddle Offense" segment, Cramer said it might finally be safe to invest in banks again now that years of lawsuits may be coming to a close.
Cramer said today's 3.4% rally in Bank of America
, a stock he owns for his charitable trust, Action Alerts PLUS
, may be the first of many because the regulators have set their sights on the foreign banks, finally allowing the U.S. banks to gain a foothold.
The financials are cheap versus historical levels, Cramer said. With so many fund managers underweight on the group, a 5% to 10% rally could be possible as stocks including JPMorgan Chase
and US Bancorp
, two more Action Alerts PLUS favorites, plus Wells Fargo
come back into favor.
To watch replays of Cramer's video segments, visit the Mad Money page on CNBC
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-- Written by Scott Rutt in Washington, D.C.
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