Cramer's Mad Money Recap: Markets vs. Inflation

Jim Cramer analyzes the latest inflation data and looks at why the stock markets are still bullish.
By Scott Rutt , |

How can the stock markets be hitting new highs while we're seeing terrifying inflation numbers? Jim Cramer told his Mad Money viewers Thursday night that there's a simple answer. It's not a surprise when everyone knows what's coming and why. On the surface, 5% inflation might sound serious but if you look closely, most of that inflation is only transitory and will resolve itself over time.

The biggest source of inflation in Thursday's report was a 7.3% jump in the price of used cars and trucks. But with new car production slowed due to semiconductor shortages, it only makes sense that people are bidding up used vehicles. Once chip foundries can ramp up to meet demand, those prices will fall.

Then there are airline fares. Is anyone surprised that the price of a seat is going up while airlines slowly start returning their fleets to service?

In industry after industry, we see the same patterns. Grain prices are up until farmers can plant more crops. Restaurant demand is soaring after countless restaurants closed and supply chains were disrupted. And in the plastics industry, cold temperatures in Texas are only now allowing factories to return to normal operation. Cramer said only in freight do we see sustained inflation and that's because we need to pay our truck drivers more.

So while some may claim inflation is for real, Cramer told viewers the only inflation he sees is in the price of the stocks being bid up by the WallStreetBets crowd that refuses to sell.

Cramer and the AAP team are looking at everything from earnings and politics to the Federal Reserve. Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts Plus.

Executive Decision: PerkinElmer

In his first "Executive Decision" segment, Cramer spoke with Prahlad Singh, president and CEO of the diagnostics and testing company PerkinElmer  (PKI) - Get Report.

Singh explained that while their COVID testing business continues to exceed their exceptions, PerkinElmer is about more than just COVID. The company has made a dramatic pivot into life sciences, which now accounts for 75% of their business. Consumables and services are a big part of the company's recurring revenue streams that are building year after year. 

PerkinElmer has also been active on the acquisition front, making five acquisitions over the past six months, all in the life sciences area. Singh noted that cell and gene therapies will be a major trend over the next decade.

China remains an important market for PerkinElmer, accounting for 25% of total sales. Singh noted that food quality, safety and testing has been challenged during the pandemic in China, but is now returning to normal levels.

Cramer reiterated that there are only a handful of life sciences companies worth owning, and PerkinElmer is one of them.

Executive Decision: Chewy

For his second "Executive Decision" segment, Cramer also spoke with Sumit Singh, CEO of Chewy  (CHWY) - Get Report, the online pet emporium that's seen its shares fall 12% as investors flock to the economic reopening stocks instead.

Singh said the increase in pet adoption is not just a pandemic event. Chewy works with over 6,000 pet shelters across the nation that report adoptions are still growing by double digits.

When asked about their continued success, Singh noted that 69% of Chewy's volume stems from their auto-ship subscription programs, which delivers supplies without customers even having to think about it. The company is also working hard to reduce the barriers to attaining quality pet health visits and medications to ensure that all pets lead long, healthy lives.

Chewy has also built a culture that supports a great customer experience, Singh added. Items like surprise birthday cards not only delights their customers, it also builds trust, he said. That's why they make an effort to give back to their communities wherever they can.

On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.

Outlook for the Retail Sector

In a special interview, Cramer once again checked in with Matt Boss, Senior Retail Analyst at JPMorgan Chase, to get a read on where the retail sector might be headed next after racking up big gains over the spring. Boss had been bullish on L Brands  (LB) - Get Report, American Eagle Outfitters  (AEO) - Get Report and Gap Stores  (GPS) - Get Report, three laggards that have recently sprung back to life.

Boss said that economically speaking, things could not be better for retail going into summer and the upcoming back-to-school seasons. Savings rates are up, debt is low, there is $12 trillion of wealth creation from the stock market and jobs are plentiful. Not to mention that when kids go back to school in the fall, every one of them will need new clothes after staying home for most or all of this school year.

Boss advised staying with his previous winners. He said L Brands could see another 40% of upside, and he still likes both American Eagle and Gap for back to school. He was also bullish on the discount, dollar stores and off-price retailers as department stores clear out old styles to make way for the newest trends.

Not Every Winner Is a Meme Stock

In his "No Huddle Offense" segment, Cramer reminded viewers that not everything that's going higher is a meme stock. Case in point: Cleveland-Cliffs  (CLF) - Get Report and Clean Energy Fuels  (CLNE) - Get Report, two once loved, but since abandoned stocks by WallStreetBets.

For years, it's been hard to make money selling commodity steel, but after several smart acquisitions, Cleveland-Cliffs is now an integrated powerhouse that can deliver solutions its competitors can't. The company is cash-rich and most importantly, is generating a ton of cash.

Clean Energy Fuels once billed itself as a bridge fuel to the future, but that future never came. Now the company is focused on renewable natural gas and has seen its fortunes shift dramatically.

With or without the Reddit traders, Cramer said these stocks are headed higher.

Lightning Round

Here's what Jim Cramer had to say about some of the stocks that callers offered up during the "Mad Money Lightning Round" Thursday evening:

ZIM Integrated Shipping ZIM: "Oh man, this one has had a big run. Let's wait for it to cool and buy it lower."

Churchill Capital  (CCIV) - Get Report: "I like Lucid and I like Fisker  (FSR) - Get Report. Let's stay away from Lordstown Motors  (RIDE) - Get Report."

Kadmon Holdings  (KDMN) - Get Report: "This is a very speculative stock."

IBM  (IBM) - Get Report: "I like IBM. They're doing a good job. There will be growth after they split the company."

BP Midstream Partners  (BPMP) - Get Report: "I like the pipelines. I like the whole group. "

AquaBounty Technologies  (AQB) - Get Report: "I think this is an interesting situation. "

The Trade Desk  (TTD) - Get Report: "This one has come down a lot, but I'm sticking by it. I like Jeff Green."

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.

At the time of publication, Cramer's Action Alerts PLUS had no position in the stocks mentioned.