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Ask the Kids: Cramer's 'Mad Money' Recap (Wednesday 10/21/20)

Jim Cramer says that after he saw Wednesday's market action, he thinks investors need to be in touch with their kids to know what to buy.
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On Wall Street, you always want to know about new opportunities as early as possible. That's why Jim Cramer told his Mad Money viewers Wednesday that when he's looking for new ideas, he goes right to the source: his kids.

Kids inherently know all about the future, including what's hot and what's not. Cramer said he wouldn't have known about Snap  (SNAP) - Get Snap, Inc. Class A Report, which rose 28% Wednesday on blowout earnings, without a tip from his daughter. He also wouldn't have been aware of stocks like PayPal  (PYPL) - Get PayPal Holdings Inc Report, Adobe  (ADBE) - Get Adobe Inc. Report or Facebook  (FB) - Get Facebook, Inc. Class A Report either. It was his family that helped change Cramer's mind on Tesla  (TSLA) - Get Tesla Inc Report earlier this year and helped turn him onto Apple  (AAPL) - Get Apple Inc. (AAPL) Report years ago.

Following the trends of young people isn't an excuse not to do your homework however, Cramer reminded viewers. You still must find companies with solid business models that aren't fads, like MySpace and GoPro  (GPRO) - Get GoPro, Inc. Class A Report proved to be. But young people are your best bet for finding up-and-coming stocks like Shopify  (SHOP) - Get Shopify, Inc. Class A Report, Etsy  (ETSY) - Get Etsy, Inc. Report and Pinterest  (PINS) - Get Pinterest, Inc. Class A Report, which ended the day up another 8.9%.

Cramer and the AAP team are looking at everything from earnings and tariffs to the Federal Reserve. 

Here's what the team is watching ahead of the election: 

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: Lithia Motors

In his first "Executive Decision" segment, Cramer spoke with Bryan Deboer, president and CEO of Lithia Motors  (LAD) - Get Lithia Motors, Inc. Class A Report, the auto dealer network that is rolling out Driveway.com, an at-home alternative to buying and servicing cars at a dealership.

Deboer explained that Driveway is offering at-home services for car owners, allowing them to get their cars serviced right in their driveway. The website also has 20,000 used cars for purchase on the site, complete with delivery and a 7-day return policy. Deboer said that number will soon be expanding to 40,000 cars as the company enters new markets with Driveway.com.

When asked why people are buying cars in the middle of a pandemic, Deboer explained that there are actually a lot of cost savings when you don't drive to work every day and people are moving their gas and coffee budgets to invest in new vehicles.

In addition to their online operations, Lithia also is actively buying up profitable car dealerships across the country. Deboer said it typically takes three to five years to acquire a dealership, as many are family owned and require long relationships before deals get done.

Pioneer Natural Resources, Parsley Energy

For his second "Executive Decision" segment, Cramer spoke with Scott Sheffield, CEO of Pioneer Natural Resources  (PXD) - Get Pioneer Natural Resources Company Report, and Matt Gallagher, president and CEO of Parsley Energy  (PE) - Get Parsley Energy, Inc. Class A Report, after the two companies agreed to a merger deal valued at $4.5 billion.

Sheffield explained that the deal brings together two great companies with the best properties in the Permian Basin. The combined company will be adopting Pioneer's focus on slow but steady growth with plenty of free cash flow and a variable dividend. Gallagher added that the combination accelerates all of Parsley's environmental goals and having worked at Pioneer, he knows they have an amazing team.

Sheffield said he expects consolidation in the oil industry, although it may take some time as many smaller producers have too much leverage. He said Pioneer and Parsley will have a break-even price around $35 a barrel.

Executive Decision: Fisker

For his final "Executive Decision" segment, Cramer welcomed Henrik Fisker, founder, chairman and CEO at Fisker, the electric automaker which will be merging with Spartan Energy Acquisition Corp.  (SPAQ) - Get Spartan Energy Acquisition Corp. Class A Report to become a publicly held company next week.

Fisker said the auto industry is one of the most complex in the world and so far, only two people have brought electric vehicles to market from scratch and that's Elon Musk and himself.

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Fisker said he has learned from his past failures with the Karma, an EV that was introduced a year before Tesla. Back then, battery technology was in its infancy and the market wasn't ready for high-volume electric cars.

Today however, the market is different, Fisker said. They've partnered with Magna  (MGA) - Get Magna International Inc. Report, which has invested 6% in Fisker. Fisker's new SUV, the Ocean, will be built on a shared Magna platform, which means the costs are known and the car can be produced with quality and scale from day one. Fisker will then use a direct sales model to sell the car, at a profit, direct to customers.

When asked why come public via SPAC versus a traditional IPO, Fisker explained that using a SPAC allows them to raise all of the capital they need to bring the Ocean into production, rather than delaying the process with unnecessary hurdles.

Home Remodeling Bull

In his "No Huddle Offense" segment, Cramer said the DIY home remodeling bull market is still alive and well and there are plenty of ways to play it.

First are the obvious ones, Home Depot  (HD) - Get Home Depot, Inc. (HD) Report, Lowe's  (LOW) - Get Lowe's Companies, Inc. (LOW) Report and Costco  (COST) - Get Costco Wholesale Corporation Report. Then there are decking stocks like Azek  (AZEK)  and Trex  (TREX) - Get Trex Company, Inc. Report, tools with Stanley Black & Decker  (SWK) - Get Stanley Black & Decker, Inc. Report and appliances with Whirlpool  (WHR) - Get Whirlpool Corporation (WHR) Report.

Painting remains popular, which is when you think of Sherwin-Williams  (SHW) - Get Sherwin-Williams Company Report and PPG  (PPG) - Get PPG Industries, Inc. Report. Cramer was also bullish on WD-40  (WDFC) - Get WD-40 Company Report and Masco  (MAS) - Get Masco Corporation (MAS) Report. He said all of these great companies should be bought on any weakness.

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 Wednesday evening:

Yeti Holdings  (YETI) - Get YETI Holdings, Inc. Report: "I've loved Yeti for a long time."

Manpower Group  (MAN) - Get ManpowerGroup Inc. Report: "Manpower is interesting. Better times are coming."

L3Harris Technologies  (LHX) - Get L3Harris Technologies Inc Report: "I don't think this one is bad, but the market likes Lockheed Martin  (LMT) - Get Lockheed Martin Corporation (LMT) Report."

DraftKings  (DKNG) - Get Draftkings, Inc. (DKNG) Report: "This is a down stock lately, but they own sports gambling along with Penn National Gaming  (PENN) - Get Penn National Gaming, Inc. Report."

Walgreens Boots Alliance  (WBA) - Get Walgreens Boots Alliance Inc Report: "CVS Health Corp.  (CVS) - Get CVS Health Corporation Report and Walgreens are in the same boat. No one wants to own them. But I'd hold onto them."

Boeing Co.  (BA) - Get Boeing Company Report: "I would buy Boeing. I think you should, too."

MGP Ingredients  (MGPI) - Get MGP Ingredients, Inc. Report: "I've always liked it. I think it represents a terrific value."

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.

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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, CVS, COST.