In a feast-or-famine market, it's best to maintain your perspective, Jim Cramer told his Mad Money viewers Monday. As investors, we can't dismiss the pandemic, nor can we dismiss our scientists working on a cure.
Cramer admitted that it's hard to be both an optimist and a pessimist at the same time, but that's exactly what this market demands. Inexperienced investors are playing the headlines, treating every headline about a decline in cases as a reason to buy the airlines, cruise lines and the oils, and every headline about an increase in cases as a reason to sell these same sectors.
But Cramer said it's foolish to sell the stocks in his COVID-19 index, as they will continue to thrive long after we have a vaccine. The smarter approach is to have a barbell portfolio, one that both embraces the secular growth trends of the COVID-19 portfolio but also includes the best of the recovery stocks.
It's always been foolish to bet against science, Cramer reminded viewers. But it's also too early to sound the all-clear and pretend this pandemic isn't going to be around for a while to come.
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Executive Decision: Campbell Soup Co.
In his first "Executive Decision" segment, Cramer spoke with Mark Clouse, president and CEO of Campbell Soup Co. (CPB) - Get Report, the packaged foods maker with a lot of growth since the pandemic began.
Clouse said while the recovery has begun in some parts of the country, the behaviors learned over the past few months are likely to stay with us for a long time. Campbell expects to see long-term sales growth for its portfolio of brands as a result.
Many families are rediscovering quick-scratch cooking, Clouse said, where just a few quality ingredients, like soup, can make a great meal. In-home lunch consumption will also continue to be strong, he said, and there's no better way to have a simple, convenient meal than soup.
Snacking is another area where Campbell excels, with brands like Goldfish crackers, Kettle Brand chips and Snyder's Of Hanover pretzels. These are differentiated brands that consumers seek out, even when they're not loading up their pantries for quarantine.
Cramer said Campbell is not the same company it was years ago, and they're doing many things right.
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Hertz: Believe Them
When a company tries to sell you a share of stock that even they say is worthless, believe them! That was Cramer's cautionary advice for investors after the incredible news that the bankrupt Hertz Global Holdings (HTZ) - Get Report will be allowed to sell $500 million worth of new shares at $2 a share.
After falling below $1 a share, Hertz became a cult phenomenon with younger investors looking to make a few cents on a cheap stock. On the Robinhood trading platform, 44,000 users has ballooned into 170,000 users as shares have peaked over $5 a share.
Meanwhile, the New York Stock Exchange attempted to delist shares of Hertz, but the company appealed. The Securities and Exchange Commission has opted for a hands-off approach with a "buyer beware" attitude. But Cramer noted that even the company's own statement clearly says their common stock will be worthless.
Cramer said Hertz would need to raise $2 billion in order to have a fighting chance of shareholders seeing any value whatsoever, and that's a far cry from this $500 million offering.
Investors betting on a quick economic recovery are also making a mistake, Cramer said. Hertz needed to see travel return to pre-COVID-19 levels by April in order for it to survive and that clearly did not happen. The company currently owes $20.5 billion in debt, an amount that is not covered by the value of its cars.
Cramer said that it's painful to see this offering being allowed to continue.
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Executive Decision: Newmont Mining
Palmer said as a fourth-generation miner, he knows the value of being a low-cost provider, that's why Newmont operates as if gold is just $1,200 an ounce. He said being profitable and being able to pay a sustainable dividend at that low level gives them a huge advantage in the market.
When asked about the effects of COVID-19, Palmer explained that Newmont put five mines into care-and-maintenance mode during the quarter, but is now working to return those mines to regular operations. The health and safety of their workers is paramount, he said, and they have a full regiment of cleaning, screening and social distancing to keep workers safe.
Making the Rent
In his "No-Huddle Offense" segment, Cramer said there's a ticking time bomb in the market that no one's talking about. What happens when millions of small businesses stop paying rent? We're about to find out.
With millions of small businesses still struggling to survive and security deposits running out, Cramer said major concessions will be needed to keep small business afloat, but so far, no one is talking about any concessions. Rents must be reduced, he said, otherwise we will face an unprecedented wave of evictions and store and restaurant closures.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the "Mad Money Lightning Round" Monday evening:
Virgin Galactic (SPCE) : "I don't like it. It's too dangerous for me."
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At the time of publication, Cramer's Action Alerts PLUS had no position in the stocks mentioned.