Short-sellers are often seen as the villains on Wall Street, Jim Cramer told his Mad Money viewers Tuesday, but on this day, they provided the ammo for a powerful rally. Short sellers provide an important market function, Cramer added, a function that was on full display today.
Shares of Hasbro (HAS) - Get Report have been in a tailspin ever since the collapse Toys 'R Us left the industry with too much inventory. But today shares vaulted 14% after the shorts got caught off guard by strong earnings. Cramer said the excess toy inventory has finally been snapped up by retailers like Ollie's Bargain Outlet (OLLI) - Get Report , leaving healthy profits for Hasbro.
Qualcomm (QCOM) - Get Report was another company benefiting from short sellers. For months, Qualcomm has been in legal battles with Apple (AAPL) - Get Report , a fight the shorts assumed Apple would win. So when the two the giants settled their grievances, shares of Qualcomm began to rally, including another 5.8% today.
Two more standouts in Tuesday's session included Twitter (TWTR) - Get Report , which soared 15.6% on strong earnings that few short sellers anticipated. The company's efforts to combat negativity on its platform appear to be working as advertisers are returning. Finally there's Kohl's (KSS) - Get Report , which today announced that it will be accepting Amazon (AMZN) - Get Report returns at all of its locations, sending shares markedly higher.
Cramer said none of these gains would have been possible without the short sellers being on the wrong side of the trade, which is why, at least for today, they should be applauded.
Cramer and the AAP team are analyzing the update to the Kohl's-Amazon partnership. 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: Hasbro
For his "Executive Decision" segment, Cramer spoke with Brian Goldner, president and CEO of Hasbro, the toymaker with shares that are up 23.8% for the year after posting a 21-cents-a-share earnings beat.
Goldner said Hasbro saw good growth this quarter across many of its segments and is continuing on its plan toward profitable growth for 2019 and beyond. He said their progress of cleaning up after the Toys R' Us liquidation are now ahead of schedule.
Among the standouts in the quarter was "Magic: The Gathering," a game that began as an in-person, table-top experience but is now expanding into the digital world.
Goldner also noted that Transformers continues to be a big driver for Hasbro, as they develop new characters and new stories for the franchise. Hasbro has also partnered to bring the series back to primetime TV in China.
When asked about their company culture, Goldner was proud to share that Hasbro was voted the most ethical company for the either year in a row, a feat which has helped it attract top talent from all over the world.
The Pop in PepsiCo
A little more than a year ago, Wall Street had given up on PepsiCo. Soda sales were slowing down in North America, freight costs were rising and rising interest rates made PepsiCo's bountiful dividend less attractive. One analyst even went so far as to downgrade shares of PepsiCo to an outright sell.
The weakness continued after the company announced the acquisition of Sodastream and after long-time CEO Indra Nooyi announced she was stepping down from the company. Shares bottomed in October at $105.
But things took a turn for the better this quarter, just as management told investors they would. The company posted solid 5.2% organic growth and investors have been returning to that dividend yield as interest rates have retreated. PepsiCo continues to deliver with new products and innovations, as their investments last year have begun to bear fruit.
Cramer said investors need to suspend their disbelief in PepsiCo, as the company has a solid track record and has earned our trust.
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Off the Tape
In his "Off The Tape" segment, Cramer sat down with Hill Ferguson, CEO of the privately-held Doctor on Demand, the online primary care provider that has partnered with Humana (HUM) - Get Report to deliver new, innovative health plans beginning this summer.
Ferguson explained that Doctor on Demand is a national network of employed physicians that provide care via video, messaging and phone. Doctor on Demand is available wherever and whenever you need them and they currently resolve 92% of the cases they encounter. Ferguson said you can think of them as a medical concierge service.
Through the Humana partnership, Doctor on Demand will begin offering new health plans that are half the cost of traditional plans, Ferguson said, and unlike rival services, his company employs their doctors, which means patients can see the same doctors over and over and build a relationship.
Bring the Investors Back
In his "No Huddle Offense" segment, Cramer offered up his suggestions for what it would take to bring individual investors back to the stock market. Individuals continue to flee the market, Cramer said, despite it still being the best asset class available. He said three things can change that trend.
First, we need to stop the relentless creation of ETFs which are draining the life out of the stock market and bring back the Uptick Rule, which was created in 1934 but repealed in 2007 at the request of the ETF industry. Cramer said the uptick rule prevented short sellers from selling a stock that's already falling, thereby protecting individuals. ETFs, on the other hand, don't care about individuals, and lobbied to have free rein to buy and sell as they please. This has led to lightning fast declines that have wiped out many individual portfolios.
Second, Cramer said, companies need to split their stocks, so individuals can once again buy 100 shares instead of just one. At the end of the day, the price doesn't really matter, Cramer admitted, but psychologically, it makes all the difference in the world.
Finally, Cramer said the the heads of all the major banks and brokerages need to sit down with the SEC and make bringing back individuals a priority. They were once the lifeblood of the market, and they should be again.
In the Lightning Round, Cramer was bullish on CarGurus (CARG) - Get Report , Carmax (KMX) - Get Report , Barrick Gold (GOLD) - Get Report , Align Technology (ALGN) - Get Report , Johnson & Johnson (JNJ) - Get Report , NextEra Energy (NEE) - Get Report , Dominion Energy (D) - Get Report , American Electric Power (AEP) - Get Report , Baidu.com (BIDU) - Get Report , Alibaba (BABA) - Get Report , Kohlberg Kravis Roberts (KKR) - Get Report and Canopy Growth (CGC) - Get Report .
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At the time of publication, Cramer's Action Alerts PLUS had a position in KSS, AMZN, AAPL, JNJ.