Business Goes Digital: Cramer's 'Mad Money' Recap (Thursday 12/3/20)

Businesses need to go digital or go broke, says Jim Cramer. And investors should look for the companies that make the digital transformation possible.
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Companies need to go digital or they risk going out of business, Jim Cramer told his Mad Money viewers Thursday night.

For investors, it’s easy to spot technology — it’s what we use every day. Whether that’s an iPhone from Apple  (AAPL) - Get Report or our online order at Starbucks  (SBUX) - Get Report and Chipotle  (CMG) - Get Report, we see this tech first hand because we use it. 

But don’t forget about the companies that make this digitalization possible. These companies that operate behind the scenes are generating monstrous growth because of this rising demand. 

Cramer is referring to the companies like CrowdStrike  (CRWD) - Get Report, which just hit new all-time highs on earnings as demand for cybersecurity continues to climb. Or Snowflake  (SNOW) - Get Report, which rallied 16.1% on earnings as demand for data analytics continues to climb.

And don’t forget about a company like Salesforce.com  (CRM) - Get Report, which reported a tremendous quarter earlier this week and announced its acquisition of Slack Technologies  (WORK) - Get Report

Of course, the flip side to these stocks is the valuation and the risk of a big decline, like Splunk  (SPLK) - Get Report experienced Thursday. However, these higher-risk, higher-reward stocks can be game-changers for investors if they pick the winners. 

Here’s the bottom line: It’s OK to own the companies that are using the technology to help pivot their businesses, but it’s also a good idea to own some of the companies that make it possible in the first place. 

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Executive Decision: Snowflake

Speaking of Snowflake, Cramer spoke with Frank Slootman, chairman and CEO of Snowflake, on the show’s Executive Decision segment. 

Big data is becoming more important by the day. But the processes within that data parsing needs to drive outcomes for enterprises and needs to help drive an understanding of people’s behavior, Slootman said.

The beauty of Snowflake is that it allows for massive scale, is incredibly efficient and is very precise, he said. The problem with anecdotal observations is that they aren't not precise and often flat out wrong, he added. 

Only a fraction of big data has really been tapped into and there’s a lot of potential from where it can go from here. With Snowflake, the company is helping to address that, too. 

Its platform does not hit customers with a huge bill right at the start. Instead, customers can sign up and will only be charged for what they use. Further, the platform is very approachable. You don’t need to be a rocket scientist to use it, Slootman said.

The stock jumped to new all-time highs on earnings, but the initial reaction wasn’t as bullish until investors were able to digest just how good of a quarter it was. If investors want to own some high-octane growth, they can have a position in Snowflake, Cramer said. 

Executive Decision: Azek

On the show’s second “Executive Decision” segment, Cramer spoke with Jesse Singh, president and CEO of Azek  (AZEK)

Despite reporting a terrific quarter, the stock fell 2.6% Thursday. Cramer pointed out the company’s top- and bottom-line earnings beat, Azek’s 22% revenue growth and management's strong forecast for the coming year.

It was a “really strong quarter,” Singh said. Revenue was up and margins improved, even in a pandemic-ridden year. 

The thing that people don’t seem to understand? The trend in housing. The remodeling market is very strong right now, Singh explained, adding that those trends should remain in place for the foreseeable future. 

“We have the benefit of playing in multiple technologies which gives us multiple opportunities to drive growth,” he said. 

These technologies allow the company to perform well in decking and exterior building markets. These high-end products look very, very similar to wood, but are non-wood materials. In fact, Azek’s largest raw input is recycled material, which made up 54% of its materials in fiscal 2020. 

There’s a lot of long-term opportunity too, with so much of the market still being addressed with wood. Singh said they need to educate the customers and help spread the word about non-wood materials. 

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SPACs and EVs

Amid the volatility in SPACs, the special purpose acquisition companies — and electric vehicle stocks, Cramer wanted to take a closer look at CIIG Merger Corp  (CIIC)

The company will merge with Arrival and eventually trade under the ticker symbol “ARVL.” The merger will take place in the first quarter of 2021, where the company will receive $660 million in cash. 

The stock has come in hard from its peak around $27 down to $21.55, the closing price on Thursday after the stock’s impressive 9.6% gain on the day. That dip is enough for speculative buyers to start dipping their toe in, Cramer said. 

So what makes this company so much better than the rest of its peers? While Arrival does not yet have any revenue or earnings, they may not be that far off. 

The company, which plans to build electric busses and vans, expects to begin production in the fourth quarter of 2021. Its investors include Kia, Hyundai and United Parcel Service UPS — the last of that group already has an order for 10,000 electric vans and an option for more. The company has already secured $1.2 billion worth of orders for its first products. 

Cramer’s also excited about the company’s “micro-factory” production approach. Essentially, it can set up shop in about six months, virtually anywhere in the world where existing warehouse real estate exists and get up and running under a less capital-intensive operation. 

The company has some aggressive, although not impossible targets, such as $14 billion in revenue by 2024. If Arrival can even get close to that, its stock should perform well, Cramer said. 

Eviction Crisis Ahead

On the show’s No-Huddle Offense, Cramer pointed out that we have record Covid-19 hospitalizations and deaths. Lockdowns are tightening too. So why aren’t there more bankruptcies? 

While commercial bankruptcies are up — no surprise there — personal bankruptcies are down. How can that be? With a moratorium on evictions, it’s easy for many consumers to cover their other bills and have some spending money. After all, some don't have to worry about rent. 

When that moratorium concludes at the end of the year though, we’re going to be in for a rude awakening. That includes homeowners behind on their payments, landlords, banks, retailers and REITs.

Cramer has been a proponent of passing additional stimulus, but it simply isn’t gaining traction in Washington. It’s crazy that the government is allowing such a risk to grow when we are so close introducing a vaccine.

The bottom line? Americans still need some help. 

Lightning Round

Here’s what Cramer had to say about some of the stocks during the Mad Money Lightning Round: 

BlackBerry  (BB) - Get Report: “It’s been reinventing itself for so long, I forgot what it’s reinventing. How much better off would investors have been with Apple? I suggest buying that one instead.” 

Blink Charging  (BLNK) - Get Report: “Be very careful with this group. I like the one we discussed earlier in the show, CIIG Merger.” 

Palantir  (PLTR) - Get Report: “It was a good play recently, as it’s run so much from when it came public.”

PayPal  (PYPL) - Get Report: “Management is excellent, it’s the bank of the future. I think it can go higher still.”

Chewy  (CHWY) - Get Report: “I’m partial to the company, but it’s hard to value and has run up a bit too much to buy it right now.”

Veeva Systems  (VEEV) - Get Report: “It’s been a great performer over the years and I’m not going to abandon ship.” 

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