There are a lot of encouraging signs in the stock market, Jim Cramer told his Mad Money viewers Monday, but with the markets still veering from one extreme to another, investors need to remain vigilant and cautious. On Friday, stocks fell on news of the spike in COVID-19 infections. Today, they rallied on the same news.
What are investors so encouraged about? Cramer said May pending home sales surged, showing pent up demand for housing. We also saw the stocks of Nike (NKE) - Get Report, Facebook (FB) - Get Report and Southwest Airlines (LUV) - Get Report all bounce after falling on Friday.
Boeing (BA) - Get Report is another bright spot in the market, as it begins testing the fix for its 737 Max. Strength in Boeing is good news for Honeywell (HON) - Get Report, General Electric (GE) - Get Report and the aerospace sector.
Beyond individual stocks, Cramer said there was a sector rotation into the recovery stocks, with the banks and retail both up by the close. He continued to recommend Costco (COST) - Get Report, Dollar General (DG) - Get Report and TJX Companies (TJX) - Get Report.
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Executive Decision: Honeywell
In his first "Executive Decision" segment, Cramer spoke with Darius Adamczyk, chairman and CEO of Honeywell International, the industrial giant with shares off 19% for the year.
Adamczyk said Honeywell has played a vital role in every phase of the COVID-19 pandemic, from providing millions of N-95 masks and creating healthy building and aircraft products, to inventing a new container that can replace glass vials for vaccines.
Beyond COVID-19 however, Adamczyk said Honeywell continues its transformation from a hardware company to a software one. He said at their core, Honeywell is a controls company and it controls buildings, aircraft, machinery and more. And everything those companies do relies on quality software and services, especially with the IoT.
Adamczyk was also bullish on Honeywell's materials business, which is working on economically viable energy storage systems and sustainable plastic renewable products that will be crucial in saving our environment.
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Executive Decision: Restaurant Brands
For his second "Executive Decision" segment, Cramer also spoke with Jose Cil, CEO of Restaurant Brands (QSR) - Get Report, purveyors of the Burger King, Popeye's Louisiana Kitchen and Tim Horton's restaurant chains.
Cil said even though the pandemic hit everyone hard, their brands were ready to serve customers with drive-thru, takeout and delivery services at many locations. He said there's still work to be done in streamlining these offerings to increase margins, but he's been very proud of all their teams.
At Popeye's, the introduction of the chicken sandwich has ushered in a new wave of regular, daily customers, Cil said. Those customers are now beginning to sample the entire Popeye's menu and helping to boost sales. He was also bullish on Burger King's plant-based Impossible burger, which is also gaining in popularity as customers look for meat alternatives.
Cil also called attention to his company's many other initiatives, from sustainability and natural ingredients to diversity, inclusion and social justice. He said if you want to build a strong company, you need to have all of these things, which is why they continue to be a priority for Restaurant Brands.
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Checking on Cramer's COVID-19 Index
As the pandemic reignites, Cramer said it's a great time to revisit his Mad Money COVID-19 Index, to see which of the stocks need to be updated and which ones should be bought.
Cramer said most of the best performers in the index have been technology, with Zoom Video (ZM) - Get Report, Spotify (SPOT) - Get Report and Peloton (PTON) - Get Report leading the pack. But not all have been winners however, which is why Cramer opted to drop Baxter International (BAX) - Get Report, GlaxoSmithKline (GSK) - Get Report and Kellogg (K) - Get Report from the index, in favor of VMware (VMW) - Get Report, Newmont Goldcorp (NEM) - Get Report, and content delivery network Fastly (FSLY) - Get Report.
As for the stocks he'd buy today, Cramer said there are a number of great stocks in the COVID-19 index that are worth buying right now into weakness. He singled out Crown Castle (CCI) - Get Report, UnitedHealth Group (UNH) - Get Report and Verizon (VZ) - Get Report along with Walmart (WMT) - Get Report, Johnson & Johnson (JNJ) - Get Report, Advanced Micro Devices (AMD) - Get Report and health insurer Centene (CNC) - Get Report.
Keeping an eye on the Banks
In his "No-Huddle Offense" segment, Cramer said investors should be concerned that banks are beginning to fail their stress tests and companies like Wells Fargo (WFC) - Get Report have been forced to cut their dividends.
The banks are the glue that holds the stock market together, Cramer said. Without their dividends, bank stocks will fall, when bank stocks fall, they take the rest of the market with them. We have yet to see what happens when government stimulus runs out and people and businesses can't pay their bills. A wave of defaults is likely, which could put a lot of strain on those who loan money.
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:
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At the time of publication, Cramer's Action Alerts PLUS had a position in COST, TJX, JNJ.