Just when you thought the federal government had forgotten how to govern, it surprised us with two pieces of news that sent the stock market soaring. Jim Cramer told his Mad Money viewers Thursday that we saw a "jailbreak" moment that set free a breadth of stocks, signaling more good things to come.
The first news was the FDA approval of Eli Lilly's (LLY) - Get Report latest drug for Alzheimers. While the news was widely expected, it's another feather in the cap of Lilly, which has seen its shares rise 38% so far this year.
The second news was the surprise infrastructure deal. Cramer said this news was totally unexpected, and was great for the usual construction-oriented stocks like United Rentals (URI) - Get Report, Caterpillar (CAT) - Get Report and Vulcan Materials (VMC) - Get Report.
But beyond the infrastructure names, the market leaders included a mix of names that made Cramer take notice. A rally in Tesla (TSLA) - Get Report tells us that growth investing is back. The rise in Darden Restaurants (DRI) - Get Report shows optimism for the American consumer, while Align Technologies (ALGN) - Get Report is good for discretionary spending. Meanwhile, Qorvo (QRVO) - Get Report and Skyworks Solutions (SWKS) - Get Report tells us that there's more to tech than just the FAANG stocks.
Finally, Cramer noted that Wells Fargo (WFC) - Get Report could be the biggest winner after it passes the latest round of government stress tests. He told viewers to view weakness in any of these stocks as a buying opportunity, because the rally may have only just begun.
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Executive Decision: Vista Outdoor
In his first "Executive Decision" segment, Cramer spoke with Chris Metz, CEO of Vista Outdoor (VSTO) - Get Report, makers of outdoor equipment for shooting, biking, golfing, cooking and more. Shares of Vista rose 2.9% Thursday to new 52-week highs, but still trade at less than 12 times earnings.
Metz said there's a lot more to the Vista story than just ammunition and shooting sports. He said they simply cannot meet the equipment demand for other outdoor activities including biking and golf.
When asked where all of the demand is coming from, Metz said that Americans are ready to get back outdoors, and unlike boats and RVs, the activities Vista plays in are a lot more affordable. Innovation has been driving the company's growth, but mergers and acquisitions remain a key component of their strategy. Vista has completed four acquisitions in just the past six months and Metz says the company has not developed the full power of their brand portfolio.
Used car inflation accounted for nearly a third of the 4.2% rise in the latest consumer price index. This inflation makes total sense given that new car production has been crimped by a shortage of semiconductors. Used cars are simply picking up the slack. But does that demand have staying power?
Thursday we received a pair of conflicting analyst reports on Carvana. JPMorgan Chase & Co. downgraded the stock, while analysts at Jefferies raised their price targets. After reading both reports, Cramer said he's siding with the bears at JPMorgan.
Carvana has certainly seen growing demand that's worthy of the stock's 27% rise this year, but as new car production ramps higher and we enter the seasonally sluggish back half of the year, that growth isn't likely to continue. Even in Carvana's own numbers, April was better than May, which was better than June.
Cramer advised taking profits in Carvana ahead of what will likely be a tough six months for the used car market.
Executive Decision: Starbucks
An upbeat Johnson said he's vaccinated and caffeinated and ready to welcome the world back to Starbucks. He also said that all of humanity is ready to gather and reconnect and there's no better place than at Starbucks.
Foot traffic is steadily increasing at Starbucks locations and Johnson noted that same-store comparisons are tracking ahead of 2019 before the pandemic began. Eventually, every market around the globe will experience what the U.S. has experienced over the past 90 days.
Johnson also confirmed that despite reports, there is no cup shortage or labor shortage at Starbucks. He said employee retention increased over the pandemic after the company guaranteed no layoffs and provided wage increases to give associates economic certainty. "We don't take for granted how hard our associates work," he said.
Additionally, Starbucks is currently in the process of relocating 600 locations to better serve their communities. New locations are typically larger, brighter and feature drive-thrus and expanded mobile order pickup areas.
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In "Cramer's Playbook," we learned the mechanics of what caused secular rotation out of the industrials and back into the high-growth tech names like Roku (ROKU) - Get Report, Zoom Video (ZM) - Get Report, Snowflake (SNOW) - Get Report and Tesla.
Cramer said when you look at all of these charts, you'll notice they all bottomed around May 12. What happened on May 12? That's when we received the hottest consumer price index number in decades, one that was so hot that money managers decided en masse that the Federal Reserve had no choice but to raise interest rates and the party for the industrials was over.
Never underestimate the power of Wall Street "groupthink," Cramer cautioned viewers. Even if the Fed isn't planning to raise rates any time soon, if enough people think it will, that's enough to launch the money manager playbook into action and sell the cyclicals and buy back into tech.
The stock market is a humbling place, Cramer admitted. The moment a rotation feels permanent, it's likely to change, he said, and frankly, just about no one saw this sudden shift in sentiment coming.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the "Mad Money Lightning Round" Thursday evening:
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At the time of publication, Cramer's Action Alerts PLUS had a position in FB, AMZN, AAPL, GOOGL, WFC.