Publish date:

Cramer's Mad Money Recap: Nucor and the American Economy

Jim Cramer says low interest rates help, but this rally owes more to the child tax credit and hopes for an infrastructure bill.
Author:

Stop pinning this rally on the Federal Reserve, Jim Cramer told his Mad Money viewers Tuesday. Sure, lower interest rates are helping the economy, but the Fed's contribution pales in comparison to the effects the child tax credit is having on retail or what the new infrastructure bills means for American manufacturing.

That's why Cramer went right to the source, speaking to Leon Topalian, president and CEO of steelmaker Nucor  (NUE) - Get Nucor Corporation Report, to find out exactly what today's infrastructure bill means for our economy.

Topalian said that America hasn't had a meaningful infrastructure investment in decades, which makes Tuesday's news a big deal. The U.S. must invest in order to stay competitive, he said, and the pandemic only proved how important it is to make vital products here at home.

Over on Real Money, TheStreet's in-house technical analyst, Bruce Kamich, has a new strategy for steelmaker Nucor on an upside breakout. The charts are bullish, he says, and traders could go long this name.

The infrastructure bill is about a lot more than just roads and bridges, Topalian added, it's about investing in American manufacturing. Nucor is ready and able to provide the steel America needs. The company's new mills are highly efficient, turning scrap metals into new products at the best prices in the industry.

When asked why Nucor shares trade at just six times earnings, Topalian said those shares are worth a lot more than they trade for, which is why the company is aggressively buying back stock and remains focused on shareholder returns.

Nucor shares added 9.58% on Tuesday to close at $118.20. The stock is up more than 122% so far this year. 

Get more trading strategies and investing insights from Cramer and his Action Alerts PLUS team.

Executive Decision: Pioneer Natural Resources

For his second "Executive Decision" segment, Cramer spoke with Scott Sheffield, CEO of Pioneer Natural Resources  (PXD) - Get Pioneer Natural Resources Company Report, which saw its share close up 2.3% after the company reported inline earnings and declared a new, variable dividend for shareholders.

Sheffield said there have been a lot of changes at Pioneer that have led to their success. After two acquisitions, Pioneer is now the largest oil producer in Texas and in the Permian Basin. Thanks to the efforts of their team, well costs have declined 40% to 50% over the past three years and flaring of natural gas has been reduced by 80%.

Pioneer has also been listening to their shareholders, who told them the business model needed to change. That's why the company now only drills with 50% of their cash flow, which then allows for the new variable dividend. Pioneer's break even price, including the base dividend, is now just $31 to $32 a barrel, among the lowest in the industry.

Sheffield added that he's also focused on increasing diversity at Pioneer and is making progress on getting their people, even the "stubborn" ones, to get vaccinated against COVID-19.

Executive Decision: Revolve Group

In his next "Executive Decision" segment, Cramer also spoke with Michael Mente and Mike Karanikolas, co-founders and co-CEOs of Revolve Group RVLV, the digital department store that's seen its share of volatility recently after reporting earnings last week.

Mente said the volatility comes with the territory of being fast-growing, disruptive company. He said their business continues to be on fire, yet they're still only a tiny sliver of the overall retail market. Karanikolas noted that while they're very pleased with their FORWARD brand, there's still a lot of work to be done introducing that brand to Revolve's customer base. The two brands currently only see 5% overlap.

Mente added that Revolve was built from the ground up as a digital retailer, which makes it hard for brick-and-mortar retailers to match their flavor of style and innovation. "It's hard to disrupt yourself" and try something new, Mente said.

Mente also clarified his comments on the company's conference call regarding changes in Apple's iOS advertising. He said while some segments were affected, those losses were offset in other areas, making them non-material in the quarter overall.

Executive Decision: Eastman Chemical

For his final "Executive Decision" segment, Cramer checked in Mark Costa, chairman and CEO of Eastman Chemical  (EMN) - Get Eastman Chemical Company Report, the chemical maker that's changing the game when it comes to plastic recycling. Shares of Eastman are up 57% over the past year.

Costa said that Eastman has been transforming itself into an environmental technology leader. The company now has plastic recycling agreements with 20 top consumer brands including Estee Lauder  (EL) - Get Estee Lauder Companies Inc. Class A Report and Procter & Gamble  (PG) - Get Procter & Gamble Company Report.

TheStreet Recommends

Most plastics today are mechanically recycled, Costa explained. That means the plastics are chopped up, melted and turned into other plastic products, often of lesser quality. But with Eastman's molecular recycling technology, chemistry is used to unwind the plastic molecules and rebuild them into exactly the same caliber of plastic as the original. And, they do it with a smaller carbon footprint than traditional recycling.

Eastman can turn the 70% of plastics that aren't recycled into a circular economy that represents a lot of opportunities. Costa said people need to understand that while glass and aluminum is more recyclable than plastic, it takes a lot more energy to produce and recycle. Using Eastman's technology, plastic can now be used and reused with less impact to our environment.

Showman as CEO

In his No-Huddle Offense segment, Cramer answered the question of what makes a great executive in today's market. His answer? Showmanship.

Earlier today, Cramer spoke with Adam Aaron, CEO of AMC Entertainment  (AMC) - Get AMC Entertainment Holdings, Inc. Class A Report, who's emerged as the king of harnessing the enthusiasm of his shareholder base to save his company. After being anointed as one of the original meme stocks, Aaron used AMC's elevated share price to issue more shares and raise all of the cash he needs to adapt and thrive in the new world of in-person entertainment.

Aaron said he works for his shareholders, and when they gave him the opportunity to do great things, he seized that opportunity, staving off bankruptcy and saving jobs in the process. AMC has more cash on hand now than at any time in the company's history.

Cramer added Tesla  (TSLA) - Get Tesla Inc Report CEO Elon Musk to the list of gray showmen, along with John Legere, the former CEO of T-Mobile  (TMUS) - Get T-Mobile US, Inc. Report. All of these CEOs have great execution and great showmanship.

Lightning Round

Here's what Cramer had to say about some of the stocks that callers offered up during the "Mad Money Lightning Round" Tuesday evening:

EVgo  (EVGO) - Get EVGO, INC. Report: "This is one of my favorites, but there are four of these now, which means it's speculative."

Piedmont Lithium  (PLL) - Get Piedmont Lithium Ltd Sponsored ADR Report: "Lithium is a difficult business. It's not my fav."

fuboTV  (FUBO) - Get FUBOTV INC. Report: "This looks like a dynamite quarter."

Skyworks Solutions  (SWKS) - Get Skyworks Solutions, Inc. Report: "I don't understand why people don't like this stock. They're going to regret selling it."

Paysafe  (PSFE) - Get PAYSAFE LTD Report: "I'm still sticking by Paysafe. It's too good."

RxSight RXST: "This stock isn't holding up. You need to be careful with this one."

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.

At the time of publication, Cramer's Action Alerts PLUS had a position in NUE.