It's no secret that prices for a lot of things are on the rise. But while price hikes may be bad for consumers, Jim Cramer told his Mad Money viewers they're also a great way to pick stocks. That's because if a company can raise prices and no one cares, that's a stock you want in your portfolio.
We saw this phenomenon Thursday with Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report, which announced it's raising prices for Office365 for the first time in a decade. The news instantly sent shares up a quick 2%, as Office365 is still a great bargain and no one will blink an eye about paying an extra 10%, especially since most people who buy it are enterprises.
What other companies are strong enough to raise their prices? Jim Cramer analyzes what we'd be willing to pay, what's a bargain and how to find those stocks. Read more of his trading strategies and investing ideas on Real Money.
Another company with pricing power is Apple (AAPL) - Get Apple Inc. (AAPL) Report, an Action Alerts PLUS holding. Apple can raise prices on its iPhone and everyone will still want one. And it's not just hardware either, Apple's services are also in demand at any price.
Other Cramer favs that have pricing power include Costco (COST) - Get Costco Wholesale Corporation Report, the retailer with a yearly membership that no one can live without. Then there's Netflix (NFLX) - Get Netflix, Inc. (NFLX) Report, which has seen several price increases over the years, all of which were panned initially, but none of which affected the company's bottom line.
Finally, Cramer called out Amazon (AMZN) - Get Amazon.com, Inc. Report, a stock which many investors now see only as a pandemic stock. But the truth is that Amazon Prime is now a staple of many households and that isn't going to change anytime soon. Cramer said that Prime is a steal at any price and that's why Amazon also belongs in your portfolio.
Cramer and the AAP team are looking at everything from earnings and politics to the Federal Reserve. 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: Lithia and Driveway
In his first "Executive Decision" segment of the night, Cramer spoke with Bryan Deboer, president and CEO of Lithia and Driveway (LAD) - Get Lithia Motors, Inc. Class A Report, the new and used auto dealer franchise with some of the fastest growth in the S&P 500.
Deboer first commented on the company's recent name change. He said the new brand represents both of their brands, which allow customers to purchase and service their vehicles from the comfort of home. Lithia Motors now has dealerships within 311 miles of 100% of the country.
When asked about the state of auto sales in America, Deboer said Lithia still has a good supply of both new and used vehicles. But with new cars still in short supply, the company only has 25 days worth of inventory. That's not a problem, Deboer said, as their used car supply is still fantastic. If buyers can afford to be patient, he added, things look to improve in the second half of the year.
Turning to the company's growth, Deboer said they have high aspirations to continue their current growth trajectory. That's why Lithia has completed two recent stock offerings to help fund that growth. The company has delivered 118% revenue growth and 270% earnings growth over the past year.
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Fire Up the BBQ
Last year, the pandemic kicked off a bull market in the great outdoors. And with this year's Labor Day looking a lot like last year's, Cramer said the trend is likely to continue. But unlike last year, where there was no pure-play way to invest in backyard grilling, this year, we have two. Cramer looked at both Traeger COOK and Weber (WEBR) - Get WEBER, INC. Report to see which one deserves a spot in your portfolio.
Traeger is the smaller of the two companies, but has been making a splash with its wood pellet grills. Consumers who prefer that authentic wood-fired taste can't live without their Traegers. The company is also a play on technology, as their grills come complete with apps that include over 1,600 digital recipes. Nearly 7% of Traeger's sales are direct to consumer.
Weber is the market leader in grills and is far better known than Traeger. The company bills itself as fuel agnostic, making wood, charcoal and gas-fired product. Weber currently has 20% of its sales from direct-to-consumer channels.
So which is the better investment? Cramer said it depends. These companies are at different points in their lifecycle. Traeger is a high-flying growth stock, while Weber is a mature, steady performer. Depending on your risk tolerance, either could make a great addition to your backyard and your portfolio.
Executive Decision: Fiserv
For his final "Executive Decision" segment, Cramer checked in Frank Bisignano, president and CEO of Fiserv (FISV) - Get Fiserv, Inc. Report, the financial technology company with 100 million digital banking users and six million merchant locations across the globe.
Bisignano said the Fiserv is in business to help clients grow theirs. The company has a very resilient business model and one that continues to innovate and power small businesses with new technologies. In the second quarter, Fiserv grew revenues by 20%, thanks to the power of its brands, he said.
There are many companies in the financial technology sector, Cramer said, but few of them are run by actual bankers that have a solid track record, like Bisignano does.
Are We There Yet?
In his No-Huddle Offense segment, Cramer reminded viewers that when everyone turns positive, there's no one left to buy. And when that happens, the top is usually close at hand.
That's how "Off The Charts" guest Carley Garner was able to predict the top in the oil market a few weeks ago. Garner was able to ascertain that all of the big money managers had turned bullish, leaving few people left to buy.
With oil at $50 a barrel, U.S. oil producers remained disciplined. But at $70, all bets were off and supply quickly outpaced demand, crushing the price of crude.
Fortunately, producers like Devon Energy (DVN) - Get Devon Energy Corporation Report and Pioneer Natural Resources (PXD) - Get Pioneer Natural Resources Company Report now offer variable dividends, and can easily cope with changing market conditions.
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:
Academy Sports and Outdoors (ASO) : "Even after this run I think it's inexpensive and I'd be a buyer."
Sea Limited (SE) - Get Sea Ltd. (Singapore) Sponsored ADR Class A Report: "That company is on fire."
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At the time of publication, Cramer's Action Alerts PLUS had a position in MSFT, COST, AAPL, AMZN.