Wall Street can seem like a pretty negative place sometimes, Jim Cramer told his Mad Money viewers Wednesday. Too often, good news is seen as bad news, because investors seem to always focus on what can go wrong instead of what could go right.
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When it comes to the Federal Reserve and inflation, investors should be cheering that our economy is so strong that interest rates need to nudge higher. Many stocks, like the financials, actually do better with higher rates. Yet all we hear are the fears of lockstep rate hikes crippling the recovery.
There are some genuine worries in the market, like growing concerns that Russia might invade Ukraine. But should you sell in advance of this news? Cramer said he's concerned about Russia, but he's not worried.
It's important to keep the big picture in mind. Over his career, the Dow Jones Industrial Average has soared from 1,000 to over 35,000. That's quite a run, despite all of the negativity.
Know Your IPO
In his "Know Your IPO" segment, Cramer reminded viewers that when it comes to new issues, price matters. Case in point: Sweetgreen (SG) - Get Free Report, the salad-focused restaurant chain that debuted at $28, then spiked to $56, before drifting back down to just $24. On Wednesday, Sweetgreen shares popped 6.8% to close at $33.
The concept of locally-sourced, healthy salads is perfect for today's consumer, and the chain is well run. What's not to like? The price.
Sweetgreen is tiny, with only 140 locations in 13 states. That means investors aren't paying for the stores they have, but the stores they will have. Ultimately however, how big can a sales chain get?
Sweetgreen is not yet profitable, but based on its current market cap, each location is valued at $25 million. For comparison, the gold standard of fast-casual dining is Chipotle Mexican Grill (CMG) - Get Free Report, which values its stores at just $17 million.
Given that disparity, Cramer said he'd go with Chipotle, which has less growth given its size, but is a tried-and-true operator investors can count on.
Off the Charts: The VIX
In the "Off The Charts" segment, Cramer checked in with colleague Mark Sebastian to see where the market is likely to head next, using Sebastian's favorite market metric, the CBOE Volatility Index, known as the undefined.
Sebastian first looked at a daily chart of the S&P 500 versus the VIX and noted that during October, the pair did not follow their typical inverse relationship. Instead, both the S&P and the VIX rose simultaneously, foreshadowing the recent volatility.
As the market began to break down, the VIX spiked, returning to its normal pattern.
Sebastian then looked at the ARK Invest ETF (ARKK) - Get Free Report, noting that as this fund, run by Cathie Wood, sold off, the VIX rose, as if in a feedback loop. However, now that ARK is beginning to recover, the VIX is falling, indicating that we are likely past the bottom.
According to Cramer, Sebastian's research puts the market in the perfect position for a Santa Claus rally going into the back half of December.
Executive Decision: Edwards Lifesciences
Mussallem said that Edwards is in the business of helping people live longer, healthier lives while also helping to save the healthcare system money.
It's been 10 years since TAVR, the Transcatheter Aortic Heart Valve Replacement, was first approved in the U.S., but since then, Mussallem said the procedure has only gotten better. They've made the device smaller and reduced complications, resulting in better patient outcomes. TAVR is now just a 45-minute procedure and patients often go home the next day.
That's why Edwards is forecasting double-digit sales growth in 2022 and why they're doubling-down on research and development. The company is also adding more clinical trials to prove to doctors that TAVR can be used earlier, and in more patients than are currently getting the procedure. Edwards currently reinvests 17% to 18% of sales into research, he noted.
Edwards is also innovating with smart recovery solutions that continuously monitor patients after surgery and can predict low blood pressure events before they occur.
Innovation and Reinvention
In his "No Huddle Offense" segment, Cramer said if a company wants to be successful, they need to constantly reinvent themselves. That's why today's downgrade of Honeywell (HON) - Get Free Report is so short-sighted. Honeywell has a long history of invention and reinvention, and they should be rewarded for their efforts.
The same applies to Chevron (CVX) - Get Free Report, which aims to reinvent itself for a low-carbon future, and Ford Motor (F) - Get Free Report, which is offering commercial customers new technology solutions. Sure, all of these plans may not pan out in the end, but at least they're trying.
Then there are companies like Johnson & Johnson (JNJ) - Get Free Report and General Electric (GE) - Get Free Report, which are reimagining themselves by breaking up into smaller pieces. These are all examples of companies adapting to change, and they should be applauded.
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