We're in a new year and a new phase of the business cycle, Jim Cramer told his Mad Money viewers Tuesday. That means conceptual stocks are out and tangible stocks are back in fashion. If a company doesn't make real things and have real profits, then prepare for big losses.
The best way to look at investor sentiment as we enter 2022 is to look at the stocks of Okta (OKTA) - Get Okta, Inc. Class A Report, a cybersecurity company, versus Deere & Co. (DE) - Get Deere & Company Report, a good old-fashioned machinery maker.
Okta is a turbo-charged tech company, one with amazing revenue growth, but not a lick of earnings. Last year, investors were willing to pay up for the prospects that Okta will one day have great earnings, but now that the Federal Reserve is our foe, those future earnings look a lot less attractive. Okta has no stock buyback, nor a dividend to protect its shares, which means there's no floor to how low it could sink.
Compare that to Deere, which makes real things and has real earnings. Deere trades at 16 times earnings, unlike Okta, which trades on sales. Deere is easily understood and has a small dividend and a stock buyback program. It's also benefiting from the new infrastructure bill and an uptick in farm spending.
In this light, it's easy to see why Deere has rallied 6% over the past month, while Okta shares are plunging. In this market, even a serial screw-up like Boeing (BA) - Get Boeing Company Report can rally $10 this week, and Ford Motor (F) - Get Ford Motor Company Report, which trades at just 12 times earnings, soared 11.6% Tuesday on the news it will once again double the output of its upcoming electric F-150 pickup.
What's an easy way to spot some of this year's biggest winners? Look at last year's biggest winners. That's why Cramer continued his week-long year in review by examining the Nasdaq's top 20 winners from 2021.
The top performer on the Nasdaq was Lucid Motors (LCID) - Get Lucid Group, Inc. Report, which shot up 280% since its debut in 2021. Unfortunately, this is exactly the type of stock investors need to avoid in 2022. Lucid is only on pace to make 20,000 cars this year, making it a long way from becoming the next Tesla (TSLA) - Get Tesla Inc Report as many investors had hoped.
Semiconductors held five of the top 20 slots, with Marvell Technology (MRVL) - Get Marvell Technology, Inc. Report up 84% and Advanced Micro Devices (AMD) - Get Advanced Micro Devices, Inc. Report up 57%. Semiconductor equipment makers Applied Materials (AMAT) - Get Applied Materials, Inc. Report, KLA Corp. (KLAC) - Get KLA Corporation Report and ASML Holdings (ASML) - Get ASML Holding NV Report also made the list. Cramer remained bullish on the entire group.
Cramer was also bullish on small business software maker Intuit (INTU) - Get Intuit Inc. Report, but said other software makers like Atlassian (TEAM) - Get Atlassian Corp. Plc Class A Report, DataDog (DDOG) - Get Datadog Inc Class A Report and Zscaler (ZS) - Get Zscaler, Inc. Report are now out of style and need to be avoided.
Turning to the biggest losers on the Nasdaq in 2021, Peloton (PTON) - Get Peloton Interactive, Inc. Class A Report topped the list, down 76%. Everything that could go wrong, did go wrong for Peloton, and exercise equipment was never a good business to begin with, especially as many people return to the gym.
Several Chinese stocks made the list, with Baidu (BIDU) - Get Baidu Inc. Report down 311% and JD.com (JD) - Get JD.com Inc. Report off 20% for the year. Cramer remained skeptical of all Chinese companies.
Other names to avoid were Splunk (SPLK) - Get Splunk Inc. Report, whose CEO mysteriously resigned in November, DocuSign (DOCU) - Get DocuSign, Inc. Report and MercadoLibre (MELI) - Get MercadoLibre, Inc. Report.
Among those Cramer said he'd stick with were Zoom Video (ZM) - Get Zoom Video Communications, Inc. Class A Report, PayPal (PYPL) - Get PayPal Holdings, Inc. Report and T-Mobile (TMUS) - Get T-Mobile US, Inc. Report.
Executive Decision: eMed
In his "Executive Decision" segment, Cramer welcomed Dr. Michael Mina, chief science officer at eMed, back to the show for an update on Covid and testing in the U.S.
Dr. Mina said that the best way to attend public events in an Omicron world is to perform a rapid, at-home COVID test 15 minutes before you leave. That seems to be the only way to ensure that you're not infectious.
Unfortunately, those 500 million at-home tests promised by the Biden Administration aren't available yet, and Mina said that the U.S. lags far behind the rest of the world where tests are readily available. That means we need to be strategic with where we deploy the little tests we have and ensure that they're being used where they'll do the most good.
Dr. Mina also sounded off against the CDC's latest guidance regarding isolation. He said a 5-day isolation with no testing requirement is not sufficient. People can still be infectious at five days, he said, and testing is the only way to know if you're in the clear.
In his No-Huddle Offense segment, Cramer reviewed the one-year anniversary of the Reddit rebellion that sent shares of GameStop (GME) - Get GameStop Corp. Class A Report and AMC Entertainment (AMC) - Get AMC Entertainment Holdings, Inc. Class A Report into the stratosphere. He said the movement that took Wall Street by storm is steering younger investors in the wrong direction.
The initial thesis of the Reddit crowd proved to be wildly successful, sending GameStop from $17 to over $400 and AMC from $9 to $62 a share. But those moves proved to be short-lived. Both companies were supposed to use their windfalls to turn themselves around. A year later, and we're still waiting.
GameStop and AMC were followed by attempts to move the stocks of Wendy's (WEN) - Get Wendy's Company Report and Corsair Gaming (CRSR) - Get Corsair Gaming, Inc. Report, both of which also had spikes that lasted just days.
In the end, these trends have taught new investors little about how Wall Street works or how to make money over the long term. For all of the excitement and attention the initial short-busting garnered, it's a shame the opportunity was squandered on cryptocurrencies and call options.
In the Lightning Round, Cramer was bullish on Otter Tail (OTTR) - Get Otter Tail Corporation Report, Oppenheimer (OPY) - Get Oppenheimer Holdings Inc. Class A Report, Mosaic (MOS) - Get Mosaic Company Report and Vertex Pharmaceuticals (VRTX) - Get Vertex Pharmaceuticals Incorporated Report.
Cramer was bearish on Teladoc (TDOC) - Get Teladoc Health, Inc. Report, Qualtrics (XM) - Get Qualtrics International, Inc. Class A Report, Icahn Enterprises (IEP) - Get Icahn Enterprises L.P. Reportand Ebix (EBIX) - Get Ebix, Inc. Report.
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