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Cramer's Mad Money Recap: PepsiCo, Home Depot, Gap

Jim Cramer says younger investors should looking beyond tech to the raw materials, transportation, retail and bank stocks that made it all possible.
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There's more to a booming economy than tech stocks, Jim Cramer told his Mad Money viewers Monday. In fact, for most seasoned investors, high-flying tech stocks are a source of funds to buy what's really working.

Never forget that stocks follow the laws of supply and demand. That means when the economy heats up, it's the physical goods that are in short supply, not the digital ones.

A booming economy is when you buy the mining and mineral stocks, the infrastructure stocks and the transports, Cramer told viewers. It's also when the home builders and home improvement stocks are in demand.

In a strong economy you need oil and chemicals and agriculture. Consumers spend more, which means consumer goods and retail stocks are hot. And of course, you need the banks to help fund all of the activity and growth.

Cramer said if you look at Monday's market action, this is exactly the trade you'll see. Veteran investors are selling their tech stocks and taking their winnings to buy all of the above. It's still not too late to buy a homebuilder like DR Horton  (DHI) - Get D.R. Horton Inc. Report, or a consumer stock like PepsiCo  (PEP) - Get PepsiCo Inc. Report. It's a great time for Norfolk Southern  (NSC) - Get Norfolk Southern Corporation Report, Home Depot  (HD) - Get Home Depot Inc. (The) Report and even Gap Inc.  (GPS) - Get Gap Inc. (The) Report.

Younger investors may only see the technology that's right in front of them. But they should be looking beyond the tech and into the raw materials, transportation, retailers and banks that made it all possible.

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Executive Decision: RingCentral

In his first "Executive Decision" segment, Cramer spoke with Vlad Shmunis, chairman and CEO of RingCentral  (RNG) - Get RingCentral Inc. Class A Report, the communications provider with shares off 40% from their highs just three months ago, despite posting strong earnings last week.

Shmunis explained that RingCentral is not a pandemic story. RingCentral was growing steadily before the pandemic and it will be still growing after the pandemic. Companies around the world have legacy telecommunications equipment that needs to be upgraded to the cloud, and RingCentral has the platform to make that happen.

Shmunis was pleased to announce Verizon  (VZ) - Get Verizon Communications Inc. Report as his company's latest partner. RingCentral now has partnerships with three of the top 10 telcos around the globe and is using these partners to help spread the word. RingCentral differentiates itself through its partnerships, Shmunis added.

When asked about video conferencing, Shmunis said that RingCentral has world-class video products that their customers love.

Executive Decision: Alteryx

For his second "Executive Decision" segment, Cramer also spoke with Mark Anderson, CEO of Alteryx  (AYX) - Get Alteryx Inc. Class A Report, the cloud analytics software provider that just delivered strong earnings and raised its full-year guidance.

Anderson said that digital transformation is no longer a "nice to have," it's become a "must have." Companies want to see their knowledge workers become more productive, so they're using tools like Alteryx to rapidly transform them into citizen data scientists that can perform their own analysis. That's how Alteryx was able to add 131 new customers in the quarter.

Alteryx has also refocused their go-to-market strategy, Anderson noted, with the company now focusing on large enterprises and the Global 2000. Small and mid-size companies are now being serviced through their growing network of partners, which are better able to deliver custom analytics solutions.

Off the Charts

In a Monday edition of his "Off The Charts" segment, Cramer checked in with colleague Larry Williams to see what the Memorial Day trade might have in store for investors this year. According to Williams, there's a clear seasonal pattern that suggests buying some summertime right before the Memorial Day weekend, and selling them in the days and weeks that follow.

Auto sales surge during the summer, which is why Williams said buying Tesla  (TSLA) - Get Tesla Inc. Report just before Memorial Day and holding it for between 10 to 15 days has been a winning trade every year. For General Motors  (GM) - Get General Motors Company Report, the key time to sell is nine trading days after the long weekend.

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Williams also looked at Newell Brands  (NWL) - Get Newell Brands Inc. Report, which has a 42-year history and eight outdoor brands that includes Coleman camping gear. He noted that buying on the eve of Memorial Day, then selling six days later is the sweet spot. For Camping World  (CWH) - Get Camping World Holdings Inc. Class A Commom Stock Report, the best time to sell was 15 trading days after the holiday.

Finally, Williams noted that as summer hits, people spend more on their credit cards, which makes Visa  (V) - Get Visa Inc. Report part of the Memorial Day trade as well.

On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.

Beware Oversupply

In his "No Huddle Offense" segment, Cramer sounded off on the deluge of software-as-a-service stocks. He reminded viewers that nothing kills a bull market faster than oversupply.

Many of these software stocks are trading at huge multiples with no earnings to speak of. That makes them particularly vulnerable in an economy with rising inflation. Inflation makes future earnings worth a lot less. And while these software companies have growth, many of the industrials have growth as well, with earnings to boot.

But the software stocks have other issues as well. Many are riddled with insider selling and looming lockup expirations. Many of them are performing secondary offerings that are hurting existing shareholders, and many of these names that came public via SPACs simply weren't that good to begin with.

That's why we saw declines like we did Monday, Cramer concluded. There is simply too much supply and not enough demand.

Lightning Round

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

Home Bancshares  (HOMB) - Get Home BancShares Inc. Report: "This is a good situation. I like all of the banks. This one is not that expensive."

Hawaiian Holdings  (HA) - Get Hawaiian Holdings Inc. Report: "This is a winner. I would stick with this one, but my favorite remains Southwest Airlines  (LUV) - Get Southwest Airlines Company Report."

Teladoc Health  (TDOC) - Get Teladoc Health Inc. Report: "There are too many companies in this business. I'm going to say no, don't buy more. "

Marathon Petroleum  (MPC) - Get Marathon Petroleum Corporation Report: "I would continue to buy this one. I like it very much."

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At the time of publication, Cramer's Action Alerts PLUS had no position in the stocks mentioned.