We're in a forgiving stock market, Jim Cramer told his Mad Money viewers Tuesday. Despite what seems like daily changes in leadership, investors are still willing to buy high-quality stocks on weakness, and that's a good thing.
Tugging the market in different directions Tuesday were Treasury Secretary Janet Yellen's comments that eventually, the Federal Reserve might have to raise interest rates to cool an overheating economy. These comments are, of course nothing new, but they did appear different than those of Fed Chair Jay Powell just last week.
Remember though that all stocks aren't hurt by inflation. Commodity producers like Freeport McMoRan (FCX) - Get Report, Cleveland-Cliffs (CLF) - Get Report and Nucor (NUE) - Get Report all benefit from rising prices, as do chemical makers like DuPont (DD) - Get Report. For the majority of other stocks however, such as grocery stores like Kroger (KR) - Get Report, inflation can be devastating.
The other controversy in the market are the semiconductors. The chip shortage has largely been seen as a good thing. But since it only takes one missing component to bring manufacturers like Ford Motors (F) - Get Report to their knees, the entire industry suffers. Also, when the shortage is resolved, prices could plunge.
Finally, Cramer noted that rising tensions between China and Taiwan have the potential to cripple shipping in the South China Sea.
However, despite these market gyrations, investors are still buying stocks on weakness, which is how we can continue to climb.
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Executive Decision: Goodyear Tire & Rubber
In his first "Executive Decision" segment, Cramer spoke with Rich Kramer, chairman, president and CEO of Goodyear Tire & Rubber (GT) - Get Report, the tire maker which just posted a 31-cents-a-share earnings beat with a 15% uptick in revenue.
Kramer said technology and innovation has been the key differentiator for Goodyear. When you think of electric vehicles, for example, he said EVs require all-new solutions that can handle the extra weight and torque, while offering an extra-quiet ride and still have the handling and performance characteristics customers have come to expect from Goodyear.
Goodyear is also looking forward to the needs of shared mobility systems like robo-taxis, where speeds are slower, but reliability is essential.
Kramer also commented on the benefits of targeted tariffs, which have stopped illegal dumping and provided a level playing field where everyone can compete equally.
When asked about the supply of rubber, Kramer noted that he's never had a problem getting the raw materials he needs. However, prices are fluctuating as speculators, including China, buy large quantities to store in warehouses for future use.
Executive Decision: Zebra Technologies
For his second "Executive Decision" segment, Cramer also spoke with Anders Gustafsson, CEO of Zebra Technologies (ZBRA) - Get Report, the logistics company that just posted stellar earnings with 25% organic growth. Shares of Zebra closed down 1.7% on the news.
Gustafsson said the pandemic has changed a lot of value behaviors. Companies are moving faster than ever towards digitization and automation, especially in healthcare, which is Zebra's faster-growing vertical.
Patients are expecting a digital experience, and technologies from Zebra helps provider greater efficiency and overall patient care. Fewer errors translates to lower malpractice premiums, he said, and that provides hospitals with real value. That's why the company was able to raise their outlook for the year.
Shares of Zebra Technologies are up 106% over the past year.
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Off the Charts
In the "Off The Charts" segment, Cramer checked in with colleague Dan Fitzpatrick over the charts of package delivery giants FedEx (FDX) - Get Report and UPS (UPS) - Get Report. According to Cramer, UPS is the better company, but according to Fitzpatrick, FedEx has the better stock.
Looking at a daily chart of UPS, Fitzpatrick noted that after building a base for months, UPS shares have recently surged 22%, well above their 50-day moving average. He felt the stock was now overextended and needed a pullback before resuming higher. Cramer disagreed, positing that any pullback would be small, making now the time to buy.
Turning to FedEx, Fitzpatrick said that like UPS, shares have been also building a base, then breaking out to the upside, albeit in a more measured fashion. He felt that $365 a share could be achieved as the stock is not as overextended as UPS.
Buy Into Weakness
In his "No Huddle Offense" segment, Cramer reminded viewers that they're supposed to be buying stocks, not selling them, into weakness. Case in point: the drug stocks. Last week, shares of Merck (MRK) - Get Report, Bristol-Myers Squibb (BMY) - Get Report and Eli Lilly (LLY) - Get Report got crushed on disappointing results. Cramer noted that these results had nothing to do with the companies themselves, but rather that patients were still staying away from doctors and hospitals.
Eli Lilly, in particular, plunged $30 a share from almost $210 to just above $180, after the company reported some disappointing Alzheimer's trial data. But Cramer said the stock now represents real value and should be bought, not sold.
This pattern is present all over the market during earnings season, Cramer added, from Waste Management (WM) - Get Report to L Brands (LB) - Get Report. Don't create a bottom by yourself, he concluded, be a buyer.
Here's what Cramer had to say about some of the stocks that callers offered up during the "Mad Money Lightning Round" Tuesday evening:
II-VI (iiVI) : "That's a pretty good idea. Our viewers are so smart."
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At the time of publication, Cramer's Action Alerts PLUS had a position in BMY.