Fear of Flying: Cramer's 'Mad Money' Recap (Tuesday  6/9/20)

Jim Cramer says that in this unsettled weather, investors should buy stocks that don't need a tailwind to be successful.
Author:
Updated:
Original:

The problem with the "bigger fool" theory is that eventually, you run out of fools, Jim Cramer told his Mad Money viewers Tuesday. For weeks, investors have been buying up the airlines and cruise lines with abandon. But Cramer said even if you believe we're coming out of a recession, the airlines and cruise lines are still the last stocks you should be buying.

We still have 13% unemployment in our country, along with a virus that makes the promise of packed airline flights highly unlikely, Cramer said. Full planes make money, planes that are only half full do not.

Investors shouldn't be buying stocks that need economic tailwinds, Cramer continued, they should be buying secular growth stocks that can flourish even without a recovery. 

Stocks like Facebook  (FB) - Get Report, which has a renewed focus on supporting small businesses, is one good choice. Apple  (AAPL) - Get Report is hitting new record highs as consumers use its contactless ApplePay more than ever. Amazon  (AMZN) - Get Report continues to dominate fast, in-home delivery of goods. And both Advanced Micro Devices  (AMD) - Get Report and Nvidia  (NVDA) - Get Report power it all with state-of-the-art microprocessors.

None of these stocks need tailwinds, Cramer concluded, they create their own destinies with the best products and services.

Cramer and the AAP team are looking at everything from earnings and tariffs 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.

Don’t miss Cramer’s best, every day, with fast, actionable strategies: StreetLightning.

Executive Decision: Stitch Fix

In his first "Executive Decision" segment, Cramer spoke with Katrina Lake, CEO of Stitch Fix  (SFIX) - Get Report, the online apparel service that saw shares plunge 5.5% after the company reported a top- and bottom-line miss.

Lake explained that the primary challenge for the quarter was keeping warehouses open and at capacity in a safe manner. For much of the quarter, their locations were either closed or running at limited capacity, which forced them to turn off parts of their service to cope. Lake said it's true that the pandemic caused many shoppers to turn online for their purchases, but apparel sales plunged 80% as shoppers don't buy clothes when they have nowhere to go.

Lake commented on Stitch Fix's recent decision to lay off 1,400 workers in California. She said it was a difficult and painful decision, but the cost differential between California and practical anywhere else was too high to justify. The company has pledged to hire up to 2,000 employees in other geographies in the coming months.

Lake added that she's deeply concerned about the protests around our nation. She said capitalism has provided her with many opportunities, but it's clear those same opportunities are not afforded to everyone in our country.

Executive Decision: Chewy

For his second "Executive Decision" segment, Cramer also spoke with Sumit Singh, CEO of Chewy  (CHWY) - Get Report, the online pet retailer with shares up 77% for the year.

Singh said Chewy's business is resilient because pets are essential, 70% of their business comes from auto-shipped products and they're a data-driven organization that knows exactly what their customers need. 

Chewy is all about surprising and delighting their customers, Singh said. That's why the company currently works with over 1,000 artist partners to offer pet portraits for customers. Singh said these portraits are terrific conversation starters and drive a lot of loyalty.

When asked about their low prices on essential items like medications, Singh said that nearly a third of all pet owners don't go to the vet as often as they should because of high prices. By keeping prices low, that helps encourage everyone to see their vets and take better care of their pets, which in turn helps Chewy.

Finally, when asked about the effects of the pandemic, Singh noted that pet adoptions rose 60% from year ago levels as people sought companionship in a self-isolating world.

Executive Decision: DocuSign

For his next "Executive Decision" segment, Cramer checked in with Dan Springer, CEO of DocSign  (DOCU) - Get Report, the cloud software provider with shares up 125% from their March lows.

Springer said DocuSign sees no shortage of opportunities to make our world and our country a better place. That's why they stand in solidarity for equality and are doing things both internally and contributing more in their communities to be a positive force for change.

Turning to the topic of their business in a pandemic, Springer said clients are discovering more than ever that online signatures are faster, more convenient and cost less than in-person alternatives. That's why DocuSign continues to invest in identity and notary services, to remove the in-person elements from more and more transactions. For transactions like real estate, it's far more convenient to sign online than to have a notary come to your home.

DocuSign is also helping governments across the country better manage their digital processes. The digital trend is here to stay, Springer said, and the pandemic has only pulled that trend forward in a big way.

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.

Hertz Hurts

In his No-Huddle Offense segment, Cramer reminded investors that it doesn't matter how little you pay for a stock. When it goes to zero, you lose everything.

Those investors buying up shares of the bankrupt Hertz  (HTZ) - Get Report need a refresher in how bankruptcy works, Cramer said. It's the creditors, not the shareholders that hold all of the cards. The $19 billion in debt which Hertz currently owes will be canceled, as will the common shares investors just bought.

The new Hertz will issue new shares, Cramer explained, and those shares will go to the creditors and bondholders. That's why activist investor Carl Icahn sold his Hertz shares at just 72 cents a share. Icahn knows there's simply no value left to be had.

Cramer said shares of Hertz should have been canceled long ago, but just because they still trade doesn't mean you should buy them.

Lightning Round

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

Marriott International  (MAR) - Get Report: "I think this one can go a little lower. "

Penn National Gaming  (PENN) - Get Report: "I like Penn Gaming. Pull the trigger. I think this is a good one."

Axon Enterprise  (AAXN) - Get Report: "I've liked this stock for years. This is part of the solution to change how the police work in this country."

General Mills  (GIS) - Get Report: "They had a terrific quarter. General Mills works here."

Agenus  (AGEN) - Get Report: "I think there are greener pastures in the biotech world."

G-III Apparel Group  (GIII) - Get Report: "I would keep holding onto it. They're a winner in a tough market."

Zuora  (ZUO) - Get Report: "They reported a good quarter. I think they're making a comeback."

Seattle Genetics  (SGEN) - Get Report: "There are some sellers lurking here, but I think they're a buy here."

TEGNA  (TGNA) - Get Report: "There is no media stock that's worth recommending here."

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.

At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, FB, AMZN, AMD, NVDA.