Stop looking at positive data through a negative lens, Jim Cramer asked of his Mad Money viewers Tuesday. Something good happens in our economy every day and not everything needs to be met with pessimism.
We are finally past the effects of the Great Recession, and we are smarter and more prudent for the lessons learned, he said.
Tuesday, we learned that housing permits for new home construction were up big, yet the bears immediately heralded the news as proof positive that the next housing bubble was at hand. In reality, housing is only now reaching its pre-recession levels, yet our country has millions more people than it did a decade ago. We've seen a real change in consumer behavior, Cramer said, and people aren't taking out loans they cannot afford.
When Caterpillar (CAT) - Get Caterpillar Inc. Report reported, we learned the machinery maker has also learned its lessons from the recession. The company is lean and balanced, no longer levering up for growth, nor relying on China for profits.
Netflix (NFLX) - Get Netflix, Inc. (NFLX) Report is no longer beholden to domestic subscribers, as the company reported more than 90 million outside of the U.S. Even Tesla (TSLA) - Get Tesla Inc Report has been able to win over some of its harshest critics, including Cramer.
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Executive Decision: Eli Lilly
For his "Executive Decision" segment, Cramer spoke with David Ricks, chairman and CEO of Eli Lilly (LLY) - Get Eli Lilly and Company (LLY) Report, the drugmaker with shares that are up 81% for the year and which have added more than 41% in just the past three months.
Eli Lilly is a transformation story. The company now derives over 50% of its revenues from new products that were introduced in just the past few years, Ricks explained. Lilly also has no major patent expirations in the near future to weigh down its earnings.
Ricks said they're very excited about their partnership with DexCom (DXCM) - Get DexCom, Inc. Report, joining forces to bring information technology to the treatment of diabetes. Lilly is also hard at work with two new treatments for the 30 million people who suffer from migraines. Ricks said Emgality is a preventative measure for migraines, while Reyvow helps treat migraines as they are happening.
When asked about the controversy surrounding insulin prices and availability, Ricks said the issue is not with Eli Lilly but rather with the underlying economics of drug wholesalers and middlemen, which prefer not to carry low-margin drugs.
Finally, Ricks noted that it takes approximately $2 billion to bring a new medicine to market, and the business is highly risky and fraught with failures.
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Off the Charts: Shopify, Nvidia and More
In the "Off The Charts" segment, Cramer searched for bargains with colleague Carolyn Boroden, who uses Fibonacci analysis to rate stocks. Boroden previous predicted a 127% extension of the market's December 2018 lows, a prediction that came to fruition this month.
Boroden felt that Shopify (SHOP) - Get Shopify, Inc. Class A Report was due for 15% more upside given the stock's strength over the past few weeks. She also put a $338 price target on shares of chipmaker Nvidia (NVDA) - Get NVIDIA Corporation Report after that stock's recent decline.
Boroden also liked the outlook for PayPal (PYPL) - Get PayPal Holdings Inc Report, which has also begun to rebound of its recent lows. She gave the stock a $128 a share price target. Finally, she also liked Home Depot (HD) - Get Home Depot, Inc. (HD) Report, noting the stock's 5-day exponential moving average just ticked above its 13-day exponential moving average, which is her trigger that now is the time to buy.
Risky Biotech Stocks
Speculating on high-risk biotech stocks is, well, risky, Cramer told viewers. Sometimes, you're going to get it wrong. That was certainly the case with Wave Life Sciences (WVE) - Get Wave Life Sciences Ltd. Report, which saw its stock implode, losing 55% after a leading drug candidate failed.
Before this week, Wave's Duchenne Muscular Dystrophy drug seemed promising. It was in Phase III trials and the FDA just gave it fast-track status, meaning even they saw promise. But this week we learned the drug failed, a major blow that no one saw coming.
Cramer said while there was one potential warning sign in some of the company's April data, the FDA doesn't typically give fast-track status to drugs unless they're the real deal, which is why the stock responded so violently. He said while Wave has other treatments in its pipeline, he can't endorse buying the stock until the company delivers an actual winner.
Why a Stock Deserves to Rise
In his "No-Huddle Offense" segment, Cramer said if there's one thing we learned in 2019, it's that we must weigh the upside more heavily than the downside. Instead of thinking about why stocks deserve to be lower, why not focus on what will take them higher?
For months, investors have feared what would happen to Boeing (BA) - Get Boeing Company Report if the company needed to halt production of the 737Max altogether. Today we got our answer: nothing. Those same bearish investors feared the downside in General Electric (GE) - Get General Electric Company (GE) Report, Apple undefined and Caterpillar, as well, Cramer noted, and in every case, the positives outweighed the perceived negatives.
This was the most important lesson of 2019, Cramer concluded, and it's only going to continue into 2020.
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:
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At the time of publication, Cramer's Action Alerts PLUS had position in NVDA, HD, FB, AAPL.