Forget index funds. If you want to make money in this market, you need to invest in the COVID-19 winners and steer clear of everything else. That's what Jim Cramer told his Mad Money viewers Thursday, as he divided the market into three distinct groups, only two of which are investable.
The first group of stocks are big businesses with deep pockets. Cramer said companies like IBM (IBM) - Get Report have growth, a strong balance sheet and a commitment to their dividend that will allow them to weather the COVID storm. Likewise with Union Pacific (UNP) - Get Report, the railroad that beat on earnings despite lighter cargo loads, thanks to strong execution and cost cutting.
Cramer's second group of stocks were those companies who were made for this moment. With retail shuttered, Amazon (AMZN) - Get Report, Walmart (WMT) - Get Report and Target (TGT) - Get Report have perfected delivery and curb-side pickup. Stocks like Kimberly-Clark (KMB) - Get Report and Clorox (CLX) - Get Report make the items we need to be at home, while the obvious stocks like Zoom Video (ZM) - Get Report, Netflix (NFLX) - Get Report and Domino's Pizza (DPZ) - Get Report keep us comfortable. Snacks, spices and pet foods all work in this environment.
The final group are the untouchables. These include the banks, the oils and all of retail outside of Walmart, Target, Dollar General (DG) - Get Report and Home Depot (HD) - Get Report. It also includes everything related to travel, leisure, restaurants and gathering of any kind.
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Executive Decision: Domino's Pizza
For his "Executive Decision" segment, Cramer spoke with Ritch Allison, CEO of Domino's Pizza (DPZ) - Get Report, after the company reported a strong quarter that beat estimates on the top and bottom line.
Allison said Domino's is very fortunate to still be open and operating. Demand for their food has been very strong, he said, and that's why they're hiring over 10,000 new team members across the nation. Domino's needs more drivers out on the road delivering.
Domino's is also proud to be a part of Feed The Need, a program where they are donating 10 million slices of pizza to those in need. Allison said local operators can choose where those slices go in their local communities, from kids without school lunches to front-line medical workers, Domino's is proud to serve.
When asked about the "new normal" after the economy reopens, Allison admitted it is difficult to predict at the moment. He said customers are likely to be very price conscious with unemployment so high, and social distancing may severely limit profitability for many restaurants.
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Executive Decision: Inovio Pharmaceuticals
In his second "Executive Decision" segment, Cramer also welcomed back Dr. Joseph Kim, president and CEO of Inovio Pharmaceuticals (INO) - Get Report, the early-stage biotech with shares up 52% for the year as the company works towards a vaccine for COVID-19.
Kim explained that Inovio has both superior technology and a dedicated team that has allowed it to move very fast in developing a vaccine for COVID-19. He said his company went from design to their first dose in just 83 days.
Inovio is currently in Phase I trials with 40 volunteers, Kim said and so far results have been promising. He said it is certainly possible to have a vaccine for limited use in less that 18 months. He added that there's a lot of money and resources available for Inovio to ramp up production quickly once they have a proven vaccine ready.
Taking a Temperature
How should investors evaluate the health of our nation's largest health insurer? Cramer said there was a lot to like about UnitedhHealth Group's (UNH) - Get Report earnings this quarter, but the outlook is still murky.
Shares of UnitedHealth spiked over $300 a share after the company reported strong results that included a nine-cents-a-share revenue beat. The company told investors that while claims related to COVID-19 spiked, claims for practically everything else have plummeted as patients postpone procedures until our healthcare system is better equipped to handle them.
Cramer said he was impressed that UnitedHealth didn't suspend its earnings guidance, instead choosing to maintain the status quo, at least for now. He also liked that the company's health information business saw strong growth. However, the insurer will still be in the hook for those postponed procedures once the quarantines are lifted.
With shares now pulling back to $285, Cramer said he'd still be a buyer on UnitedHealth on any continued weakness.
Beware Slippery Investments
In his "No-Huddle Offense" segment, Cramer cautioned investors to be wary of phony commodity prices. He said the recent collapse in oil prices below zero was largely caused by one ETF, the U.S. Oil Fund (USO) - Get Report. This fund trades a huge number of futures contracts which require the purchaser to take delivery of physical oil as the contracts expire. The only problem? The U.S. Oil Fund isn't allowed to own physical oil, which means it must liquidate positions at any price.
Cramer said U.S. Oil Fund is a lousy investment that had dire consequences to the market overall. It should not be bought by individual traders, he said, as this oil ETF has nothing to do with oil or oil prices.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the "Mad Money Lightning Round" Thursday evening:
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At the time of publication, Cramer's Action Alerts PLUS had a position in AMZN, CLX.