Goods or Services: Cramer's 'Mad Money' Recap (Wednesday 9/16/20)

Jim Cramer says we have a booming goods economy amid a desperate services recession and folks need to understand what big institutional investors are thinking.
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If you want to understand our stock market, you need to understand how institutional investors run their business, Jim Cramer told his Mad Money viewers Wednesday. Every morning, these money managers listen to the research firms, looking for pin action on what's working. Wednesday, there was a lot of pin action.

When the pandemic first began, analysts expected our economy to be devastated. But this prediction proved to be wrong. Only parts of our economy have been devastated. The rest of our economy has adapted, with some of it even thriving.

Case in point: FedEx  (FDX) - Get Report, which soared another 5.7% Wednesday on strong e-commerce shipments. FedEx told shareholders consumers shifted away from services and into buying more goods online. The company also predicted that unemployment will continue between 7% and 8% for the rest of 2020. Cramer said this research sent all of the transports, and even Boeing  (BA) - Get Report, rallying on the day.

Then there's homebuilder Lennar  (LEN) - Get Report, whose strong comments on Tuesday night's show was followed by a 3.9% rise in its shares, along with the rest of the home building sector. We also saw strength in retail with Tapestry  (TPR) - Get Report closing up 7.4%. Cramer said he would be a buyer of Lululemon Athletica  (LULU) - Get Report.

Finally, Cramer highlighted General Electric  (GE) - Get Report, which told shareholders it expects to return to positive cash flow in the second half of 2020. That was great news for all of the industrials, with Cramer naming 3M  (MMM) - Get Report and Honeywell  (HON) - Get Report as his favorites.

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Executive Decision: Campbell Soup

In his first "Executive Decision" segment, Cramer spoke with Mark Clouse, president and CEO of Campbell Soup  (CPB) - Get Report, the packaged foods maker with shares off 12% over the past month as investors question whether the pantry-stocking trend would continue.

Clouse said that consumers are getting comfortable with their new normal and that  includes cooking more at home with Campbell's products. He said their brands have seen elevated levels of relevance and they're hard at work adding capacity and reallocating resources to meet demand as we enter the winter soup season.

Clouse added that Campbell is attracting a whole new generation of consumers, with over 50% of sales stemming from younger, millennial consumers. He said millennials are discovering that canned foods can be just as natural and healthy as other options.

Campbell is also riding the snacking wave. As people work from home, they snack from home, Clouse said, and their snack food segment now accounts for half of their revenue and has only accelerated through the pandemic.

Executive Decision: Box

For his second "Executive Decision" segment, Cramer also spoke with Aaron Levie, chairman and CEO of cloud storage provider Box  (BOX) - Get Report. Shares of Box are currently trading for 25 times earnings.

Levie said he's very pleased with Box's most recent quarter, which saw a revenue beat and raised guidance for the remainder of 2020. He said even with the challenging environment, Box is still seeing growth and their enterprise clients are still expanding with more Box services.

When asked how they've been able to grow without meeting clients in person, Levie explained that going virtual has allowed them to reach more customers and prospects than they could in person. He said more conversations have led to more business and he expects most companies will embrace a hybrid work-from-home model going forward.

Finally, Levie noted that their relationship with activist investor Starboard Capital has been a positive one for the company. He said Starboard has pushed them to evolve in positive ways and overall, the experience has been good for the company. 

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Know Your IPO

In his "Know Your IPO" segment, Cramer followed up on Wednesday's two big IPOs, Snowflake  (SNOW) - Get Report and JFrog FROG. He said that Snowflake's IPO did not disappoint, with shares doubling to $245 by the close, but the stock remains too pricey to consider.

The Snowflake IPO was a big win for shareholders, which gained 112%, but it was not without some losers as well. 

Cramer reminded viewers that money managers can't own everything, so they'll often sell what they own in order to make room for what's new. That means the shareholders of existing cloud stocks will see their shares slump as the momentum shifts to Snowflake and the wave of other coming cloud IPOs. Nothing kills a bull market faster than too many IPOs, Cramer said, which makes the losers in the Snowflake IPO all of us.

But then there's the other big IPO of the day, JFrog.

JFrog is a DevOps software provider that helps software companies bridge the gap between their development team and their operations team, ensuring that software and updates are deployed smoothly. The company has a strong list of clients, from Amazon  (AMZN) - Get Report to Netflix  (NFLX) - Get Report and boasts little in the way of a sales team. According to JFrog's CEO, their products are bought, not sold.

But even with a 50% growth rate and being almost profitable, Cramer said the key to JFrog is its valuation. Their shares debuted at 25 times sales but opened at 40 times sales, and Cramer said even with everything they have going for them, he cannot recommend JFrog at these levels.

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 Wednesday evening:

Parsley Energy  (PE) - Get Report: "I'm only recommending Parsley and Chevron  (CVX) - Get Report."

Zoom Video Communications  (ZM) - Get Report: "Let's keep it going with Zoom."

Alteryx  (AYX) - Get Report: "This is a terrific company but people will sell this one to buy the hot deals like Snowflake."

Uber  (UBER) - Get Report: "I think Uber is doing OK. "

Nordic American Tanker  (NAT) - Get Report: "I think it's time to move on."

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At the time of publication, Cramer's Action Alerts PLUS had a position in HON, AMZN.