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Headlight Stocks: Cramer's 'Mad Money' Recap (Wednesday 8/5/20)

Jim Cramer says buyers are betting science will beat the virus. Here are the companies that can light the way forward.
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Are the big money managers betting on a return to normal? Jim Cramer told his Mad Money viewers Wednesday that he's compiled a "go" list of stocks, and when these "headlight" stocks are all heading higher, you'll know the markets are heading higher.

Cramer has repeatedly told viewers never to bet against American science. He's always known a vaccine or cure for COVID-19 was coming. The only question was when. That's why his list of touchstone stocks hold the key, as they all signal a recovery is at hand.

There are several industrial stocks on Cramer's "go" list, all of which need strong global markets. They included DuPont  (DD) , which rallied 3% today, along with 3M Co.  (MMM) , Emerson Electric  (EMR) , PPG Industries  (PPG)  and Nucor Corp.  (NUE) . Among the group, 3M was Cramer's favorite.

Retail also made Cramer's list, with PVH  (PVH) , Ralph Lauren  (RL)  and Nike  (NKE)  representing the group. Cramer said these stocks will only head higher when investors are betting on a strong holiday season.

Walt Disney Co.  (DIS)  is also on the "go" list, as it needs a vaccine to save its theme parks and bring sports back to ESPN. Disney saw a 9% run Wednesday.

Rounding out the list was railroad Union Pacific  (UNP) , which will only rally when global commerce is returning to normal, and Mastercard  (MA) , which needs global travel to return. Mastercard closed up 4.3%.

When all of these stocks go green, Cramer said we'll know the return to normal has begun and money managers are betting on the recovery. Tuesday saw many of these stocks end higher, which means we may be getting close.

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Executive Decision: Beyond Meat

In his first "Executive Decision" segment, Cramer spoke with Ethan Brown, president and CEO of Beyond Meat  (BYND) , the plant-based meat alternative that saw its shares fall after reporting inline earnings for the quarter.

Brown said he's very excited about Beyond Meat's partnership with KFC. He said they've been working on chicken alternatives for years and the combination of their products with KFC's seasoning and presentation is exceptional. Their initial trial was scheduled to last a month, but sold out in less than two weeks.

KFC is just one of many quick-service restaurant trials, Brown added. His company has many other trials underway and can be found in 3,000 Starbucks  (SBUX)  locations in China.

Beyond Meat is using the pandemic to expand their reach and market share, Brown said. The company was equally split between retail and food service sales at the beginning of the year, but now has 88% retail as consumers have been cooking more at home. Their retail revenues are up 192% for the year.

Brown said the question is no longer are consumers willing to pay more for a better alternative. He said Beyond Meat will ultimately produce their products for less than the cost of animal protein. They just need to continue to add scale.

Executive Decision: Xilinx

For his second "Executive Decision" segment, Cramer spoke with Victor Peng, president and CEO of Xilinx  (XLNX) , the semiconductor maker that just posted a nine-cents-a-share earnings beat.

Peng said Xilinx saw a strong first half of the year, even with the pandemic, thanks to a resilient business and their strong and diverse end markets. While some investors chose to focus on short-term impacts of trade restrictions with China, Peng noted that China should not be the narrative for Xilinx.

Xilinx continues to innovate in key end markets, including streaming video. The company just introduced two new video streaming appliances that offer the lowest cost per channel for diode providers. Peng added that video meetings and movies aren't going away anytime soon.

No talk about semiconductors would be complete without discussing 5G wireless. Peng said 5G is still in the early innings and Xilinx is planning on at least three generations of 5G chips as the technology continues to be refined.

Cramer said Xilinx is now one of the cheapest semiconductor stocks out there.

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Executive Decision: Sempra Energy

For his final "Executive Decision" segment, Cramer checked in Jeff Martin, CEO of Sempra Energy  (SRE) , the utility making big moves, thanks in part to activist investors. Shares on Sempra trade for 17 times earnings and yield 3.3%.

Martin said after transforming and simplifying their business, Sempra is now a top-tier growth and income story. The company has sold off all of their non-core assets and is now concentrating on its core businesses in core markets.

Martin noted that they just completed construction on their LNG export terminal, which has a tolling model that provides income no matter where the gas is going. By owning the infrastructure, Martin said Sempra collects rent whether the gas shows up or not.

Sempra is also bullish on green hydrogen, Martin explained. He admitted that it's still early for hydrogen, but being early allows them to carve out a leadership position for when hydrogen becomes a more prevalent fuel source.

When Sellers Get it Wrong

There's a big difference between making a mistake and having an appalling lapse of judgment, Cramer told viewers, as he questioned the action in four terrific stocks that headed lower Wednesday.

Investors took shares of Wendy's  (WEN)  down almost 6% after the company reported earnings, just as they did last quarter. The only problem? Wendy's is a terrific company and shares will rally again, just as they did last quarter.

Then there were the sellers of Regeneron  (REGN) , which dipped 3.6% by the close. Regeneron reported excellent earnings, including its treatment to help severe cases of COVID-19. Cramer says it's a big mistake to be selling Regeneron.

Finally, there was the announcement of a merger between Teladoc  (TDOC)  and Livongo Health  (LVGO) . Cramer called the combination "brilliant" and said anyone selling on this news needs to have their head examined.

"If you sold any of these stocks today, you will regret it," Cramer concluded.

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:

Sarepta Therapeutics  (SRPT) : "They have a lot of proprietary drugs and I think this is a good one. I also like Vertex Pharmaceuticals  (VRTX) ."

Lumentum Holdings  (LITE) : "This group has always hurt me. Be careful."

Royalty Pharma RPRX: "This is one you want to hold onto. I like it."

American Airlines  (AAL) : "I like American. I'm a big Southwest Airlines  (LUV)  fan but American works here."

TJX Companies  (TJX) : "There is a lot of excess inventory. This stock is a winner."

Southern Company  (SO) : "This group is signaling growth in the economy, so you don't want to be in this group."

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