It's still unclear whether China really wants to make a trade deal, Jim Cramer told his Mad Money viewers Monday. That means investors need to prepare for the trade wars to continue, but investors also need to be aware that today's market bounce was by design.
Cramer said President Trump doesn't want stocks to head lower. That's why the president typically says something positive after every big market decline. It's a mistake to sell into the teeth of the panics, Cramer said, as days like today often follow.
Given the current environment, Cramer said investors need to lighten up on the industrial stocks and swap into stocks that are less cyclical, like Verizon (VZ) - Get Verizon Communications Inc. Report . He also advised raising cash to about 10% of your portfolio so you'll be well positioned to buy during the next market decline.
Cramer and the AAP team are looking at whether Apple (AAPL) - Get Apple Inc. Report can offset the iPhone tariffs. Find out what they're telling their investment club members and save 57% with our Labor Day Sale. Join Jim Cramer's Action Alerts PLUS investment club to become a smarter investor. Click here to sign up.
Executive Decision: Starbucks
For his "Executive Decision" segment, Cramer spoke with Kevin Johnson, president and CEO of Starbucks (SBUX) - Get Starbucks Corporation Report , the coffee chain with 6% same-store sales growth last quarter.
Johnson said Starbucks continues to focus on improving their customer experience, whether that's innovating with new beverages, making their stores better or improving their digital offerings. Additionally, the company's partnership with Nestle (NSRGY) - Get NSRGY Report is accelerating, making a meaningful contribution to their bottom line.
Expanding on those topics, Johnson was bullish on their cold brew and nitro products, which are driving customers into stores during off-peak times. Their digital strategy is also increasing customer loyalty. Newly 42% of all payments are now made via the Starbucks mobile app, he added.
When asked about China, Johnson explained that their China business was built in China, for China, and is not suffering from tariffs or trade issues. They also continue to have a terrific partnership with Alibaba (BABA) - Get Alibaba Group Holding Ltd. Report inside China.
Finally, Johnson reiterated that Starbucks is about more than just shareholders. They focus on all stakeholders and are making strides to advance projects like hiring more veterans and providing more service to the communities they serve.
On Real Money, Cramer is thinking about what could catch the pajama gang off guard. Get more of his insights with a free trial subscription to Real Money.
The Chicken Sandwich Wars
The chicken sandwich wars have begun on Twitter (TWTR) - Get Twitter, Inc. Report and social media, Cramer proclaimed to viewers. It's Chick-fil-A versus the upstart Popeye's Louisiana Kitchen and just about everyone is praising Popeye's for their first-ever chicken sandwich.
Long lines out the door is typically great news for investors, but in this case, Chick-fil-A is privately held and Popeye's is now just one of many brands housed inside Restaurant Brands (QSR) - Get Restaurant Brands International Inc Report . In fact Popeye's accounts for just 12% of sales at Restaurant Brands, and while Cramer said he's not against owning the stock, investors should not invest for Popeye's.
But there is a hidden way to play the chicken wars and that's with Tyson Foods (TSN) - Get Tyson Foods, Inc. Class A Report , which derives 30% of its sales from chicken and 88% of sales from the domestic U.S. market. Trading at just 13 times earnings, with shares up 70% for the year, Cramer said he's a buyer of Tyson Foods.
Loyalty and Long-Term Growth
Investors tired of the daily gyrations of the trade wars need to consider investing in long-term secular growth themes like the humanization of pets, Cramer told viewers. Stocks such as IDEXX Laboratories (IDXX) - Get IDEXX Laboratories, Inc. Report and Zoetis (ZTS) - Get Zoetis, Inc. Class A Report are up 340% and 259% respectively over the past four years and show no signs of slowing.
But there is another name in the animal health world, and that's Elanco Animal Health (ELAN) - Get Elanco Animal Health, Inc. Report , the spinoff from Eli Lilly (LLY) - Get Eli Lilly and Company Report that's down 28% from its 2018 debut.
Cramer said Elanco is primarily a livestock oriented company with feed additives and vaccines. Only 35% of the company's revenue stem from companion animals, but that's about to change, as Elanco is buying the animal health division of Bayer, a move that will double its companion animal business. Cramer said investors simply don't understand the coming deal and that makes Elanco a stealth winner in this space.
Hard to Predict the Futures (Market)
In his "No Huddle Offense" segment, Cramer reminded viewers that it's easy to get burned when you're simply chasing a trend without considering the other side of the trade. Case in point, last night's stock futures market, which forecast huge declines, only to be derailed by some positive comments this morning from President Trump.
The futures markets are already a risky business, Cramer said, and the so-called "pajama traders" often trade in unison during the overnight hours. But smart investors need to always consider what could go right, like a President who doesn't like to see stocks falling.
In the Lightning Round, Cramer was bullish on CyberArk Software (CYBR) - Get CyberArk Software Ltd. Report , NovoCure (NVCR) - Get NovoCure Ltd. Report , Xilinx (XLNX) - Get Xilinx, Inc. Report and Advanced Micro Devices (AMD) - Get Advanced Micro Devices, Inc. Report .
Cramer was bearish on Glu Mobile (GLUU) - Get Glu Mobile Inc. Report , Vermilion Energy (VET) - Get Vermilion Energy Inc. Report , Cliffs Natural Resources (CLF) - Get Cleveland-Cliffs Inc Report and Morgan Stanley (MS) - Get Morgan Stanley Report .
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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL.