We're all learning to live in a new world, Jim Cramer told his Mad Money viewers Wednesday, but now it's time to learn how to invest in the new world. Until we have a vaccine for COVID-19, he said, it's clear the stay-at-home, social distancing stocks are the way to go.
Investing in a pandemic doesn't have to be rocket science. When you're stuck at home, you're probably going to spend money on your home. That means invest in stocks like Masco (MAS) - Get Masco Corporation (MAS) Report, Stanley Black & Decker (SWK) - Get Stanley Black & Decker, Inc. Report and Home Depot (HD) - Get Home Depot, Inc. (HD) Report. It means investing in household products like Clorox (CLX) - Get Clorox Company Report and food stocks like ConAgra Brands (CAG) - Get Conagra Brands, Inc. Report and Beyond Meat (BYND) - Get Beyond Meat, Inc. Report. And it means sticking with Netflix (NFLX) - Get Netflix, Inc. (NFLX) Report and gaming stocks like Take-Two Interactive (TTWO) - Get Take-Two Interactive Software, Inc. Report.
Travel has become too risky, Cramer said, which means the airlines are out, but traveling in an RV made by Thor Industries (THO) - Get Thor Industries, Inc. Report is red hot. Disney World and Las Vegas may no longer be the destinations of choice, which means you'll need gear from Camping World (CWH) - Get Camping World Holdings, Inc. Class A Report.
This is our new normal, Cramer concluded, and he thinks it's going to stay this way until at least next year, and likely even longer.
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Executive Decision: Union Pacific
In his first "Executive Decision" segment, Cramer spoke with Lance Fritz, chairman, president and CEO of Union Pacific (UNP) - Get Union Pacific Corporation Report, the railroad with shares off $16 from its recent highs.
Fritz said they're starting to see a few signs of optimism in our economy, with housing, auto and grain volumes increasing slightly. He said their parcel business, which supports e-commerce operations, has also been strong. Meanwhile, the company's cost-cutting initiatives have given it access to new markets.
When asked about energy, Fritz explained that while coal remains in secular decline, shipments of natural gas and wind turbines, as well as refined petroleum products, have helped to cover those declines.
Fritz was bullish on the new U.S. trade deals to replace NAFTA. He said the U.S., Canada and Mexico trade alliance is stronger than ever, which makes the block of countries more competitive globally.
Finally, Fritz noted that everyone at Union Pacific has been sharing the burden of the coronavirus. Executives have taken 25% pay cuts and management has opted for one week per month of unpaid leave to help keep the company in a strong financial position.
Know Your IPO
In his "Know Your IPO" segment, Cramer told viewers the new IPO cycle is upon us and the investment bankers are putting their best foot forward with deals like Royalty Pharma (RPRX) , which debuted this week at $28 a share and currently trades over $48.50.
Cramer said the last wave of IPOs ended with the implosion of WeWork, but after a long hiatus caused by COVID-19, the IPO pipeline is once again beginning to fill.
Investors can think of Royalty Pharma as a hedge fund for biotech, as the company invests in individual drugs to help fund their clinical trials, then receives a royalty stream once the drugs are in production. The company is currently receiving royalties from Vertex Pharmaceuticals (VRTX) - Get Vertex Pharmaceuticals Incorporated Report, Biogen Idec (BIIB) - Get Biogen Inc. Report and Gilead Sciences (GILD) - Get Gilead Sciences, Inc. (GILD) Report, among others.
Cramer said Royalty is the smart way to invest in biotech, as it involves less risk thanks to its diversified portfolio and it doesn't charge fees like a biotech ETF would. The company has a proven track record and currently sells for just 16 times trailing earnings, which is only in the middle of the range for biotech stocks. Cramer said he'd be a buyer, even at current levels, and would buy more into any weakness.
Off the Tape: Nextdoor
In his "Off The Tape" segment, Cramer checked in with Sarah Friar, CEO of the privately-held, locally-based social network, Nextdoor.
Friar said Nextdoor has become extremely relevant in recent months and usage across their platform is up 80%. She said not only has the pandemic made local discussions more relevant, but so too has the recent social movements against racism and the financial crisis affecting local businesses.
In the case of the latter, Friar said Nextdoor now offers free business pages for local businesses and has programs for advertising and deals to help connect with customers. Members of Nextdoor want to shop locally and support their local businesses, and Nextdoor brings businesses and neighbors together.
Friar also commented on the protests across our nation. She said there's no place for racism in our world or on the Nextdoor platform. They are working hard to stamp out racism, harassment and hate speech of all kinds while still encouraging healthy debates and the sharing of ideas to bring people together.
The Numbers Game
In his No-Huddle Offense segment, Cramer talked about the 11% spike in new COVID-19 cases in Texas as that state reopens for business. He said that while we know a lot more about the disease now, and have some treatments to help reduce the mortality of the most severe cases, COVID-19 remains a numbers game.
Some Americans believe they're immune to COVID-19 because they've got "grit," but the reality is, this disease doesn't care how tough you are.
If you're indoors and in close proximity to someone who's infected, you're going to get sick. If you're outdoors and socially distant, your odds are a lot better. You don't wear masks to protect yourself, Cramer said, you wear them to protect others. You can choose to be selfish, or choose to do the right thing and wear a mask. If we all wore them, this disease would be well under control.
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:
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At the time of publication, Cramer's Action Alerts PLUS had a position in TTWO, CLX.