There is a big difference between blind speculation and informed speculation, Jim Cramer told his Mad Money viewers Thursday. That's why it's time to run down the seven deadly stock sins Cramer said he sees on Twitter (TWTR) - Get Twitter, Inc. Report every day.
The first deadly sin is cheerleading. Cramer said investors think they're helping their favorite stocks by promoting them, but in reality, the exuberance is only alerting the short sellers to an opportunity.
The second deadly sin is not knowing what a company does. Cramer said every investor should have at least three reasons why they like a stock so they'll know when to sell as those reasons disappear.
Deadly sin No. 3 on Twitter: buying electric vehicle stocks that aren't Tesla (TSLA) - Get Tesla Inc Report. Cramer said stop looking for the next Tesla, just own Tesla, the only EV maker that's actually selling cars.
Sins No. 4 and 5 are buying low-dollar stocks and buying penny stocks. No stock falls below $10 a share because things are going well, Cramer said, and penny stocks are the riskiest investments around.
Sin No. 6 is not taking a profit. Cramer reminded viewers that you don't have a gain until you sell. Ring the register on your original investment and play with the house's money, or close out your position and enjoy your win.
Finally, the last deadly sin Cramer sees on Twitter is heckling him to promote a stock. "I won't recommend a stock just because you ask me to," Cramer said. Being a smart investor means doing your homework, making your own opinions and not committing sin No. 2.
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Executive Decision: PayPal
In his first "Executive Decision" segment, Cramer spoke with Dan Schulman, president CEO of PayPal (PYPL) - Get PayPal Holdings Inc Report, the online payments powerhouse that just posted earnings that included 50% revenue growth and helped propelled shares up 78% for the year.
Schulman said the pandemic has created a surge toward digital-first payments, which is making PayPal's tools more relevant than ever before. He said his company has redefined itself from just a "buy now" button into a leading platform of tools for our new digital economy. If you shop online and consume digital services, you need PayPal, he explained.
But PayPal is about a lot more than just online payments, Schulman added. In a recent survey, nearly 45% of consumers said they no longer want to deal with cash, have to touch a keypad or sign their name to make a purchase. These consumers want contactless, mobile payments.
PayPal is also at the forefront in the fight for racial justice, Schulman said. It's not enough to just be about maximizing profits, he said. PayPal thinks about the communities it serves and cares for the welfare of its employees and those communities. He said companies need to do more than just condemn racism, they must help make the systemic changes needed to fix the problem.
Executive Decision: Azek
For his second "Executive Decision" segment, Cramer also spoke with Jesse Singh, president and CEO of Azek (AZEK) , the building materials company with shares that rose 4.5% Thursday after reporting its first earnings as a public company.
Singh said Azek saw strong demand across the board, even though many contractors were not allowed to work in some parts of the country. The pandemic has made the home more important than ever, he said, and addressing the exterior with high-quality materials that last is a big bonus for the long-term.
Azek has been building its brands for over 20 years, Singh said, and the company's unique technologies have translated into many loyal customers. Despite all of their successes, 80% of the decking market is still wood, which remains its primary competitor.
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Executive Decision: Five9
For his final "Executive Decision" segment, Cramer checked in Rowan Trollope, CEO of Five9 (FIVN) - Get Five9 Inc. Report, the call center software provider that now trades for $10 less than last week, when it reported strong earnings.
Trollope explained that Five9 is at the right place at the right time, and when the pandemic hit, the cloud software providers were the big winners from the work-from-home trend. He said their enterprise market grew by 33% in the quarter as companies are moving fast to replace legacy systems with new cloud technologies.
Beyond AT&T, Trollope said that his company's two biggest deals closed this quarter and Five9 continues to have a very low churn rate. Customers want digital-first technologies and legacy providers simply cannot match Five9's advanced cloud offerings like virtual assistants powered by artificial intelligence.
Take a Cue From Apple and Tesla
Cramer's on a new crusade to help the individual investor. He's urging companies with high-dollar stocks to follow in the footsteps of Apple (AAPL) - Get Apple Inc. (AAPL) Report and Tesla and split their stocks to make them more affordable.
Yes, it's true, splitting a stock into smaller pieces creates zero value, Cramer admitted. But to the often-irrational stock market, cheaper stocks are always better. In years past, companies would split their stocks often, usually with much fanfare, using the event as a sign of strength. But as larger, institutional investors gained more power, companies have instead been urged to let their share prices run to levels unattainable to more individuals.
But Cramer said every company with shares over $100 should follow Apple and Tesla's lead and make their shares more affordable. If it truly makes no difference at all, why not do it? The market will reward you, Cramer said, just as it is rewarding Apple and Tesla.
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 AAPL.