The stock market's ability to overcome even the toughest of obstacles is remarkable, Jim Cramer told his Mad Money viewers Wednesday.
Even when faced with with retaliation from Iran, stocks had enough fuel to keep the rally going, making this one of the most resilient markets in recent memory.
Cramer said there are a lot of positive things fueling this rally. Wednesday, payroll processor Automatic Data Processing (ADP) - Get Report released its latest employment report showing another 200,000 jobs were created. We also saw strong earnings from homebuilder Lennar (LEN) - Get Report.
Constellation Brands (STZ) - Get Report had positive things to say on its conference call and Tesla (TSLA) - Get Report dealt the shorts another blow with several price target bumps. Even GrubHub (GRUB) - Get Report had positive things to say as the company considers putting itself up for sale.
All of the pluses give investors conviction, Cramer said, and conviction leads to resilience and resilience makes investors less skittish and more complacent about continuing to buy.
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Executive Decision: Constellation Brands
For his "Executive Decision" segment, Cramer spoke with Bill Newlands, president and CEO of Constellation Brands (STZ) - Get Report, the wine and spirits maker that just posted a 30-cent-a-share earnings beat that sent shares up 3.6% by the close.
Newlands said there's still tremendous upside for Modelo, a brand that was selling just 35 million cases a year 10 years ago, but now sells in excess or 140 million cases a year. Modelo is now the fourth largest beer brand, but still has lots of room to grow.
Newlands was also bullish on the hard seltzer category, which he said is poised to double in 2020. Constellation plans to invest heavily in hard seltzer to gain marketshare.
When asked about the company's $4 billion investment in Canopy Growth Corp (CGC) - Get Report, Newlands said they're pleased with their 37% ownership of the company and have no plans to invest more. He said Canopy is the marketshare leader in Canada and is one of the largest suppliers in the world.
What's Ahead for the Oil Sector
Investors looking for a read on what comes next in the oil sector should look no further than Core Labs (CLB) - Get Report, Cramer told viewers. Core Labs is the best in the oil services arena, helping oil producers find more oil and get the most out of every well. But last week, the company slashed its dividend from 55 cents a share to just 25 cents a share, sending its stock tumbling 12.9%.
On the surface, Core Labs' explanation seems benign, Cramer told viewers. But upon closer examination, it appears something has fundamentally shifted in the oil business. This time last year, there were 1,050 oil rigs in operation. Today, there are only 773. The reason? Cramer said technology is helping each rig produce more than before. Conservation and efficiency also are helping us use less oil in the first place.
As we just saw with Iran, the oil market absorbs disruptions in supply better than ever. The U.S. and others around the globe are easily able to increase supply, keeping prices stable. This means that companies like Core Labs are simply less in demand than they were in years past and they're likely to be needed less as the world moves away from oil.
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Searching for Best of Breed
The humanization of pets continues to be a powerful theme in the stock market, but Cramer's pet-related ETF from last summer isn't faring as well, necessitating some serious changes.
Cramer's ETF included 11 of the biggest pet-care names, but overall, the index only rose half a percent from June through the end of 2019. That's compared to 13% for the S&P 500 overall. The problem rested with four of the 11 names, including Covetrus (CVET) - Get Report, which plunged 46%, Chewy (CHWY) - Get Report, which fell 16%, PetIQ (PETQ) - Get Report, down 28% and Elanco Animal Health (ELAN) - Get Report, off 14%.
Cramer admitted that he got too excited about the pet theme and chose too many stocks instead of just sticking with the best-of-breed companies. This illustrates why picking just a few stocks is better than a bigger basket of lesser quality.
That said, Cramer continues to recommend Chewy, which now boasts that 70% of its sales stem from automatic, recurring orders. The stock is far too cheap, Cramer said, trading at just two times sales. He was also bullish on Elanco, which trades at just 20 times earnings, despite the company's 15%- to 20%-growth estimates.
Cramer Does His Homework
In his "Homework" segment, Cramer follows up on stocks that stumped him during earlier shows.
He said that Sea Limited (SE) - Get Report was a great gaming and e-commerce story, but the stock is too expensive to invest in. Shares have risen from $11 to $40 in just a few months, and after a 255% gain, Cramer said, the easy money has already been made.
At $40, Cramer said he's taking a pass, but after shares pull back to reasonable levels, he'd be a buyer of this great growth story.
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 AAPL, FB.