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The Resilient Bull: Cramer's 'Mad Money' Recap (Wednesday 1/8/20)

Jim Cramer says this market environment is a strange merger of resilience, complacency and hubris. He explains how this feeds a stock rally.
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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 Automatic Data Processing Inc. Report released its latest employment report showing another 200,000 jobs were created. We also saw strong earnings from homebuilder Lennar  (LEN) - Get Lennar Corporation Class A Report

In the retail space, Macy's  (M) - Get Macy's, Inc. Report losses were not as bad as feared and Apple's  (AAPL) - Get Apple Inc. Report holiday sales were better than expected. 

We also got positive news from China, where American Express  (AXP) - Get American Express Company Report is now allowed to operate without needing a joint venture. 

Constellation Brands  (STZ) - Get Constellation Brands Inc. Report had positive things to say on its conference call and Tesla  (TSLA) - Get Tesla Inc. Report dealt the shorts another blow with several price target bumps. Even GrubHub undefined 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. 

Cramer and the AAP team are looking at everything from earnings and tariffs to the Federal Reserve. Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts Plus.

Executive Decision: Constellation Brands

For his "Executive Decision" segment, Cramer spoke with Bill Newlands, president and CEO of Constellation Brands  (STZ) - Get Constellation Brands Inc. 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 Canopy Growth Corporation 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 Core Laboratories N.V. 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.

On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.

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TheStreet Recommends

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 Covetrus Inc. Report, which plunged 46%, Chewy  (CHWY) - Get Chewy Inc. Class A Report, which fell 16%, PetIQ  (PETQ) - Get PetIQ Inc. Report, down 28% and Elanco Animal Health  (ELAN) - Get Elanco Animal Health Incorporated 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 Sea Limited American Depositary Shares each representing one Class A 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.

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:

Teladoc Health  (TDOC) - Get Teladoc Health Inc. Report: "This is a cost containment play and I like it." 

Karuna Therapeutics  (KRTX) - Get Karuna Therapeutics Inc. Report: "Mental health is hard to get right, so this one is speculative." 

Cloudflare  (NET) - Get Cloudflare Inc. Class A Report: "I don't think there's much to this one. I'd rather see you in any of my cloud king stocks." 

Apellis Pharmaceuticals  (APLS) - Get Apellis Pharmaceuticals Inc. Report: "I'm suspicious of this equity offering. I'd wait." 

Pinterest  (PINS) - Get Pinterest Inc. Class A Report: "I have high hopes for Pinterest, but I prefer Twitter  (TWTR) - Get Twitter Inc. Report and Facebook  (FB) - Get Meta Platforms Inc. Report." 

Veeva Systems  (VEEV) - Get Veeva Systems Inc. Class A Report: "I'd buy it right here..." 

Alibaba  (BABA) - Get Alibaba Group Holding Limited American Depositary Shares each representing eight Report: "This one is kicking butt and is the only Chinese stock I'm recommending." 

Uber Technologies  (UBER) - Get Uber Technologies Inc. Report: "They need to get rid of UberEats and then they can rally." 

Cloudera  (CLDR) - Get Cloudera, Inc. Report: "This one is not as bad as it was." 

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