Demand is what will define the next leg of the bull market, Jim Cramer told his Mad Money viewers Wednesday. Now that COVID-19 vaccines are around the corner, everything that was put on hold during the pandemic will soon be back en vogue.
Throughout most of 2020, the pandemic stocks led the market higher. Everything from housing and home renovation to PCs, used cars and entertainment have been surging. But as the world slowly returns to normal, Cramer said there will be a whole new set of leaders in the market.
Boeing (BA) - Get Report will be leading the aerospace stocks higher, as the company puts both the pandemic and its 737Max problems behind them. As travel resumes, Boeing will see plenty of new orders for planes and all of the airlines will rise as well. In fact, all of the travel names will be in bull-market mode, from United Airlines (UAL) - Get Report, to Wynn Resorts (WYNN) - Get Report, to Walt Disney Co. (DIS) - Get Report and the cruise lines.
Cramer said there will be a boon in advertising, which will bode well for Alphabet (GOOGL) - Get Report. Business spending will increase, which makes American Express (AXP) - Get Report a buy. And demand for oil will rise, making Chevron (CVX) - Get Report and Pioneer Natural Resources (PXD) - Get Report big winners.
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Executive Decision: PVH
In his first "Executive Decision" segment, Cramer spoke with Manny Chirico, chairman and CEO of PVH (PVH) - Get Report, the apparel maker that just posted strong earnings despite the pandemic. Shares of PVH have risen 39% over the past month.
Chirico said that PVH's strong brands, combined with strong international sales, helped drive their results this quarter. He called out both Europe and China as pockets of strength, despite store closures in Europe due to COVID-19.
When asked about U.S. sales, Chirico noted that international tourism accounts for 35% to 40% of North American sales at PVH, so with tourism down by as much as 95%, their sales suffered. However, some of those losses were offset by gains in digital sales, where online partners like Macy's (M) - Get Report and Amazon (AMZN) - Get Report helped close the tourism gap.
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Know Your IPO
In his "Know Your IPO" segment, Cramer opined on Luminar, makers of LiDAR sensors for autonomous driving systems which will be coming public tomorrow via a reverse merger with a special purpose acquisition company. Luminar will trade under the ticker LAZR.
Cramer explained that Luminar was founded in 2012 by a 17-year-old and the company now has partners like Volvo and an order book totaling $1.3 billion. LiDAR sensors are an integral part of every self-driving system, sans Tesla (TSLA) - Get Report, and helps provide critical object detection and ranging information.
Cramer said Luminar has great prospects and the stock is actually cheap at current levels. He said shares are definitely worth owning, but he suggested starting with a small position and adding to it slowly over time.
Executive Decision: XPO Logistics
For his second "Executive Decision" segment, Cramer also spoke with Brad Jacobs, chairman and CEO of XPO Logistics XPO, which is splitting itself into two companies in an effort to unlock value for shareholders.
Jacobs explained that XPO has been on a mission to unlock value for over a year now. While some in the logistics space trade for as much as 19 times earnings, XPO trades for just nine times earnings. When they asked shareholders what would rectify that disparity, simplification of the business and investment grade debt where the two key factors. That's why XPO will split itself into two companies, allowing them to both simplify and reduce their leverage in the process.
Jacobs said that XPO is a major player in the hottest parts of logistics at the moment, from e-commerce to cold chain logistics services. He noted that while XPO is not a direct player in Operation Warp Speed, which will be distributing the COVID vaccine, they are ready and waiting for a flood of secondary business that will inevitably be a part of the distribution efforts.
When asked for some clarity on those vaccine efforts, Jacobs said that while the world is chaotic and disorganized in so many areas at the moment, there are plenty of companies that are doing everything they can for our country and for humanity to help save as many lives as possible.
Cramer said shares of XPO should be "substantially higher" on their earnings alone, not to mention their efforts to unlock the company's hidden value.
Outlook for China Trade
In his No-Huddle Offense segment, Cramer said that President Trump made some real progress in the trade war with China, and it would be a real shame to give that all up.
Today we learned that President-elect Biden has no plans to immediately roll back Trump's tariffs on Chinese goods. Instead, Biden indicated that he supports strategies that get all of our allies on the same page.
Cramer said while that tactic sounds good on paper, in reality our allies have little incentives to align their interests with ours. China required a hard-line approach for concessions to begin. Cramer said they will likely need equally strong policies from Biden for concessions to continue.
Here's what 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 DIS, GOOGL, AMZN.