Today's market rally might not be as crazy as it looks, Jim Cramer told his Mad Money viewers Monday. The bulls have a lot of reasons to be buying, Cramer said, but he still advises exercising caution until we see what Iran's next move will be.
Why are investors so bullish in the face of heightened tensions with Iran? History has proven that declines like these are the perfect time to buy.
When tensions rose with North Korea in August of 2017, stocks saw a 10% rally.
After the U.S. made airstrikes in Syria in 2018, the market also dipped, only to rally afterwards. And the same pattern was seen in 2019 after Iran attacked oil fields in Saudi Arabia.
Investors have been trained that geopolitical tensions don't always turn into major selloffs and many of the naysayers are simply exaggerating. There are many stocks that are not economically sensitive and do great in times like these, including technology and the drug stocks.
We've been here before and things turned out OK, Cramer concluded, but we still need to exercise caution until we see what Iran's next move will be before we can sound the all-clear signal.
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Executive Decision: Planet Fitness
For his "Executive Decision" segment, Cramer sat down with Chris Rondeau, CEO of Planet Fitness (PLNT) - Get Planet Fitness Inc. Report, the fitness chain with over 2,000 locations and 7.9% same-store sales growth.
Rondeau said that Planet Fitness is a "no intimidation zone," and their members come in all shapes and sizes and range in age from 18 to 80 years old. He said while many fitness clubs preach that you have to work out for 90 minutes a day, multiple times a week, Planet Fitness just wants you to get up off the couch. One 20-minute workout is better than no workouts, he said, and Planet Fitness is trying to break down the barriers that keep people from getting started.
When asked about their retail-adjacent locations, Rondeau said that retailers love having Planet Fitness in their shopping centers because most workouts occur during off-peak times and their members often shop at nearby stores.
Finally, Rondeau recounted his own story at Planet Fitness, which started as a front desk clerk and has now spanned 27 years. He said he still works in their centers and gets new ideas for making it better every time he does.
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If tensions between the U.S. and Iran escalate into a full-blown conflict, what should investors be buying? Cramer laid out a wartime portfolio so investors can be prepared.
The first thing investors must have is cash, Cramer said, and lots of it. Cash provides some protection against losses but also provides the ability to be flexible. The second thing investors need in their portfolios is gold. Cramer recommended bullion or stocks like Barrick Gold (GOLD) - Get Barrick Gold Corporation (BC) Report or Agnico Eagle Mines (AEM) - Get Agnico Eagle Mines Limited Report. He felt gold prices could soar to $2,000 an ounce.
The third thing investors should own are the utilities. Stocks like American Electric Power (AEP) - Get American Electric Power Company Inc. Report yields 3%, while ConEd (ED) - Get Consolidated Edison Inc. Report and Dominion Energy (D) - Get Dominion Energy Inc. Report yield 3.4% and 4.5%, respectively.
Oil prices are likely to spike, at least in the short term, which led Cramer to recommend Schlumberger (SLB) - Get Schlumberger N.V. Report with its 5% yield as well as Pioneer Natural Resources (PXD) - Get Pioneer Natural Resources Company Report.
Next, investors should own a defense contractor, Cramer said. His top recommendation remained L3Harris Technologies (LHX) - Get L3Harris Technologies Inc. Report, which makes intelligence equipment perfect for a confrontation with Iran. All of the other defense names are too pricey to recommend.
Executive Decision: Axon Enterprises
In his second "Executive Decision" segment, Cramer also sat down with Rich Smith, CEO of Axon Enterprises (AAXN) - Get Axon Enterprise Inc Report, a stock that's down 6% for the year after the Federal Trade Commission took issue with the company's acquisition of rival VieVu.
Smith explained that Axon, which manufactures and sells conducted electrical weapons, spent $7 million to acquire VieVu, which was on the verge of bankruptcy, to prevent VieVu's customers from seeing an interruption in their service. Axon felt the deal falls well within the failing safe harbor provisions, but the FTC says otherwise, Smith said.
Axon has chosen to file suit with the FTC to have a federal judge weigh in on the issue.
Turning to the rest of their business, Smith explained that Axon's mission continues to be making bullets obsolete and every generation of their tasers takes them one step closer to surpassing the effectiveness of handguns.
Rally for Retailers?
In his "No-Huddle Offense" segment, Cramer opined on the recent report from JPMorgan Chase's retail analyst, Matthew Boss, a man Cramer called "the best in the business."
According to Boss' research, 76% of retailers are poised to meet or beat their expectations for this past quarter, something most other analysts think is impossible. If true, Cramer said, the resulting short squeeze would be staggering, as most other analysts have written off retail as a casualty of Amazon (AMZN) - Get Amazon.com Inc. Report.
Among Boss' favorites were Nordstrom (JWN) - Get Nordstrom Inc. Report, which is seeing accelerating cash flow, and Kohl's Stores (KSS) - Get Kohl's Corporation Report, which continues to benefit from its partnership with Amazon.
Cramer said he stopped selling shares of Kohl's for his charitable trust, Action Alerts PLUS, because betting against Boss has proven to be a huge mistake.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Monday evening:
Nokia undefined: "There was an upgrade today and I think it's a good value stock."
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At the time of publication, Cramer's Action Alerts PLUS had a position in SLB, AMZN, KSS.