Small Biz Woes: Cramer's 'Mad Money' Recap (Monday 8/17/20)

Jim Cramer says the big retailers are going to start gobbling up the smaller ones.
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We'll be hearing a lot from major retailers and restaurants this week, Jim Cramer told his Mad Money viewers Monday. But what are expected to be strong results from the likes of Walmart  (WMT) - Get Report, Target  (TGT) - Get Report, Home Depot  (HD) - Get Report and Lowe's  (LOW) - Get Report will be bittersweet, Cramer said, as they will come at the expense of small business.

This quarter's earnings will likely be the last where these major restaurants and retailers will be competing against mom-and-pop operations, Cramer said. The government stimulus is ending, he said, and many small businesses are about to fail.

That's part of why Domino's Pizza  (DPZ) - Get Report announced plans to hire an additional 20,000 workers. Those workers come at the expense of small restaurants that can't turn a profit with social distancing in place. Outdoor seating only works while it's warm, Cramer cautioned. Once the weather turns cold, it will be lights out for many smaller operators.

Eventually there will be a vaccine, Cramer noted, but that vaccine comes too late. That's why any weakness in stocks like WingStop  (WING) - Get Report and Chipotle Mexican Grill  (CMG) - Get Report are buying opportunities, Cramer said, because these chains have the scale and the expertise to make takeout and delivery, with limited in-store dining, profitable.

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Executive Decision: PerkinElmer

There are countless companies rushing to make a COVID vaccine, but in the end, we only need two or three good ones, Cramer told viewers.

That's why the best way to make money isn't with the vaccine makers, it's with companies like Thermo Fisher Scientific  (TMO) - Get Report and Danaher  (DHR) - Get Report. In his first "Executive Decision" segment, Cramer added another name to the list, PerkinElmer  (PKI) - Get Report, after speaking to Prahlad Singh, the company's president and CEO.

Singh explained that when it comes to COVID-19 testing, the bottleneck isn't making machines that can test for the virus, it's providing turnkey solutions that can provide results quickly. A test isn't just a test, he explained. Testing includes extraction, preparation, testing and analysis. It requires logistics to acquire the samples and information technology to provide the results and countless technicians to make it all happen.

That's why PerkinElmer has been focused on full workflow solutions for its customers, ensuring that once up and running, each of their machines is able to process up to 10,000 tests every day and be used to its maximum capacity.

PerkinElmer has partnered with different entities, including Rutgers and Yale, to help bring new innovations, like saliva testing and even free testing to market. But all of these innovations still have all of the components, Singh said, and that's where PerkinElmer shines.

Executive Decision: GrowGeneration

For his second "Executive Decision" segment, Cramer also spoke with Darren Lampert, co-founder and CEO of GrowGeneration GRWG, the hydroponic supply retailer with shares up 22% thanks to a strong quarter that included a 49% rise in same-store sales.

Lampert said business is booming at GrowNation. He said they are still in the early stages of a multi-billion dollar industry.

When asked about completion in their space, Lampert explained that there are some smaller players in more established cannabis states, but GrowGeneration has a roll-up strategy to acquire a dominant position in those markets while simultaneously expanding into new states as legalization occurs.

Nearly 20% of sales stems from the largest cannabis growers, Lampert added, and the company supports over 700 commercial growers, a number which is rising every quarter.

Shares of GrowGeneration are up 294% for the year.

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Know Your IPO

In the "Know Your IPO" segment, Cramer examined the recent IPO of KE Holdings (BEKE), the most recent Chinese IPO of the year.

KE Holdings is known as the "Chinese Zillow," but as Cramer had previously noted, investors should avoid these mostly unregulated Chinese companies and opt instead for their U.S. counterparts. Forget owning the "Chinese Amazon" or the "Chinese Tesla," just own Amazon  (AMZN) - Get Report and Tesla  (TSLA) - Get Report.

Chinese IPOs are flooding the IPO market, with 19 deals so far this year accounting for 15% of the IPOs in 2020. But Cramer said the odds are stacked against you. The median Chinese IPO is down 8.8%, while the median U.S.-based IPO is up 28%.

Cramer said if KE Holdings was a U.S. company, he would recommend it. The company has 60% revenue growth and is profitable. But as a Chinese company, shareholders not only have no voting rights, they in fact don't own any actual equity in KE Holdings at all. 

Cramer again called on the SEC to block these Chinese deals that are only hurting U.S. investors.

The Home Office

In his "No-Huddle Offense" segment, Cramer told viewers to pay attention to what CEOs are telling shareholders about going back to work. The White House may want everyone to head back to work, but CEOs are pretty proud of their work-from-home initiatives. 

Cramer said no one was talking about going back to the office this quarter. Maybe that's why public transit is still off 60% and toll road usage is down 40%.

Companies are concerned about employee safety, Cramer said, and they're uncertain about the protocols for a safe return. The fact is that working from home is convenient and cost-effective, providing a work-life balance that many employees desire. Zoom Video  (ZM) - Get Report works great, Cramer added, and maybe that's why so many workers are unwilling to go back even if they could.

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 Monday evening:

Ping Identity  (PING) - Get Report: "There are so many companies in this space and Ping is a very expensive stock."

Royalty Pharma  (RPRX) : "I love Royalty Pharma. I like that company very much."

Vertex Pharmaceuticals  (VRTX) - Get Report: "You want to buy Vertex. This one is getting better and better."

Builders FirstSource  (BLDR) - Get Report: "This one is trading very well."

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At the time of publication, Cramer's Action Alerts PLUS had a position in AMZN.