After a weak opening spurred by Europe, the bears got caught with their pants down, Jim Cramer told his Mad Money viewers Thursday. By the afternoon, stocks had reversed course, and for good reason. "The U.S. isn't Europe," Cramer reminded viewers. What happens in European markets doesn't always translate to U.S. markets, as they did in years past.
There are plenty of reasons why the economy in Europe is a mess, Cramer explained. After getting the coronavirus under control, many European countries reopened too quickly and became complacent, the two things the virus needed to make a stunning comeback. But Cramer said the U.S. isn't likely to follow Europe back into lockdowns. Our economy simply can't afford it.
The second reason for European weakness are the European banks. Cramer said in Europe, banks are thinly capitalized, unlike our banks, which are swimming in extra cash. There's no link between European banks and U.S. banks, he added.
Add to these issues, continuing travel bans, a generally anti-business environment and continued scrutiny of our tech giants like Apple (AAPL) - Get Apple Inc. (AAPL) Report, Google (GOOGL) - Get Alphabet Inc. Class A Report and Facebook (FB) - Get Facebook, Inc. Class A Report, and it's easy to see why European stocks are faltering, while ours continue to rally.
The next time investors see a buyable dip, like Thursday's open, Cramer said, they need to be ready to pounce.
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A Surge in SPACs
We've seen a surge in special purpose acquisition companies, or SPACs, in recent months. Many of these SPACs are concentrated in the electric vehicle space, merging with smaller and riskier startups like Nikola Corp. (NKLA) - Get Nikola Corp. Report. Cramer reiterated that investors need to be careful with these SPACs, as the hype rarely lives up to reality.
But there is one EV SPAC that might be interesting and that's Hyliion HYLN, makers of electric power trains for large trucks. Cramer explained that Hyliion owns its battery technology and has impressive software to boot. Its power trains are designed to work with compressed natural gas fuel cells, which already has some infrastructure in place to support it. Best of all, Hyliion has 1,000 powertrain orders already, making the company closer to a reality that most.
That said, Cramer noted it's still early for Hyliion, and shares are likely to see more downside before they bottom. Under $20 a share however, he would be tempted to do some buying.
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The Best of Banks, the Worst of Banks
The action in the financials doesn't tell the whole story, Cramer told viewers. When it comes to the banks, there are actually three tiers, he said, and there's a big difference between the best and the worst.
At the top of the pile are the investment banks of Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. (GS) Report and Morgan Stanley (MS) - Get Morgan Stanley (MS) Report. These banks don't have huge loan losses and their wealth management businesses are on fire, Cramer said.
In the second tier are the big money center banks of Bank of America (BAC) - Get Bank of America Corp Report and JP Morgan Chase (JPM) - Get JPMorgan Chase & Co. (JPM) Report. While JPMorgan opted to defer many of its loan losses, Bank of America took a different approach, taking a big hit now to set itself up for success later down the road.
In the bottom tier are Citigroup (C) - Get Citigroup Inc. Report and Wells Fargo (WFC) - Get Wells Fargo & Company Report, two banks Cramer called the worst of the worst. Citigroup posted uninspiring results, while Wells Fargo continues to struggle with scandals that tarnish its already tarnished reputation.
Cramer said he'd be a buyer of the top tier, which trade at just nine to 10 times earnings. On weakness, the second tier of Bank of America and JPMorgan are also attractive.
Executive Decision: Sorrento Therapeutics
In his first "Executive Decision" segment, Cramer spoke with Dr. Henry Ji, chairman, president and CEO of Sorrento Therapeutics (SRNE) - Get Sorrento Therapeutics, Inc. Report, the biotech with shares up 545% over the past year as the company works towards treatments for COVID-19.
Ji said work continues on their neutralizing antibody therapy for COVID-19. They just entered clinical trials for their first generation therapy and are on track to be filing to test their second generation in late-November. He said they've been very encouraged by the success of Regeneron (REGN) - Get Regeneron Pharmaceuticals, Inc. Report, which has a similar therapy.
Work is continuing on Sorrento's rapid test for COVID as well. Ji explained that when it comes to testing, it's all about the sensitivity of the test. Their saliva-based test is proving to be very sensitive at detecting the virus, even in patients with no symptoms.
Finally, Ji discussed the termination of their CFO by saying that all companies have different needs as they grow and Sorrento is adding a new CFO with the skills they need for this part of their journey.
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Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Thursday evening:
Still Staying at Home Stocks
In his "No-Huddle Offense" segment, Cramer said every time COVID-19 cases rise, the stay-at-home stocks rise right along with them. That's how Peloton (PTON) - Get Peloton Interactive, Inc. Class A Report shares could rise, despite being sued by the makers of NordicTrack over patents. That's also how shares of Zoom Video (ZM) - Get Zoom Video Communications (ZM) Report can trade for 50 times sales and continue to soar.
Cramer said cardboard maker WestRock (WRK) - Get WestRock Company Report was up 4% today as the demand for container board gets stronger. He was also bullish on home builders like Lennar (LEN) - Get Lennar Corporation Class A Report and restaurants like Darden (DRI) - Get Darden Restaurants, Inc. Report, Chipotle Mexican Grill (CMG) - Get Chipotle Mexican Grill, Inc. Report and McDonald's (MCD) - Get McDonald's Corporation (MCD) Report.
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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, GOOGL, FB, GS, JPM.