The bulls and the bears can't both lead at the same time, Jim Cramer reminded his Mad Money viewers Wednesday. Cramer reiterated his call for investors to take some profits and raise cash, as the negative news continues to put pressure on stocks.
New COVID-19 cases are surging in several states -- a disturbing trend that forced New York, New Jersey and Connecticut to implement quarantines for travelers from high-risk areas. The market leaders like Facebook (FB) - Get Facebook, Inc. Class A Report, Apple (AAPL) - Get Apple Inc. (AAPL) Report, Amazon (AMZN) - Get Amazon.com, Inc. Report and Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report all saw their shares decline Wednesday, adding further downward pressure on the markets.
Investors also weighed a surge in the polls for Joe Biden, Democratic presidential nominee presumptive, in November. Biden has advocated for higher corporate taxes, which is bad for profits and therefore, for stocks. Meanwhile, gold prices continue to rise and crude oil continues to decline, as investors fear the economy will slow.
Cramer said stocks are still the only game in town and he remains bullish longer term. But in the short term, we're likely to see continued declines, especially after the July 4th holiday, which is why taking profits and raising cash will be the prudent move -- so investors can buy into the coming weakness.
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What Cramer Thinks of 'Popular' Stocks
Novice traders and momentum chasers have been piling into low-dollar stocks, but Cramer said it's time to set the record straight on many of these hot names. According to a recent round up of the group, here are the top 10 most traded stocks.
Topping the list was Penn National Gaming (PENN) - Get Penn National Gaming, Inc. Report, which recently was featured on Mad Money. Cramer said he likes Penn long-term, but with COVID-19 spiking, sports seems less likely. Moderna (MRNA) - Get Moderna, Inc. Report came in at No. 2, but of all the vaccine makers, this one has the most to lose. Tesla (TSLA) - Get Tesla Inc Report was next on the list and was the only stock of the group Cramer continued to recommend.
Also on the list were a pair of cruise lines, Royal Caribbean (RCL) - Get Royal Caribbean Cruises Ltd. Report and Norwegian Cruise Line Holdings (NCLH) - Get Norwegian Cruise Line Holdings Ltd. Report, and Spirit Airlines (SAVE) - Get Spirit Airlines, Inc. Report. Cramer was not a fan, recommending instead Southwest Airlines (LUV) - Get Southwest Airlines Co. Report if investors have to own an airline. He was also not a fan of MGM Resorts (MGM) - Get MGM Resorts International (MGM) Report, which will be crippled for a long time to come.
Rounding out the list was Snap (SNAP) - Get Snap, Inc. Class A Report, the struggling social media stock, and GoPro (GPRO) - Get GoPro, Inc. Class A Report, the struggling action cam maker. Finally, Marathon Oil (MRO) - Get Marathon Oil Corporation (MRO) Report made the list, but Cramer advised going with Parsley Energy (PE) - Get Parsley Energy, Inc. Class A Report if investors have to own an oil.
Overall, Cramer would only hold onto Tesla and, longer-term, Penn National, until we have a COVID-19 vaccine.
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Know Your IPO
In his "Know Your IPO" segment, Cramer looked into the coming IPO of Albertsons, the grocery store chain which will soon trade under the ticker ACI.
Albertsons Companies has 2,250 locations in 32 states under several brands including Acme and Safeway as well as Albertsons, but this is not the first time the company has attempted to come public. Albertsons tried, and failed, an IPO in both 2015 and 2018. But investors rejected its debt-laden balance sheet and its failed merger with RiteAid (RAD) - Get Rite Aid Corporation Report in 2018.
But since then, the company has a new CEO, has spent billions to renovate its stores and has built an omnichannel strategy that includes delivery -- which has proven to be perfect for our new COVID-19 world. The company boasted 2% same-store sales growth last year and it has reduced its debt considerably.
Cramer said he likes the Albertsons story and would be a buyer on the IPO.
Special Interview: Rhode Island Gov. Gina Raimondo
In a special interview, Cramer spoke with Gina Raimondo, governor of Rhode Island, to learn how her state has been able to handle the coronavirus outbreak so well while other states have struggled.
Raimondo credited quick action, innovation and partnerships for Rhode Island's success. She said her state is densely populated and nestled between Boston and New York City -- two COVID-19 hotspots. But after a lot of hard work, Rhode Island is the only state to have tested 20% of their population with a 2% positive rate.
Rhode Island was quick to partner with Saleforce.com (CRM) - Get salesforce.com, inc. Report for contact tracing and CVS Health (CVS) - Get CVS Health Corporation Report for testing, among others, Raimondo said, and that helped give them the data they needed to implement practical solutions for citizens.
Raimondo said she's worried about travelers from current hotspots, but hasn't yet decided the best course of action to protect her state from reinfection. Rhode Island deployed the National Guard to enforce their rules, which include wearing masks in public. She said they are seeing over 90% compliance and that's making a huge difference.
"This is not magic," Raimondo concluded, "it's the good execution of a good plan."
Steer Clear of SPACs
In his "No Huddle Offense" segment, Cramer again cautioned viewers to steer clear of risky SPACs, or special purpose acquisition companies, like those that brought Draft Kings (DKNG) - Get DraftKings Inc. (DKNG) Report and Nikola Motors (NKLA) - Get Nikola Corp. Report public recently.
Cramer said DraftKings is a great long-term story, but with the return of sports in question and the stock up 29% in just the past month, the company's valuation is not justified. The company just issued 33 million shares in a secondary offering and those shareholders are already under water.
Nikola is a hydrogen fuel cell truck maker with no product, no sales and a $27 billion valuation. The company also came to market by merging with a SPAC and is now planning to offer 77 million shares in a secondary offering that has yet to price. Cramer said insiders are already ringing the register on Nikola, which is not a good sign.
SPACs are risky and highly speculative, Cramer concluded. There are 33 SPACs holding over $10.5 billion in capital so far in 2020, which means these two deals will not be the last ones we see.
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:
Marriott Vacations Worldwide (VAC) - Get Marriott Vacations Worldwide Corporation Report: "The timeshare business is a good one. When it comes down, it'll be pretty good."
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At the time of publication, Cramer's Action Alerts PLUS had a position in FB, AAPL, AMZN, MSFT, CRM, CVS.