High-growth stocks are under siege and, unfortunately, they're likely to stay that way for the foreseeable future, Jim Cramer told his Mad Money viewers Tuesday. What's ailing these high-flying tech names? Cramer offered up a list of reasons, none of which are going away anytime soon.
First, Cramer said there's too much speculation in the market. Speculation, coupled with rising inflation, makes growth stocks trade more like penny stocks. Second, there's too much greed. This week's implosion of Archegos is the latest example of excessive greed gone awry.
Third is something Cramer's warned about for weeks -- too much supply. The market simply cannot handle the deluge of IPOs, SPACs, secondary offerings and direct listings. Every new issue hammers the market a little more.
Fourth, Cramer said investors simply do not understand what they own and ignorance of your own portfolio is always a bad sign.
The only way to deal with the oversupply is to see a wave of mergers or sadly, a wave of bankruptcies, as we saw in the dot-com bust. Until then, Cramer said we must simply let the cycle play out until investors finally give up and stop buying these increasingly risky investments of lower and lower-quality merchandise.
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Executive Decision: Carvana
For his first "Executive Decision" segment, Cramer spoke with Ernie Garcia, chairman and CEO of Carvana (CVNA) - Get Carvana Co. Class A Report, the used car retailer with shares down 20% over the past month.
Garcia said many consumers are familiar with Carvana's innovative car vending machines, but they are far less familiar with the other side of the company's business, which is buying used cars. He said Carvana is very active in buying and refurbishing cars for resale. On average, the company invests $1,000 in every car they buy for resale.
When asked whether the semiconductor shortage for new cars affects used car sales, Garcia explained that there are different dynamics at play in the used car market that are not applicable with new cars. That said, he noted that Carvana is more supply constrained than they'd like to be. The company plans to build 10 new inspection centers by the end of 2022, each with the capacity to provide thousands of great cars for sale.
Caravan will be poised to take a much bigger share of the 40 million used cars that are sold every year in the U.S.
Executive Decision: Macy's
For his second "Executive Decision" segment, Cramer also spoke with Jeff Gennette, chairman and CEO of Macy's (M) - Get Macy's, Inc. Report, the retailer with shares up 47% for the year as our economy prepares to reopen.
Gennette said that Macy's continues to execute on its strategy of becoming a digitally-led, omnichannel retailer. The company added seven million new customers last year and four million of those came from digital, he said. The new Macy's customer is younger and more diverse.
Digital sales totaled $6 billion in 2020 and is growing at 25%, Gennette added. Macy's also held onto its market share in several key categories throughout the pandemic.
The key to Macy's digital success has been its stores, Gennette noted. Nearly 25% of their digital orders route through their stores. As stimulus checks start hitting bank accounts, Macy's is seeing demand rise in categories like luggage, swimwear and prom dresses.
Macy's continues to shed underperforming stores in lower-quality malls, but Gennette said that stores are a critical component to the brand and they have begun experimenting with off-mall concept stores as well.
Executive Decision: Vista Outdoor
For his final "Executive Decision" segment, Cramer checked in Chris Metz, CEO of Vista Outdoor (VSTO) - Get Vista Outdoor Inc. Report, the shooting sports and outdoor products maker with shares up 277% over the past year.
Metz said Vista is seeing strong demand across all of its business, with 35% growth even during the pandemic.
When asked where the increased demand is coming from, Metz noted that as people were forced to stay indoors, the desire to get outdoors and become self-sufficient grew, which led to strong growth in hunting and shooting sports.
Shares of Vista still trade for just six to seven times earnings, but Metz said the markets should soon realize the value the company provides. He said they are smart acquirers and integrators of brands and all of their recent acquisitions are at all-time highs.
The Great Guessing Game
In his "No Huddle Offense" segment, Cramer said that now that the world is slowly getting vaccinated, the great guessing game has begun. What will happen once everyone is vaccinated? Will they keep working from home? Will they travel and eat at restaurants? Will that brand new Peloton (PTON) - Get Peloton Interactive Inc. Report start collecting dust?
Cramer said there's only two things we know for sure. First, consumers will continue to invest in their homes. That means strong sales for Home Depot (HD) - Get Home Depot Inc. (The) Report and Lowe's (LOW) - Get Lowe's Companies Inc. Report, along with high-end retailers like Williams-Sonoma (WSM) - Get Williams-Sonoma Inc. (DE) Report and RH (RH) - Get RH Report and Cramer's favorite gardening destination, Tractor Supply (TSCO) - Get Tractor Supply Company Report.
The second thing we know for sure? Autos are in demand. That's good news for the likes of AutoNation (AN) - Get AutoNation Inc. Report, Carmax (KMX) - Get CarMax Inc Report, Lithia Motors (LAD) - Get Lithia Motors Inc. Report and Carvana.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Tuesday evening:
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At the time of publication, Cramer's Action Alerts PLUS had no position in the stocks mentioned.