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Upside Surprise: Cramer's 'Mad Money' Recap (Wednesday 3/31/21)

Jim Cramer says he thinks the second quarter will be kinder to the industrials and the banks and less hospitable to techs and healthcare stocks.
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Money managers don't always care about exciting, long-term stories, Jim Cramer told his Mad Money viewers Wednesday. When the economy begins to recover, all money managers care about are companies that can deliver big upside surprises.

Case in point: Wednesday's monster 17% rally in Cleveland-Cliffs  (CLF) - Get Cleveland-Cliffs Inc. Report. Normally, this producer of iron ore is as boring as they come. But in a growing economy after a pandemic, Cleveland-Cliffs was able to crush their 2020 comparisons, and that's exactly what fund managers want in their portfolios.

The bigger the earnings beat, the bigger the gains, Cramer explained. Many of these beaten-down industrials are super cheap, which make them far more attractive than the formerly high-flying tech stocks that trade on sales rather than earnings.

That's why shares of Zscaler  (ZS) - Get Zscaler Inc. Report are down 14% for the year, Snowflake  (SNOW) - Get Snowflake Inc. Class A Report is off 19% and RingCentral  (RNG) - Get RingCentral Inc. Class A Report has plunged 21%. An upside surprise today is worth a lot more than rising revenues in the future.

Cramer said investors need to evaluate how many of 2020's best performers they want to own in a changing 2021 and use counter-rallies like today to sell the ones they down want into strength. Technology and healthcare is quickly being replaced by the financials and industrials, Cramer said, and the time to pivot is now.

Cramer and the AAP team are looking at everything from earnings and politics to the Federal Reserve. Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts Plus.

Biden's Infrastructure Proposal

In a special interview, Cramer spoke with Gina Raimondo, U.S. Secretary of Commerce, for some clarity on President Joe Biden's proposed infrastructure package.

Raimondo said the infrastructure bill has just one goal in mind, to make America competitive and allow us to win on the global stage. The bill is about a lot more than just rebuilding roads and bridges, she said. It's about funding research and training and giving business what it needs to thrive for the next 100 years.

Raimondo said America can still out-compete China, but the time to act is now. We don't need tariffs, we need to fund research, build factories and train Americans to work in all-new industries.

The infrastructure bill does of course include infrastructure, including rebuilding airports and train lines, as well as fortifying water systems and electric grids and providing affordable broadband Internet for all.

When asked about paying for the package, Raimondo said the proposal is to raise the corporate tax rate from 21% to 28% -- what she said is a reasonable rate that allows companies to compete and win.

Executive Decision: nCino

In his first "Executive Decision" segment of the night, Cramer spoke with Pierre Naude, president and CEO of nCino  (NCNO) - Get nCino Inc. Report, the cloud software provider for financial institutions that just posted 47% revenue growth. Shares responded by rallying 4.1%.

Naude explained that in the software world, there are winners and then there's everyone else. nCino plans on being a winner, which is why they're not worried about spending big to establish market share in their space. Naude said they have the ability to turn on and off their cash flow as needed, but for now, they are a growth company in growth mode.

When asked what they do for customers such as First Horizon National  (FHN) - Get First Horizon Corporation Report, Naude explained that one of First Horizon's acquisitions, Iberia Bank, was already an nCino customer and helped bring their platform to all of First Horizon. nCino replaced 10 to 15 different systems with a single operations platform that handles everything from new customer onboarding to commercial lending and Treasury management.

Naude added that the pandemic hit smaller banks the hardest, but now that the economy is recovering, their pipeline for community and regional banks has never been better.

Executive Decision: Indie Semiconductor

For his second "Executive Decision" segment, Cramer also spoke with Donald McClymont, chairman and CEO of Indie Semiconductor, the automobile chipmaker which will soon be merging with Thunder Bridge Acquisition  (THBR) - Get Thunder Bridge Acquisition II Ltd Class A Report, a special purpose acquisition company, or SPAC. Indie will trade under the ticker INDI.

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McClymont explained that Indie was built slowly and carefully over the past 10 years. It takes a long time to establish yourself in the auto business, he said, and Indie has already done the hard work and has shipped 100 million parts into the market.

Now that the company has experience and reputation, there's a big backlog of products to build, which is why Indie is entering the public market to fund their expansion.

When asked why they chose a SPAC over a traditional IPO, McClymont said timing was the driving factor. The market is in need of Indie and now's the time to grow, he said.

On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.

Be Prepared

In his No-Huddle Offense segment, Cramer said the past 13 months of this pandemic have been so traumatic, that many people will be quietly preparing for the next one.

After the Great Depression, we saw many lasting changes in behavior, Cramer explained, and the same is true today. For example, the urban exodus is likely here to stay, and that's great news for the homebuilders and everyone from Zillow  (Z) - Get Zillow Group Inc. Report to Tractor Supply  (TSCO) - Get Tractor Supply Company Report.

We also learned in 2020 that to stay healthy, it helps to be healthy, which is driving the likes of Peloton  (PTON) - Get Peloton Interactive Inc. Report and others helping us to stay in shape.

Of course, there will certainly be a lot more e-commerce and food delivery after the pandemic, but Cramer said he's still a believer in Apple  (AAPL) - Get Apple Inc. Report, which continues its focus on our health with many of their products.

Lightning Round

Here's what Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Wednesday evening:

Himax Technologies  (HIMX) - Get Himax Technologies Inc. Report: "If you want semiconductors, go with Taiwan Semiconductor  (TSM) - Get Taiwan Semiconductor Manufacturing Company Ltd. Report."

Cintas  (CTAS) - Get Cintas Corporation Report: "I think this is a great stock to buy and put away."

ViacomCBS  (VIACA) - Get ViacomCBS Inc. Class A Report: "You don't need this one. I'd rather see you in Alphabet  (GOOGL) - Get Alphabet Inc. Report."

M/I Homes  (MHO) - Get M/I Homes Inc. Report: "I don't talk about this one enough. They're fantastic."

Hyliion HYLN: "I wouldn't sell it here. I think you'll get a bounce."

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