'V' for Victory?: Cramer's 'Mad Money' Recap (Monday 5/26/20)

Jim Cramer looks at the rally and asks, will this turn out to be a V-shaped recession and recovery after all?
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You have to marvel at the strength we're seeing in some of the most beaten-down industries, Jim Cramer told his Mad Money viewers Tuesday. Everything from housing and airlines to cruise lines and the REITs were on the move higher, Cramer said, as investors bet big on a quick V-shaped recovery.

Tuesday, we saw what the stock market would look like if we had a COVID-19 vaccine and things were headed back to normal. Investors cheered the news that drugmaker Merck  (MRK) - Get Report was also working on a potential vaccine, one that might also be ready by the beginning of next year. Investors love vaccines because they're the only path to truly getting back to normal. That's why the industrials, oils and bank stocks were rallying, Cramer said. If only it were that simple.

Assuming these many vaccine candidates actually work and assuming there aren't any major second outbreaks of the coronavirus, a V-shaped recovery is possible, Cramer admitted, but before that can happen, we still need to put 38 million people back to work.

That's why Cramer continued to recommend a "barbell" portfolio that includes the best of the stay-at-home stocks, like Zoom Video Communications  (ZM) - Get Report and Amazon  (AMZN) - Get Report, but also stocks that will rally on a strong recovery. He continued to recommend technology stocks and particularly the semiconductors, which will be in demand in either scenario.

Cramer and the AAP team are looking at everything from earnings and tariffs 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.

Back in Business

Now that the economy is reopening, we just need one thing, Cramer told viewers: customers. Tuesday, we saw many of the most beaten-down sectors come back to life on the promise of a quick vaccine, but that doesn't mean the 38 million people currently unemployed will go right back to work.

Like it or not, the world has changed. There will be more people staying home, more shopping from home and fewer customers in stores. Many small businesses won't survive, while only our biggest retailers will thrive. Those companies that are able to hire may be reluctant to do so any time soon.

That's why Cramer urged caution with these "don't worry, be happy," sectors. Reopening our economy doesn't mean much if there aren't any customers.

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Executive Decision: Intuit

In his "Executive Decision" segment, Cramer spoke with Sasan Goodarzi, CEO of Intuit  (INTU) - Get Report, the tax preparer and financial services company with shares that are up 7.7% for the year.

Goodarzi said the pandemic has caused a massive shift to the virtual world. People are getting comfortable working from home, going to school from home, exercising from home and, yes, paying their taxes from home. Goodarzi estimated we've accelerated the shift to virtual by at least five years.

But taxes are only a part of Intuit's business. The rest is helping small businesses, typically with one to five employees, with accounting and payroll. Goodarzi said they've been helping customers secure loans and stay afloat in record numbers over the past few weeks. He was also excited for their acquisition of Credit Karma, which will help match customers with financial products that can help them save money and get out of debt quicker.

When asked about their bricks-and-mortar competition, Goodarzi reiterated that while younger customers were already comfortable getting financial services online, older ones are a lot more comfortable now that they've been forced to try the alternatives.

Executive Decision: Corteva

For his second "Executive Decision" segment, Cramer also spoke with Jim Collins, CEO of Corteva Agriscience  (CTVA) - Get Report, the agriculture company with shares off 13% for the year after the company suspended forward-looking guidance amid pandemic uncertainty and flooding in the Midwest.

Collins said Corteva has a very strong market share in the seed business, supplying the majority of the seeds for corn and soy in North America. They also have a strong and growing business in crop protection, with insecticides and other products to protect fruits and vegetables.

Corteva also has a big international business, which has been affected by currency swings, especially in Brazil. Collins said it's still too early to tell how those markets will affect their business. Adding to the uncertainty has been flooding in the Midwest, which Collins said isn't likely to have a major effect on their bottom line now that the floodwaters have crested. He was hopeful for a quick recovery in transportation, which will lead to a pickup in ethanol use.

Adjusting the COVID-19 Index

It's been a month since the debut of Cramer's COVID-19 Index, a collection of 100 stocks in 19 sectors that was designed to represent the best stocks for a pandemic. But after a strong start, the index lost some of its mojo, rising only 8.5% compared to 9.7% for the Nasdaq during the same time period. That means it's time for some adjustments.

Cramer said most of his COVID-19 Index performed as expected, with the financials soaring 22%, with the cloud and technology names not far behind. However his "retail survivor" picks rose just 1.5%, while healthcare was flat and his consumer packaged goods and REIT stocks fell.

To ensure his index doesn't get left behind by the tech-heavy Nasdaq, Cramer removed 10 of the worst-performing stocks, including Becton Dickinson  (BDX) - Get Report, Kimberly-Clark  (KMB) - Get Report, Roku  (ROKU) - Get Report and Snap  (SNAP) - Get Report. His replacement names included Datadog  (DDOG) - Get Report, Splunk  (SPLK) - Get Report, Wix  (WIX) - Get Report, Target  (TGT) - Get Report and Palo Alto Networks  (PANW) - Get Report.

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 Tuesday evening:

Newell Brands  (NWL) - Get Report: "You're bottom fishing. I like quality and they don't have a good balance sheet."

Caesars Entertainment  (CZR) - Get Report: "I like Penn National Gaming  (PENN) - Get Report."

Schrodinger SDGR: "This is a very smart company but it's speculative."

Norton Lifelock  (NLOK) - Get Report: "I think this is an undervalued stock and I like it very much."

Canopy Growth  (CGC) - Get Report: "This is the most legit of all of the cannabis stocks."

Beyond Meat  (BYND) - Get Report: "This stock just doubled, but yes, I do like it. I believe in it long-term."

Pure Storage  (PSTG) - Get Report: "This one was down big but came all the way back."

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