The markets often get it wrong, especially during earnings season, Jim Cramer told his Mad Money viewers on Tuesday. But the good news is, it's easy to figure out what's working. Just look for what sold off last time, but managed to bounce right back.
Case in point: Chipotle Mexican Grill (CMG) - Get Report, which saw its shares plunge last week after investors didn't like the burrito chain's earnings. But now, merely a week later, the stock has recovered all of its losses and is now trading at new all-time highs.
A similar pattern can be seen with Constellation Brands (STZ) - Get Report. Investors shunned the stock in 2020, believing Constellation was merely a restaurant play that couldn't survive with shuttered restaurants. But Constellation re-emerged as a stay-at-home stock with sales that were better than ever.
Then there are the REITs, like Simon Property Group (SPG) - Get Report. Many investors assumed retail was dead when the pandemic struck. But Cramer said Simon is best-run REIT out there, with all of the best locations. Shares of Simon have doubled since their March 2020 lows. Federal Realty Trust (FRT) - Get Report is another of Cramer's favorite REITs for similar reasons.
So the next time you see mispriced stocks, don't assume the market knows what it's doing. Often, investors are simply following the herd and haven't even listened to the company's conference call.
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Executive Decision: Chegg
In his first "Executive Decision" segment of the night, Cramer spoke with Dan Rosensweig, president and CEO of Chegg (CHGG) - Get Report, the student services company with shares up 139% over the past year. Chegg currently serves 6.6 million students around the globe.
Rosensweig said students who use Chegg's services are more likely to graduate and are more employable than those that don't. That's why they remain committed to keeping their services affordable to everyone. Chegg hasn't raised their prices in over 10 years.
Chegg is not just an U.S. phenomenon either. Rosensweig noted that Chegg was able to add over one million subscribers outside of the U.S. and they see strong growth in over 180 countries.
When asked how the pandemic has changed their trajectory, Rosensweig said that they've always known that online education was the wave of the future, but COVID has dramatically accelerated that timeline. Every part of education is now being reimagined.
Rosensweig was most excited about their opportunities to re-skill adults for jobs in our new economy. He said many people don't want to put themselves in debt and spend four to six years getting a degree. But with Chegg, they can learn practical skills in just four to six months and be ready for the workplace.
Executive Decision: Take-Two Interactive
Zelnick said Take-Two's strength is in their franchises. The company has 11 franchises with releases that have topped five million copies, he said, and 67 franchises that have topped two million copies in a single release. Take Two currently has 92 titles in development across all of its brands.
When asked about acquisitions, Zelnick said most acquisitions fail, which is why they've only done a limited number of deals and remain very disciplined in their growth.
Turning to the elephant in the room -- the pandemic -- Zelnick said that all entertainment options have benefitted from people spending more time at home. From streaming services to linear TV to interactive gaming, everyone is doing well. The market is big enough for everyone, he said, "we don't need to eat everyone's lunch in order to be successful."
Executive Decision: Bill.com
For his final "Executive Decision" segment, Cramer checked back in Rene Lacerte, founder and CEO of Bill.com (BILL) - Get Report, the cloud software company which just posted strong earnings that included top- and bottom-line estimate beats.
Lacerte said that every small business has a shoebox of bills and receipts and with Bill.com, those businesses can finally go digital. There are over six million small businesses in America and Bill.com has just 109,000 of them, he said, which leaves a lot of room for growth.
Bill.com got its start in 2006, Lacerte continued, and has been slowly automating more and more back office functions for business owners. The company partners with over 5,000 accounting firms and all three of the top banks in the U.S., making paying bills and suppliers a snap.
While the pandemic has been a rough time for many businesses, Lacerte said it's also proven the power and time savings of going digital and simplifying the lives of so many business owners.
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Why Tech Stocks Still Rally
In his No-Huddle Offense segment, Cramer said our new economy is all about man vs. machine, and the machines are winning.
Throughout this pandemic, it's been the service sector that's been hardest hit, Cramer explained, but technology has been taking over as industry after industry rethinks how it does business. From insurance to car dealers to meetings and medicine, many areas of our economy are simply better when done online.
That's why the tech stocks continue to rally. You just can't beat the machines.
Here's what 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.