Today, we moved a little further ahead in the Covid-19 saga, Jim Cramer told his Mad Money viewers Tuesday. But we still don't know whether the outbreak in the U.S. will be contained, as it appears to have been in South Korea, or create severe disruption, as it has in Italy. Until we know exactly what we're dealing with, there are still only a handful of stocks that are safe to consider buying.
Cramer said the violent swings in the market are a sign of sickness. It means there are too few people trading and most of those people are running scared. But it also means that if you remain calm and patient, you can buy high-quality stocks at great prices and buy even more as they head lower.
What stocks should investors be considering? In a public health crisis, people want to stay healthy, and that means staying away from public areas. That's bad news for travel, airlines, cruises, hotels, restaurants and retail, Cramer said. The ongoing oil wars make most of the energy and banking sectors un-investable as well.
But Cramer said investors can still buy big pharma names, like AbbVie (ABBV) - Get Report, along with high-yielding utilities like American Electric Power (AEP) - Get Report and Dominion Energy (D) - Get Report. He also added high-growth tech names to the buy list, including Adobe (ADBE) - Get Report, ServiceNow (NOW) - Get Report and Amazon (AMZN) - Get Report.
Join Jim Cramer's special Action Alerts PLUS members-only call Thursday to prepare your investment strategy during the stock market and economic fallout from the coronavirus and energy sector.
Start With the Balance Sheet
When times are good, things like a stock's price-to-earnings multiple is what matters. But when things are tough, you must always start with the balance sheet, Cramer told viewers. It doesn't matter if a stock is cheap. If the company can't support its dividend or can't make payroll, nothing else matters.
The cruise lines have been especially hard-hit by this coronavirus outbreak. Companies like Norwegian Cruise Line Holdings (NCLH) - Get Report has $6.8 billion in debt on its balance sheet, a figure that required the company to secure a new $675 million credit line Tuesday. That, along with the company's existing $875 million credit line will help it navigate a world where our government just told some people to stop taking cruises until the virus is contained.
The airlines are another at-risk sector. With business travel quickly being replaced by video conferencing from companies like Zoom Video Communications (ZM) - Get Report, the airlines could easily run out of cash if the pandemic lasts for too long. Finally there are the oil stocks, many of which are too leveraged to survive a pandemic and a price war between Saudi Arabia and Russia.
Cramer said all three of these sectors need to catch a break and see a quick resolution to the coronavirus to survive -- and that's why they should be avoided.
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Dow Components to Consider
Continuing with his look at the 30 stocks that make up the Dow Jones Industrial Average, Cramer examined the middle of the index to see which names are investable in the event of a coronavirus-sparked recession.
Cramer was bullish on Goldman Sachs Group (GS) - Get Report, which trades at less than seven times earnings. He also liked Home Depot (HD) - Get Report ahead of the lucrative gardening season. When it came to Intel (INTC) - Get Report, Cramer preferred Nvidia (NVDA) - Get Report and Advanced Micro Devices (AMD) - Get Report. He was bullish on IBM (IBM) - Get Report as a long-term holding.
When it came to the drug stocks of Johnson & Johnson (JNJ) - Get Report and Merck (MRK) - Get Report, Cramer said J&J was his favorite. He was bullish on JPMorgan Chase (JPM) - Get Report, with its 6.6% dividend, as well as Microsoft (MSFT) - Get Report.
Executive Decision: DexCom
Sayer said that DexCom designs its products to be less expensive with more volume, so as it grows its market, gross margins will only improve. He said that prices for its glucose monitors are holding firm because it offers features that no other provider can match.
Sayer showed off their new G6 Pro device, which combines both a sensor and transmitter in a single box. He said this is DexCom's first device that's available for not just diabetics but also those who are pre-diabetic and those who just want to monitor their overall health and fitness. He said a DexCom G6 Pro is the best way to find out how your diet is affecting your health.
While DexCom has ushered in a revolution in diabetes patient information, Sayer explained that by adding pre-diabetics and others into its system, it will have even more data to help people live healthier lives.
Off the Charts: Oil and Natural Gas
In his "Off The Charts" segment, Cramer checked in with Carley Garner for a technical read on what's going on with oil and natural gas, given this week's unprecedented volatility. Garner has been a commodities broker since 2004 and while she thought she had seen it all, she said nothing prepared her for this week's trading.
Looking at a seasonal chart for crude oil and natural gas, Garner noted that these commodities typically bottom at this time every year. Natural gas looks as if it may have bottomed, but oil still likely has a little more to go.
Garner then looked at the commitment of traders report, or COT report, noting that in natural gas, traders hold the largest short position ever. Once those shorts decide to cash in, natural gas prices will rise. In the oil market, the COT report hasn't yet reflected this week's action, but will likely show many of the sellers have already exited, which would be bullish for oil as well.
Cramer cautioned that what is good for oil prices may not be good for oil stocks, so investors still must be cautious.
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 a position in ABBV, AMZN, GS, HD, NVDA, JNJ, JPM, MSFT.