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Who Needs Stimulus?: Cramer's 'Mad Money' Recap (Thursday 10/1/20)

Jim Cramer says America might need a stimulus bill, but the stock market definitely doesn't.

Investors are completely focused on the stimulus talks coming out of Washington, TheStreet’s Jim Cramer told his Mad Money viewers on Thursday. They are hanging on every word, but does it even matter?

The stock market continues to grind higher with or without a stimulus plan from Congress. Even though small- and medium-size businesses are hurting, big business is booming and that’s all the market seems to care about. 

Market participants clearly have a healthy dose of risk appetite and are willing to bet that the areas of the market with strong growth will offset the weaker industries that are under pressure. 

Just look at the tepid rally out of PepsiCo  (PEP) - Get Free Report, despite the company reporting a quarter that was a “thing of beauty,” Cramer said. 

Despite solid earnings results on the day, ConAgra Brands  (CAG) - Get Free Report barely finished in positive territory and Constellation Brands  (STZ) - Get Free Report ended lower Wednesday.

Simply put, there’s no love for the recession-proof stocks, which is Wall Street’s way of saying there’s no recession on the way. In fact it’s just the opposite. We’re seeing strength in stocks like Gap  (GPS) - Get Free Report, Under Armour  (UAA) - Get Free Report, Nordstrom  (JWN) - Get Free Report and Kohl’s  (KSS) - Get Free Report. For these companies to do well, the consumer has to do well, Cramer said. 

America might need a stimulus bill, but the stock market clearly doesn’t. 

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Executive Decision: ConAgra Brands

On the show’s first “Executive Decision” segment, Cramer spoke with Sean Connolly, president and CEO of ConAgra Brands. 

The company reported an “excellent” quarter, Cramer said, highlighting better-than-expected earnings, revenue and organic growth. Margins grew and the company bumped its dividends by 29%. 

The dividend increase is “a sign of the confidence we have in the business,” Connolly said. This should not be a one- or two-quarter phenomenon. 

Consumers and remote workers are spending more time at home, and a result, they are investing in their home. That includes workout equipment and kitchen upgrades, among other things. Now they want to see a return on that investment and eating at home is one way to achieve it. 

Plus, eating home-cooked meals are a lot cheaper than going out, he added. Put it all together and it's a good situation for the company. 

ConAgra is finally seeing years of work pay off, with strong penetration rates and repeat business now driving the results, Connolly explained. It starts with great products and excellent package design. Then distributing those products in a reliable, efficient manner and building that brand loyalty with the customer. 

If customers give ConAgra’s food a try, there’s a good chance they will turn into repeat business, he said. 

Executive Decision: Bed Bath & Beyond

On the show’s second “Executive Decision” segment, Cramer spoke with Mark Tritton, president and CEO of Bed Bath & Beyond  (BBBY) - Get Free Report

The company’s turnaround is on fire, with shares rising more than 25% on Thursday following the retailer’s top- and bottom-line beat. The short interest is around 60% in this stock, Cramer said, adding that it may not be done rallying. 

The quarter showed what a strong team and category Bed Bath & Beyond is operating in, Tritton said, and the retailer isn't done. On Oct. 28, management will explain the company’s three-year growth plan during its Investor Day.

Bed Bath & Beyond had a solid digital business, but it wasn’t easy and convenient for the customer, explained Tritton, who took the helm in November 2019. 

Some 80% of the company’s customers pre-shop for products online, then either order them or go to the store. It added 6 million new customers that are, on average, six years younger. In other words, Bed Bath & Beyond needed to excel online, he said.

The company is doubling down on that front, adding curbside pickup and same-day delivery. These were pre-coronavirus plans, but they are absolutely essential during the pandemic. Back to college efforts and the Buy Buy Baby initiative also are driving solid results. 

There’s a lot of runway left in this business, Tritton said, particularly as the company generated strong free cash flow in the quarter and swung to a net-cash rather than a net-debt position. 

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.

Executive Decision: Constellation Brands

On the show’s next “Executive Decision” segment, Cramer spoke with Bill Newlands, president and CEO of Constellation Brands. 

The company reported a “terrific quarter” but the stock went down, Cramer said, adding that there seems to be a lot of unjustified skepticism. 

Newlands was pleased with the results, too, given the challenges that the quarter brought to the company. That included reduced production out of Mexico for its Corona and Modelo brands as the pandemic hit. 

However, Modelo proved to be resilient. It has quietly become the third most-popular beer in the U.S. and the company’s high-end wine segment has done well, too. The company’s new Corona seltzer is now the No. 4 hard seltzer in the U.S. and it boasts strong growth. 

The company has momentum, even with so many bars and restaurants closed. As a result, Newlands is excited for the rest of the year. The company’s leverage ratio should allow Constellation to consider buying back stock and/or making further investments, he added. 

A somewhat recent investment has been Canopy Growth  (CGC) - Get Free Report, which continues to see momentum in its new cannabis beverage in Canada. This company has “tremendous upside,” he reasoned.

Best to Mask and Test

On the show’s No-Huddle Offense, Cramer highlighted what it will take to beat COVID-19. 

Vaccines are on the way, but they will take time to trial correctly and come to market. In the meantime, technology can help us win the fight. That is, if consumers, the government and businesses are all willing to get on the same page, which seems to be the most difficult task. 

Masks play a huge role in slowing the spread, as does testing -- whether that’s Abbott Laboratories'  (ABT) - Get Free Report $5, 15-minute test paired with the Navica App or a better but more expensive PCR test from a company like Visby, which is scheduled to be on "Mad Money" next week. 

We can get back to our regular life, or at least something close to it, with the measures of social distancing, testing and masks. But we need leadership and full participation, Cramer reiterated. 

Lightning Round

Here’s what Jim Cramer had to say about some of the stocks during the Mad Money Lightning Round: 

Roku  (ROKU) - Get Free Report: “I like the business, I’m a buyer.” 

Tapestry  (TPR) - Get Free Report: “This one is OK.” 

Xpeng XPEV: “Just own Alibaba  (BABA) - Get Free Report or  (JD) - Get Free Report instead.”

Vornado Realty  (VNO) - Get Free Report: “The REITs are not a good industry right now, although you are in a good company. That’s the problem.”

Applied Materials  (AMAT) - Get Free Report: “I like this company, even though I like Lam Research  (LRCX) - Get Free Report a little more.” 

Piedmont Lithium  (PLL) - Get Free Report: “This is a great long-term speculative position, although it’s very dangerous.”

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