Strap yourself in and prepare for a hectic week of trading, Jim Cramer told his Mad Money viewers Friday. With only a week to go before the election and a gauntlet of earnings reports to navigate, Cramer told viewers they need to proceed with caution in what will likely be a volatile week for stocks.
Cramer's game plan starts on Monday with earnings from elevator maker Otis OTIS, along with NXP Semiconductor (NXPI) - Get Report and Twilio (TWLO) - Get Report. Cramer said Otis and is rising on hopes of a Biden victory in November. NXP should provide a good read on the state of the auto market, while Twilio has run a lot going into the quarter.
The highlights on Tuesday include Pfizer (PFE) - Get Report and Merck (MRK) - Get Report, along with Caterpillar (CAT) - Get Report, Microsoft (MSFT) - Get Report and Stanley Black & Decker (SWK) - Get Report. Cramer was anxious to hear an update on Pfizer's COVID vaccine, but he was most excited about therapeutics from Merck. He felt Caterpillar had run too much ahead of earnings, but was bullish on Microsoft and Black & Decker.
The earnings continue on Wednesday with Boeing (BA) - Get Report, General Electric (GE) - Get Report, Etsy (ETSY) - Get Report and Pinterest (PINS) - Get Report. Cramer was bullish on Boeing, Etsy and Pinterest, but not yet with GE.
Most of the FAANG stocks, sans Netflix (NFLX) - Get Report, reports on Thursday. Cramer was expecting good things from Amazon (AMZN) - Get Report, Apple (AAPL) - Get Report and Facebook (FB) - Get Report, but also expected Alphabet (GOOGL) - Get Report to disappoint. Starbucks (SBUX) - Get Report should see strength, he said, as China improves.
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Banking on a Stimulus Package
Cramer said the market is betting on a stimulus package from Washington, but that doesn't mean investors should run out and buy the cyclical stocks. We aren't likely to see any form of infrastructure bill, for example. But there is one sector that could rally from additional stimulus, Cramer said, and that's the banks.
With stimulus comes a rise in interest rates, Cramer explained, and that's welcomed news for all of the banks. Morgan Stanley (MS) - Get Report and Goldman Sachs (GS) - Get Report remain his favorites.
Executive Decision: Mattel
In his first "Executive Decision" segment, Cramer spoke with Ynon Kreiz, chairman and CEO of toymaker Mattel (MAT) - Get Report, which just delivered a monster earnings beat that sent shares up 10% by the close.
Kreiz explained that Mattel's strategy has been working and his company sees strong demand going into the holiday quarter. The toy category overall continues to grow and retailers of all types are making toys and games a strategic category for attracting customers.
Among Mattel's many brands, Kreiz highlighted Barbie as a continued bright spot, with sales up 30% and demand up 50%. He said Barbie remains culturally relevant and they continue to innovate with new products. He also singled out the card game Uno, which continues to be the No. 1 product in the games and puzzles category. Uno is the perfect game for when you're stuck at home with family, he said.
While Mattel still sees supply constraints as a result of the pandemic, Kreiz noted that the company is working to ensure there will be plenty of inventory for the holidays.
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Since the pandemic began, the stay-at-home stocks have been on fire. That's why Cramer created his COVID-19 index of 100 stocks back on April 24. Now, six months later, the COVID-19 index is up 45%, trouncing the Nasdaq, which is up 34%, and the Dow Jones Industrial Average, which has risen less than 20%.
The top 10 performers in Cramer's index included a number of familiar cloud names, including Cloudflare (NET) - Get Report, Fastly (FSLY) - Get Report and Trade Desk (TTD) - Get Report, DataDog (DDOG) - Get Report and Twilio, along with payment processor Square (SQ) - Get Report and, of course, Zoom Video Communications (ZM) - Get Report.
Also making the top 10 was Boston Beer (SAM) - Get Report, thanks to strong demand for spiked seltzer, and Livongo Health (LVGO) - Get Report, which is leaving the index as it merges with Teladoc (TDOC) - Get Report, which is already in the index. As a replacement, Cramer said he's adding Sempra Energy (SRE) - Get Report, which has a 3% yield.
Topping the index however, was connected fitness machine maker Peloton (PTON) - Get Report, which has risen 280%, even after a recent downgrade. Cramer cautioned that while he still likes Peloton, investors shouldn't be greedy and should take some profits.
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Off the Tape: Boll and Branch
In his "Off The Tape" segment, Cramer sat down with Scott Tannen, CEO of the privately-held Boll & Branch, makers of high-end sheets and linens, which have become an integral part of the stay-at-home bull market.
Tannen explained that Boll & Branch began as an experiment to make it easier to buy really good sheets. They quickly learned that by doing it right, they were able to become Fair Trade Certified, which in turn had some economic advantages. Their company is built on treating employees and customers right and they've been able to grow quickly as a result.
When asked why their sheets are so much better than everyone else's, Tannen explained that better cotton makes better sheets and once people sleep on organic cotton sheets, they don't go back.
Finally, Tannen commented on their retail strategy. He said in hindsight, opening stores just before a pandemic was not ideal, but their stores have been successful because they make their employees and customers feel safe and they continue to provide great products and great service.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Friday evening:
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At the time of publication, Cramer's Action Alerts PLUS had a position in MSFT, BA, AMZN, AAPL, FB, GOOGL, SBUX, GS.