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The equity markets have a funny way of healing themselves, Jim Cramer told his Mad Money viewers Monday. While many bears are dismissing the rally in commodity stocks as simple short covering, Cramer said there's actually a lot more in play.
Case in point: Marathon Oil (MRO - Get Report) , a solid performer through mid-2015, when shares were trading at $41. Then, almost overnight, Marathon's fortunes turned as oil began its decline and earnings per share plummeted. That was soon followed by a decline in its stock price and, ultimately, a 76% cut in the company's dividend.
Marathon shares bottomed at $6 a share when oil hit its low of $26 a barrel. But then, on Feb. 29, when it appeared all hope was lost, the company did a 135 million share "in the hole" equity offering that was soon boosted to 165 million shares. Marathon shares now trade at $11, a 44% gain for those investors who took advantage of the deal.
Cramer said the Marathon deal was dilutive to equity, but in an instant the company put to rest fears of its demise. Devon Energy (DVN - Get Report) and countless other oil companies have done the same and saved themselves.
And it's not just oil, Cramer added. Iron ore, copper, gold and other commodities lifted from their bottoms and other commodity companies are following suit. Even Caterpillar (CAT - Get Report) has seen sizable gains as commodities have recovered.
So while some may dismiss the commodity rally, Cramer said most rallies start with short covering, then broaden into something more. This time feels no different.
Was Jamie Dimon Right?
Back on Feb. 11, Jamie Dimon, CEO of JPMorgan Chase (JPM - Get Report) made a bold move, buying 500,000 shares of his company's stock for $26.6 million. Since then JPMorgan's stock and the markets overall have only rallied, causing Cramer to ask, did Dimon's move mark the bottom?
It may be hard to recall but last month, things were looking pretty grim. The last of the leadership stocks, tech, had rolled over, and talk of systemic risk from the oil and banking sectors was back on the table. Oil hit a low of $26 a barrel and the political scene was looking pretty dicey with Bernie Saunders and Donald Trump shaking up the establishment.
Then, despite all of the chaos, which once again included fears that European banks might also be in trouble, Federal Reserve Chair Janet Yellen said more interest rate hikes could not be ruled out.
It was then that Dimon made his move, doubling down on the negativity.
Since then, things have generally been positive. The political scene is becoming clear, oil is rising slowly and the banks are affirming that they are on solid footing. Indeed, the stealth bear market that had been plaguing the markets for months may indeed have been broken, Cramer concluded. That sure is welcome news.
Don't Give Up on Costco
Cramer explained that when Costco reported a 4-cents-a-share earnings miss Thursday, shares barely budged. Why? Because the company told us that January same-store sales were weak, leading investors to presume that Costco was having the same tough quarter as pretty much every other retailer.
But Costco also gave investors a little more than just the lackluster same-store sales they were expecting. On a few key line items, the news was actually better than expected. New membership revenue rose by 3.3%, for example, and the company only has easy comparisons to look forward to going into next quarter.
Cramer said typically bad earnings only result in big declines when they're a surprise. As Costco has proven, when you prepare investors for the worst and then give them some glimmers of hope, all will be forgiven.
Off the Tape
In his "Off the Tape" segment, Cramer checked in with Josh Tetrick, CEO of the privately held plant-based food maker Hampton Creek which today added 43 new products to its existing line of cookies and mayonnaise.
Tetrick said that Hampton Creek's new muffins, cakes and dressings will be a perfect compliment to their existing products and will allow them to delve deeper into larger retailers and grocers.
He said all of Hampton's products use less water and less land than their counterparts and they also have less fat and cholesterol. ost important, Hampton's goal is to create products that taste better and are affordable.
When asked about the adoption rate for plant-based foods, Tetrick explained that it's not just younger consumers buying them but also moms and parents and the elderly. Everyone is beginning to realize the world's food preferences are changing.
Cramer was bearish on XPO Logistics (XPO - Get Report) , GW Pharmaceuticals (GWPH) , Tidewater (TDW - Get Report) , Amicus Therapeutics (FOLD - Get Report) , Starwood Property Trust (STWD - Get Report) and Main Street Capital (MAIN - Get Report) .
No Huddle Offense
In his "No Huddle Offense" segment, Cramer opined on the shakeout among the restaurants stocks, where a handful of names is starting to pull away from the pack.
Cramer said McDonald's (MCD - Get Report) is clearly benefitting from its turnaround efforts, including serving breakfast all day. Meanwhile, Domino's Pizza (DPZ - Get Report) is just winning and leaving mom and pop pizza shops in the dust.
Few thought Chipotle Mexican Grill (CMG - Get Report) could rally so fast after its E. coli scare, but the company's long-term strategy remains intact. Then there's Panera Bread (PNRA) , which is seeing the windfalls from its renovation efforts, while Yum! Brands (YUM - Get Report) is splitting itself into two.
Cramer said all of these stocks are worth owning on any weakness.
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