It's true, autos and retail remain very weak, Jim Cramer told his Mad Money viewers Wednesday. But fortunately, there are 10 other sectors that are not only red hot, they're able to lift the entire market higher.
The weakness in the auto sector continued today, with O'Reilly Auto Parts (ORLY) plunging 19% on a 1.7% rise in same store sales when the markets were looking for 3.5%. That was enough to send all the auto parts retailers lower, including Advance Auto Parts (AAP) , down 11.1%, and AutoZone (AZO) off 9.6%.
But Cramer said he's looking toward the sectors that are working, like travel, where the experiential economy continues to soar higher. Healthcare also continues to outperform, despite the wrangling in Washington. Cramer was also bullish on the capital goods makers, whose ill-timed expansion into emerging markets is finally bearing fruit. Likewise with the oil and gas derivatives, like chemicals, that are taking full advantage of cheap feed stock.
Looking for still more bull markets? Cramer called out the defense and housing sectors as two more obvious choices, along with e-commerce, where Amazon (AMZN) reigns supreme, along with all of the data center companies and accompanying REITs. Finally, there are the banks, which are being helped along by the Federal Reserve.
Cramer said all an investor needs to do is consult the 52-week high list to see all of these sectors in action.
Are the tech tech stocks overvalued? Many pundits and hedge fund managers would have you think so. But Cramer said these stocks have a lot more upside than you'd imagine and he's got a list of the top 10 tech performers in the S&P 500 to prove it.
Tops on the list was Activision Blizzard (ATVI) , with a 59% gain for 2017. Its rival, Electronic Arts (EA) is also on the list with a 34% gain. Cramer said gaming is exploding thanks to ever-more-powerful graphics chips, made by Nvidia (NVDA) , and the rise of eSports. All of these companies, along with Take-Two Interactive (TTWO) , which is not in the S&P, have accelerating revenue growth.
Next on the list was Adobe Systems (ADBE) , up 37% year to date. Cramer said this cloud software provider also has accelerating growth and continues to lure creative professionals from rival offerings.
Fourth is Red Hat (RHT) , the open source software provider that's also embracing the cloud, sending its shares up 36% for the year.
Rounding out Cramer's top five was Autodesk (ADSK) , the computer aided design software provider who's only competition is pirated copies of itself. Given the company's fast-growing market and its transition to a cloud offering that is not pirate-able, Cramer said Autodesk deserves its multiple of 39 times earnings.
Next on Cramer's tech list, at No. 6, was Micron Technology (MU) , a company that is displaying top-like behavior as investors have gotten too excited about it's commodity chip offerings. Cramer said he's not a buyer of Micron.
That's not the case with number seven, Paypal (PYPL) , the online payments company that has been written off by Wall Street for, well, ever. But the company's products are loved by millions, which makes it worthy of a 29 times earnings multiple.
Cramer was also a fan of number eight, the aforementioned Nvidia, which may look expensive at 40 times earnings, but only until you compare it to Intel (INTC) in 2000, which was trading north of 200 times earnings.
Rounding out the list were LAM Research (LRCX) , the semiconductor equipment maker trading at just 14 times earnings, and Broadcom (AVGO) , a stock that's often seen as a hostage to Apple (AAPL) , but is actually the big winner in the upcoming transition to 5G wireless networking.
Off The Charts
In the "Off The Charts" segment, Cramer checked in with colleague Carley Garner over the direction of oil, using the latest WTI crude prices and the commitment of traders report.
Garner noted that oil has been stuck in a range for months, and every time the commodity sees a bounce above $50, it comes crashing back into the low $40s. Making matters worse, the speculators and analysts have both been consistently wrong, betting the momentum in both directions will continue far longer than it has.
Based on historical seasonal patterns, oil is likely to see another bounce into the $50s later this month, but that move will also likely be short lived, as fall is historically weak for oil prices.
Garner noted that oil has ceilings of resistance at $49 and $51, and these ceilings will likely be too difficult to clear without a pickup in demand. But, as Cramer noted, it's not demand, but supply that's in control of oil prices and any price above $50 spurs U.S. producers to turn on the spigot and send prices right back lower.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer said there were only three things people wanted to know about while he was touring Italy last week: Apple (AAPL) , an Action Alerts PLUS holding, Tesla (TSLA) and Bitcoin.
The first was easy. Cramer said to just own Apple and don't trade it. Tesla is a battleground stock with competing points to view and Cramer said he steers clear of battlegrounds. As for Bitcoin, Cramer said he simply doesn't know enough about it, but he does know that Nvidia makes the chips needed to mine the cryptocurrency, and he'd stick with Nvidia.
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