On Wednesday, we hear again from the Federal Reserve, and Jim Cramer told his Mad Money viewers. If the market falls, he would be a buyer.
Cramer said Tuesday night that there are many experts who are critical of the Fed and President Jay Powell who accuses him of being too soft on inflation. But Cramer reminded viewers that most of the inflation we see is due to shortages, and shortages cannot be corrected by destroying the economy with higher interest rates.
An example is the Blowout earnings from Avis Budget Group (CAR) – Download Avis Budget Group, Inc. report, the rental car giant, which posted $ 10.74 per. share in earnings, even analysts were looking for only $ 6.52. The shares in Avis immediately doubled when short sellers were blown out of the water and forced to sell.
Avis’ results had nothing to do with interest rates and everything to do with America being out of cars and without semiconductors, we can not make more of them. It makes companies like Avis, which has lots of cars, much more valuable.
The rise in house prices and everything that goes into a home is also driven by shortages. And while it is true that rising interest rates will curb demand, it will not compensate for the millions of new homes the United States needs after decades of underpinning.
Rising food prices will also not be fixed with higher interest rates, it will be fixed by finding more hauliers to move food from warehouses to store shelves.
All of these problems can only be solved over time, Cramer concluded, and Jay Powell knows that. That’s why Cramer is so bullish and why he would be a buyer on any Fed-induced weakness tomorrow. The bears and inflation hawks will be out in force tomorrow, but as shorts by Avis and Bed Bath & Beyond (BBBY) – Download Bed Bath & Beyond Inc. report Learned today, good news can be very bad for your portfolio if you are on the wrong side of the trade.
Executive decision: DuPont
In his first “Executive Decision” segment, Cramer spoke with Ed Breen, CEO and CEO of DuPont (DD) – Download DuPont from Nemours, Inc. report, the chemical producer that saw its shares rise 9% after making strong earnings and announcing the acquisition of Rogers Corp. for $ 5.2 billion.
Breen said DuPont has been on a five-year journey to transform itself, and Tuesday’s announcement of the acquisition is the final major step in that plan. Rogers gives DuPont exposure to several fast-growing end markets, including 5G wireless, consumer electronics along with clean energy and wind turbines. The combined company will grow faster, with better gross margins and far less cyclical than before.
DuPont has a stable of good, reliable brands, Breen continued. They include Tyvek and Corian, who are critical of housing and construction, and Kevlar, who help keep our military and law enforcement safe. DuPont is also making progress in the automotive industry, a segment that is growing by 15%.
The glacier was optimistic about DuPont’s prospects as the world’s economies continue to recover. He said everything from cars to construction to manufacturing is slowly recovering.
Executive decision: Estee Lauder
For his second “Executive Decision” segment, Cramer also spoke with Fabrizio Freda, CEO of Estee Lauder (THAT) – Get Estee Lauder Companies Inc. Class A report, the beauty company, which opened lower after reporting earnings but rose 4.1% at the close.
Freda explained that Estee Lauder has several growth drivers so that the company can always deliver to shareholders, no matter what environment they are in. The shares in Estee Lauder have increased by 27% for the year.
Freda added that as consumers went back to school and began to return to work, the demand for beauty products grew as they expected. Sales in China were also strong as the growing Chinese middle class flocked to health and beauty products.
As for the company’s growing gross margin, Freda said that Estee Lauder is constantly optimizing its operations, and this was especially true during the pandemic. Along with innovation, his company was able to exceed expectations.
Freda also commented on Estee Lauder’s reverse mentoring program, which pairs managers with lower-level employees. He said the program has had great success in keeping in touch with consumers and learning about the latest trends and technologies. “We will never lose touch with consumers,” he said.
Chegg’s hard lesson
In his segment “No Huddle Offense,” Cramer uttered the horrific and surprising results of Chegg (CHGG) – Download Chegg, Inc. report, the education service company, which fell 49 per cent.
According to the company, not only are there fewer students attending college, these students are taking fewer and less rigorous courses that require less of Chegg’s textbooks and other services.
Between mental exhaustion, robust job opportunities, and the astronomical cost of higher education, it is no wonder that students press the pause button on their education. But Cramer said this trend would be a tragedy if it continues in the long run. College is not only an opportunity to learn and socialize, it is also an opportunity to challenge yourself to learn from some of the best brains out there. Skipping it would be a shame.
Here’s what Jim Cramer had to say about some of the stocks that callers offered during the Mad Money Lightning Round Tuesday night:
Flash charging (BLNK) – Get Blink Charging Co-report: “I think these are too risky to recommend.”
Mimecast (MIME) – Download Mimecast Limited Report: “This is one of the hottest stocks. Go for it!”
Heartland Express (HTLD) – Download Heartland Express, Inc. report: “I would suggest that you bring United Parcel Service (UPS) – Get United Parcel Service, Inc. Class B report. “
Water of American States (TIMER) – Get report from American States Water Company: “This is a solid breeder. I like the business and you can sleep at night by owning it.”
Bakkt Holdings BKKT: “This is a meme share, so no comment.”
Zenvia ZENV: “Why do people dislike this stock? This is an interesting company.”
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