Just as the Federal Reserve starts on the warpath against inflation, we’re already seeing signs that inflation is peaking, Jim Cramer told his Mad Money viewers Friday. Unfortunately, demand is also peaking for a lot of goods and services, which makes investing a lot trickier.
“Don’t fight the Fed,” remains the mantra, Cramer reminded viewers. The great pivot is upon us, even though many people are still trying to hold on to their beloved tech stocks. If the company doesn’t make real things, make real profits, and still have a cheap stock, it shouldn’t be in your portfolio.
Cramer’s game plan for the upcoming holiday-shortened week starts on Monday with any news from Ukraine, along with an eye on the 30-year Treasury bond. Any strength in bonds will hurt the Nasdaq, and any good news from Ukraine could lift the entire market.
Tuesday brings the latest consumer price index. Spoiler alert, it’s going to be bad. We’ll also hear from grocer Albertsons (ACI) – Get Albertsons Companies, Inc. Class A Report and Carmax (KMX) – Get CarMax, Inc. Report though, and both of those should be good.
Next, on Wednesday, we’ll get earnings from JP Morgan Chase (JPM) – Get JPMorgan Chase & Co. Report, Bed Bath & Beyond (BBBY) – Get Bed Bath & Beyond Inc. Report, BlackRock (BLK) – Get BlackRock, Inc. Report and Delta Air Lines (DAL) – Get Delta Air Lines, Inc. Report. Cramer was bullish on everything except the airlines, which shouldn’t be bought as rates increase.
Then on Thursday, both Bank of America (BAC) – Get Bank of America Corp Report and Goldman Sachs (GS) – Get Goldman Sachs Group, Inc. Report will report and Cramer said now is the time to own a big bank. Goldman, in particular, has never been this cheap.
Executive Decision: Constellation Brands
In his first “Executive Decision” segment, Cramer spoke with Bill Newlands, president and CEO of Constellation Brands (STZ) – Get Constellation Brands, Inc. Class A Report, the wine and spirits maker with shares up 4.6% this week on strong earnings and an accelerated stock buyback worth $500 million.
Newlands said Modelo continues to be “on fire” and is now the number two brand in dollar sales. There’s still more runway for growth, he added, as they’re still only fifth amongst draft beers.
When asked about how beer sales respond in a recession, Newlands noted that beer is an “affordable luxury” for many people and beer sales do very well in tough inflationary times.
Retailers Worth Buying
Retailers have been hit hard as of late, but not all retail is created equal. Cramer took a look at the entire retail sector and screened for companies with cheap stocks, good balance sheet, great growth and a dividend over 1%. Out of the remaining nine stocks, he found six worth buying.
Macy’s (M) – Get Macy’s Inc Report topped the list, trading at just five times earnings with a 2.7% yield. Macy’s was followed by Signet Jewelers (SIG) – Get Signet Jewelers Limited Report and Best Buy (BBY) – Get Best Buy Co., Inc. Report, both of which recently were featured on Mad Money.
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Rounding out the list was Dick’s Sporting Goods (DKS) – Get Dick’s Sporting Goods, Inc. Report, trading for a “steal” at eight times earnings, Williams-Sonoma (WSM) – Get Williams-Sonoma, Inc. Report, a long-time Cramer favorite, and Bath & Body Works (BBWI) – Get Bath & Body Works, Inc. Report, a stock Cramer said doesn’t get the credit it deserves.
Where’s Crude Headed?
What’s next for the price of crude oil? Cramer checked in with trusty colleague and oil expert Rusty Braziel, executive chairman at RBN Energy, to find out.
Braziel explained that despite what you might hear from the White House or Congress, oil production in the U.S. is increasing. Production is up 4% so far this year and is on pace to increase 8% year over year.
Why isn’t it up more? Braziel said costs are soaring, up 40% to 50% for some producers. It’s also hard to find crews to man additional rigs and it’s still hard to find truck drivers to transport oil where pipelines are not available. Add to that environment issues and investors who demand fiscal discipline and it’s easy to see why things are the way they are.
As for all of those “windfall profits” that politicians like to cite, Braziel defended his industry, saying that oil is a cyclical business. Oil producers need to make profits in the good times so they can survive in the bad times. If they sold oil at break-even prices today, they’d be out of business a year from now.
Starbucks Perks Up
In his “No Huddle Offense” segment, Cramer opined on the return of Howard Schultz as interim CEO of Starbucks (SBUX) – Get Starbucks Corporation Report. He said outgoing CEO Kevin Johnson did a lot of great things at the coffee chain, and he will be missed, but there is plenty to be happy about with the return of Schultz.
Investors weren’t happy to learn that Schultz canceled the company’s $20 billion stock buyback, but Cramer said this is likely a great move, as it will give Schultz the cash he needs to set the agenda for perhaps the next decade.
With stores beginning to unionize, it’s clear that management at Starbucks hasn’t been listening to its employees. $20 billion can blunt a lot of grievances and invest in new products and concepts to reinvigorate the workforce. These are things Schultz knows better than anyone else.
In the Lightning Round, Cramer was bullish on Portillo’s (PTLO) , Palo Alto Networks (PANW) – Get Palo Alto Networks, Inc. Report, AeroVironment (AVAV) – Get AeroVironment, Inc. Report, Mattel (MAT) – Get Mattel, Inc. Report, Federal Realty Investment Trust (FRT) – Get Federal Realty Investment Trust Report, and Realty Income (O) – Get Realty Income Corporation Report.
Cramer was bearish on Cerberus Cyber Sentinel (CISO) , Braskem (BAK) – Get Braskem SA Report, Digital World Acquisition (DWACU) – Get Digital World Acquisition Corp. Report, and Retail Opportunity Investments (ROIC) – Get Retail Opportunity Investments Corp. Report.
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