When push comes to shove, most people expect things to go right, Jim Cramer told his Mad Money viewers Tuesday. The bears never seem to learn that, even though the Dow Jones Industrial Average has gone from 1,000 to 35,000 over the past 30 years.
Make no mistake, there are many things to worry about in today’s market. Between the war in Ukraine, rampant inflation, a Federal Reserve that’s woefully behind the curve, and supply chain problems as far as the eye can see, stocks should be lower. That is, unless you have hope for a better tomorrow.
Last week, investors applauded the Fed’s rate hike, and this week they cheered when Fed Chair Jay Powell told us he would be firm yet flexible when it came to eradicating inflation. Why? Because they think the Fed is finally at work and inflation will soon be under control.
Sure, in an ideal world, stocks should be judged on their own performance, Cramer conceded. But for now, we need to bow to the forces of inflation and look at it all through the lens of the Fed and through the situation in Ukraine.
Investors have finally reconciled that our economy is strong enough to weather both events, Cramer concluded, allowing us to dive into the close.
A growing problem
As Russia’s war in Ukraine rages on and talk of global food shortages mounts, crop prices continue to soar. That’s why it’s time to return to agricultural stocks to see what’s worth investing in and what’s not.
Cramer said he would buy stocks like Archer-Daniels-Midland (ADM) – Retrieve the Archer Daniels Midland Company Reportwhich is trading at just 17 times earnings but would wait for a pullback on Corteva (CTVA) – Get the Corteva Inc report, which is already up 20% for the year. In the agricultural equipment sector, Cramer liked Deere & Co. (EN) – Get the Deere & Company Reportwhich trades at 19 times earnings, and also Agco (AGCO) – Get the AGCO Corporation Reportwhich is cheaper at just 12 times earnings with a variable dividend.
Investors should also consider Tractor Supply (TSCO) – Get the report of the Tractor Supply Company, the agriculture-focused retailer serving much of rural America. Tractor Supply trades at 24 times earnings, but gave shareholders just a 77% dividend boost.
Finally, Cramer advised staying away from fertilizer companies like CF Industries (CF) – Get the report of CF Industries Holdings, Incmosaic (MOS) – Get Mosaic company report and Nutrient NTR, all of which are already in full swing and risk supply disruptions as the country of Belarus is a major potash supplier.
Wall Street doesn’t understand sports
It may come as a shock, but Wall Street just doesn’t understand esports. That’s why investors were willing to dump Nike (NKE) – Get Class B Report from NIKE, Inc before the company reported solid earnings of 87 cents a share that quickly sent the stock up 2.3%.
Nike shares are poised to run, according to Cramer, because the company gives you so many ways to make money. Nike is a mission-driven company dedicated to making you the best athlete you can be. Nike has a split for all of its competitors, something Wall Street never gave it credit for. Nike has innovations and technologies that the competition just can’t match.
Nike focuses on its customers, not retailers. Nike doesn’t need chains like Foot Locker FL to sell shoes, they are developing entirely new direct-to-consumer apps that bypass the store entirely.
Finally, Cramer said Nike stays relevant and cool, something that’s hard to achieve in the fashion-centric footwear world where fads come and go like the days of the week.
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Executive Decision: Bausch Health
In his Executive Decision segment, Cramer spoke to Joe Papa, Chairman and CEO of Bausch Health (BHC) – Get the Bausch Health Companies Inc. reportwhich wants to split into three companies but hasn’t pulled the trigger yet.
Papa said the split is still happening, but they’re balancing the need to act quickly with a desire to maximize value for shareholders, which is harder to gauge in volatile markets. They’re not looking for perfect market conditions, he said, but they’re looking for “ideal” conditions before making the transaction.
In the meantime, however, according to Papa, Bausch is making a lot of money, paying off the pending debts. He was confident that all three of their new companies will create a lot of value for shareholders.
When asked about the increase in myopia among children, Dad said Bausch has been researching the trend, which he says is being caused by more screen time and less time outdoors. He said Bausch is of course tackling the problem with industry-leading contact lenses, but is also looking for new drugs that could slow the progression of myopia in children.
As for Bausch’s aesthetics business, Papa said things continue to be strong as our new “Zoom culture” pushes everyone to look their best in front of the camera.
In the Lightning Round, Cramer expressed optimism about CVS Health (curriculum vitae) – Get the CVS Health Corporation reportcameco (CCJ) – Get the Cameco Corporation reportThor Industries (THO) – Get the report from Thor Industries, IncHuntington Bank Stocks (HBAN) – Get the Huntington Bancshares Incorporated report and Micron technology (mu) – Get report from Micron Technology, Inc.
Cramer was pessimistic about Cano Health (CANO) and samsara (Internet of Things) .
Outside normal readings
In the “Off The Charts” segment, Cramer spoke to colleague Carley Garner about grain prices as wheat and corn prices soar and talk of widespread famine grows. Russia and Ukraine account for nearly a third of world wheat production, now threatened by war and sanctions. Even if Ukrainian frames could reap their crops, they have no way of putting them on the market.
Garner noted that the monthly chart of wheat shows it trading sideways in a range between $3 and $6 until something goes wrong. After the invasion, wheat prices shot up to levels not seen since 2008, but this may be due to market mechanisms and not actual demand.
Garner noted that commodities like wheat now have trading limits and wheat has been “limited” for six days, which has prevented short sellers from exiting and discouraged institutional investors from getting in.
Regarding corn, Garner noted that demand for corn has also surged and the commodity could retest an all-time high of $10.50.
Neither is good news, Cramer said, but unfortunately this is our new reality that we may have to get used to as the war drags on.
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