As the Dow Jones industrial average soared over 330 points on Thursday, CNBC’s Jim Cramer addressed the reasons behind the market’s wildly positive action.
“Investors decided they were willing to pay more for stocks because good, old-fashioned companies, not just autonomous-driving, bitcoin-operated, artificial-intelligence-led, machine learning [plays], keep delivering upside surprises,” the “Mad Money” host said. “In short, you have to abandon all cynicism to understand this market.”
So with buyers aplenty and prices on the rise, Cramer gave 10 reasons for why the stock market feels like it may be melting up and ignoring the fundamentals.
One of the reasons was Kroger and Costco reporting decent results in the face of Amazon’s foray into grocery, an effect that Cramer said stemmed from industries’ defenses against the e-commerce giant.
“The Rebel Alliance is successfully attacking the Death Star. Or in English, as powerful as Amazon is, it’s not big enough to destroy everything, at least not yet,” Cramer said.
Cramer hates parabolic moves, like the one he noticed in bitcoin’s rapid surge on Wednesday.
“I particularly despise parabolic rallies, the kind with a huge upward slope, when you see them in slower growing industries. There’s a word for that kind of action, and the word is ‘unsustainable,'” Cramer said. “Yet that’s exactly what’s been happening with the bank stocks in the last 72 hours, parabolic moves that seem hard to justify based on the numbers.”
The pattern worried Cramer because he knew the bank stocks — namely Citigroup, JPMorgan and Bank of America — couldn’t keep going up at this speed. It dragged everything into question: their valuations, their earnings and whether they were safe investments.
Cramer is always on the lookout for the market’s most powerful secular trends, so the rise of electric vehicles wasn’t exactly lost on him.
There’s just one problem.
“When one of these themes gets big enough, when people realize it truly represents a major secular shift, a tectonic shift, in consumer behavior like we’re now seeing with electric cars, the direct beneficiaries of that trend,” like electric automaker Tesla, “often see their stocks trade up to nosebleed levels,” the “Mad Money” host said.
That’s why, rather than herding eager investors into the “cult stock” that is Tesla, Cramer went hunting for the best ancillary plays, the hidden winners of this rapidly evolving trend.
Taking care of your pets has never been more high-tech, at least not according to Idexx Laboratories Chairman and CEO Jonathan Ayers.
Ayers’ veterinary biotechnology company has developed a new way to test dogs’ intestines that updates the “old” microscope method, the CEO said.
“We’re going to apply biotechnology to that, improve the sensitivity to whether the dog has worms, and make it much easier and faster to provide those results,” Ayers told Cramer on Thursday. “This is going to be a blockbuster point of care launch for us, and we expect to bring it to the market mid-2018.”
And in an age where people, especially young people, care about their pets more than ever, an instant solution for treating their pets is in high demand, Ayers acknowledged.
“Millennials are the pet generation. I don’t know what we taught them, but 57 percent of millennials say that pets make them happier than almost anything else, and that’s a high among the generations,” the CEO told Cramer.
In Cramer’s lightning round, he rattled off his take on some callers’ favorite stocks:
Diplomat Pharmacy Inc.: “We don’t like specialty pharma. It hurt us so much during the downturn. I’m going to have to say stay away from that, honestly.”
Cleveland-Cliffs: “You’re break-even on Cliffs? That is the greatest news in the world. You know why? Because you can sell, sell, sell. We do not like that commodity one bit.”
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Source: Investment Cnbc
Cramer Remix: Amazon may not be as powerful as it seems