“I don’t like companies that make excuses, I like companies that make money,” Jim Cramer told his Mad Money viewers on Monday. So if you want to have a growth stock, you need to choose one that has no supply chain, semiconductor or Covid staffing woes.
It’s no secret that growth stocks have been out of style since the Federal Reserve indicated it would soon raise interest rates. The latest wave of sales began in January. 20 after Netflix (NFLX) – Get Netflix, Inc reported a miserable quarter that sent shares sharply.
But last week, investors were reminded why they liked growth stocks in the first place, after a host of valuable stocks also failed. General Electric shares (GE) – Get a General Electric Company Report3M (MMM) – Get a 3M Company ReportBoeing (BA) – Get a Boeing Company Report and Caterpillar (PUSA) – Get a Caterpillar Inc, all stopped the value-stock rally in its tracks. These companies have all sorts of reasons, from supply chains to semiconductors to staffing problems – things most growth stocks don’t have.
In Action Alerts PLUS, co-portfolio managers Bob Lang and Chris Versace look at whether Friday’s market action is the start of a clearer rebound, and whether investors should buy the decline. Engage in the conversation and listen to what they have to say to their investment club members on Action Alerts PLUS.
Same Microsoft (MSFT) – Get a Microsoft Corporation Report and Service Today (NOW) – Get a ServiceNow, Inc. Report delivered great results, as did Apple (AAPL) – Get Apple Inc. Report and Mastercard (MA) – Get a Mastercard Incorporated Class A Report. Stock growth wins were followed by Chevron (CVX) – Get a Chevron Corporation Reportanother value stock miss.
Combine all of this with the fact that the IPO and SPAC pipeline has finally stopped, and the news that Netflix CEO Reed Hastings is buying more shares as a sign of confidence, and growth looks set to return to style. That is, if the company does not have any reasons to have the value of the stocks and can make money, even in this difficult environment.
Executive Decision: Cullen/Frost
In his “Executive Decision” segment, Cramer spoke with Phil Green, chairman and CEO of Cullen/Frost Bankers (CFR) – Get a Report from Cullen/Frost Bankers, Inc.the 150-year-old Texas-based bank with shares up 12% in the past month.
Green said Cullen/Frost is in some of the best markets in the country, which is why in 2018 the company promised to double the company’s footprint within two years. After completing the initiative in 2020, Cullen/Frost then focused on tripling locations in the Dallas market, something it is in the process of completing.
When asked why it chose to grow organically, rather than just take on another bank, Green explained that when banks take over other banks, they often have no growth and need new customers. Cullen/Frost grows organically and doesn’t need customers, he said, they need more locations to serve the customers they already have. That’s how they added 27,000 new customer relationships in 2021.
Returning to the topic of inflation, Green said the biggest challenge to inflation is labor costs. The bank cannot find enough talented workers to fill the positions.
Cramer said that while most of the focus on Wall Street is around large central money banks, there are many regional banks like Cullen/Frost that are very good.
None of the Charts
TV3In the segment “Off The Charts,” Cramer checked in with commodities expert Carley Garner, who offered a contrarian perspective on where markets might be headed next. According to Garner, the effects of the Fed’s quantitative easing program will last longer than most think.
Garner first provided a monthly chart of the Goldman Sachs Commodity Index going back to 2005. He noted that after the Fed’s QE policy in 2010, commodities took an explosive step higher unfinished until 2014. That means that the Fed’s QE that began in 2020 has a few more years to run.
The pattern was also seen on the monthly chart of corn prices, which made a monstrous move from $ 3 to $ 8 on the heels of the Fed, a pattern that started again last year and should be poised to continue again this year.
Garner noted the same pattern in oil and precious metals such as silver.
In the short term, goods could be poised for a serious collapse. But once they have stabilized, Garner feels there are months of benefit to be gained.
Executive Decision: Silvergate Capital
For his second segment “Executive Decision”, Cramer also spoke with Alan Lane, president and CEO of Silvergate Capital (SI) – Get Silvergate Capital Corp. Class A Reportwhich on Monday announced the acquisition of blockchain assets from Meta Platforms (FB) – Get Meta Platforms Inc. Class A Report for $ 200 million. Silvergate shares have risen 757% since March 2020.
Lane said Silvergate was one of the first banks to accept cryptocurrencies. It soon realized that crypto was a great way for them to grow its deposit base to keep pace with loan growth.
Silvergate acquired a lot of great intellectual property in the announcement on Monday, Lane added. The engineers at Meta did a great job, he said, and allowed Silvergate to introduce its own stable coin product later this year.
There is tremendous opportunity for the use of cryptocurrencies for payments, and Silvergate plans to go ahead, he said.
Circle of Lightning
In the Lightning Round, Cramer was brave with Dover (DOV) – Get a Dover Corporation Reportand Willis Towers Watson (WTW) – Get a Report by Weight Watchers International, Inc..
Cramer has been bearish on Perficient (PRFT) – Get Perficient, Inc. Report and Norwegian Cruise Line (NCLH) – Get a Report of Norwegian Cruise Line Holdings Ltd.
Don’t Count Powell
In his No-Huddle Offense segment, Cramer had a contrarian view on Federal Reserve chair Jay Powell. He explained that many people have already given up on Powell’s ability to engineer a soft landing for our economy, but that may have been premature.
Cramer explained that Powell has learned a lot from his first tightening cycle and he is good at navigating the Covid economy so far. There is no reason to doubt his ability to gently raise charges to cool our economy.
And let’s not forget that most of the inflation we see comes from our ports, transportation, semiconductors and our supply chain. But what if ships started using a less crowded port in Oakland, Calif.? What if we paid more truckers to move goods? What if companies made long-term deals that made low-end chips more profitable? And what if Omicron subsides and more people go back to work?
The truth is, Jay Powell may not have to do much to curb inflation. All the answers we need are in front of us.
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