The great American industrial renaissance has arrived, Jim Cramer announced to his Mad Money viewers on Thursday. If you want leadership in a volatile stock market, look no further than our American manufacturers.
America has long lost dominance over automobiles, surrendering to Germany, Japan and China. But then came Tesla (TSLA) – Get a Tesla Inc, which is the best manufacturer of electric vehicles in the world and dominates both Germany and China. America is once again entitled to the vehicle boast, Cramer said, and the stock’s 3.2% increase on Thursday is entirely justified.
America also led in steel, before being overtaken by Japan, Brazil, Russia, India, China and South Korea. But thanks to smart tariffs and a ton of changes, Nucor (NUE) – Get a Nucor Corporation Report has emerged as the leader in low cost in a host of steel products.
We are now leading in chemicals thanks to our abundant, cheap natural gas supplies. Dow Inc. (DOW) – Get Dow, Inc. Report climbed 2.9% Thursday to a new 52-week high. And after decades of being an importer of oil, the fracking revolution has given the US abundant oil and natural gas, making us the leading exporter of liquified natural gas and the only one that can help Europe get rid of Russia’s energy.
Even in aerospace, where Boeing (BA) – Get a Boeing Company Report constantly struggling, companies like Raytheon (RTN) – Get a Raytheon Company Report and General Electric (GE) – Get a General Electric Company Report is best in the race. You can also find American dominance in soft drinks, consumer packaged goods, agriculture and semiconductor equipment.
All of these great manufacturers deserve a place in your portfolio.
Too Early for Tech Stocks
It’s too early to invest in high-growth tech stocks, Cramer told viewers. At this point in the economic cycle, Wall Street is not willing to pay for future earnings. But that doesn’t mean we won’t be able to prepare our shopping list once the interest rate hike is over.
In times like these, we usually go back to the “Rule of 40,” which increases a company’s growth rate to its operating margin. Anything over 40 is considered an investor.
But in today’s market, the Rule of 40 is not enough. Stocks like Twilio (TWLO) – Get Twilio, Inc. Class A Report has a growth rate of 54% and operating margins of -3%, giving it a score of 51. But that hasn’t stopped the stock market from $ 412 to over $ 125 today.
Cramer’s “new” Rule of 40 still requires a 40 mark, but at least 20% revenue growth and 20% operating margin. Using this screen, he has generated just eight companies that should be added to your shopping list for when growth returns.
Same as Salesforce.com (CRM) – Get salesforce.com, inc. Report and ServiceNow (NOW) – Get a ServiceNow, Inc. Report made the list, along with smaller names like ZoomInfo ZI, Paycom (PAYC) – Get a Report by Paycom Software, Inc. and Paylocity (PCTY) – Get Paylocity Holding Corp. Report. When it comes to payroll however, Cramer said Paychex (PAYX) – Get a Paychex, Inc. Report can be bought now.
Continuing the list is Pubmatic (PUBM) – Get a Class A Report by PubMatic, Inc.the ad tech company with 25% growth and 25% operating margin, as well as Definitive Healthcare (DH) and Clearwater Analytics (CWAN) . Cramer said all of these stocks should be on your list.
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Carvana Shares shared
CarMax shares (KMX) – Get a CarMax, Inc. Report fell last week after a horrible quarter. Now, it’s on Carvana (CVNA) – Get a Class A Report of Carvana Co turn, with shares plunging 10% after the company reported a 56% increase in revenues, but total revenue per unit dropped 22.5% annually.
Cramer called the results “disastrous” for the used car seller, ending in a $ 2.89 per share loss for the company. Carvana also threw out their guidance for the rest of 2022.
It’s likely that the used car market will get worse before it gets better, according to Cramer, because used car prices are now high enough that many consumers can’t afford.
Executive Decision: Huntington Bancshares
In his “Executive Decision” segment, Cramer spoke with Stephen Steinour, chairman, president and CEO of Huntington Bancshares (HBAN) – Get Huntington Bancshares Incorporated Reportthe Ohio -based bank set to profit from rising interest rates.
Steinour said things will be going well in Huntington, with loan growth and deposit increases, improved credit quality and net interest margins among the best the company has seen. Huntington shares are currently yielding 4.5%.
Huntington is one of the largest car lenders in the country, and Steinour noted that with their super-prime approach, their loan business will remain stable regardless of vehicle prices.
Steinour has also been strong in their home state of Ohio, getting the first of hopefully many semiconductor foundry projects as semiconductor makers bring more manufacturing back to America. Steinour called these foundries “seismic opportunities” for Ohio that would bring a lot of economic activity to their region.
Circle of Lightning
In the Lightning Round, Cramer was bullish on American Airlines (AAL) – Get Report of American Airlines Group, IncUnited Continental (UAL) – Get a Report of United Airlines Holdings, Inc. and Marvell Technology (MRVL) – Get Marvell Technology, Inc. Report.
Cramer has been bearish on OptimizeRx (OPRX) – Get OptimizeRx Corporation ReportZIM Integrated Shipping (ZIMCF) SoFi Technologies (SOFI) – Get a Report of SoFi Technologies Inc and Solid Power (SLDP) .
Bright Vision for Lululemon Athletica
In his No-Huddle Offense segment, Cramer said many companies say they are in the “early innings” of their growth, but Lululemon Athletica (LULU) – Get Lululemon Athletica Inc is a company that is really in their early innings.
Lulu’s management aims to double their revenue over the next five years. And while this may seem like a lofty goal, Cramer said the company can do it. Lulu has only 25% brand awareness here in the US, compared to rival Nike (NKE) – Get a Class B Report of NIKE, Inc. with 88% awareness. Lulu has plenty of room to grow both in men’s clothing and around the world.
Lulu also recently acquired the Mirror, a connected fitness device with a monthly subscription to rival Peloton (PTON) – Get Peloton Interactive, Inc. Class A Report. Having hybrid workouts in momentum, Cramer said Lulu’s stock is likely to be in its early innings as well.
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