Has the stock market gotten too expensive? That’s a question Jim Cramer said he gets every day, especially on days like Thursday, when stocks like Robinhood (HOOD) – Get Report are giving everyone whiplash. But investors need to forget about the craziness in the stock market and focus instead on the bargains being created.
Case in point, Walmart (WMT) – Get Report, which trades at a market multiple of 24 times earnings. After today’s upgrade from Wells Fargo (WFC) – Get Report, Cramer said Walmart deserves a multiple far greater than just average.
Then there’s Uber (UBER) – Get Report, which has seen its shares fall 15% so far this year. Like Walmart, business is strong at Uber, and according to the company, it could be a whole lot stronger if it only had more drivers.
LyondellBasell (LYB) – Get Report trades for just five times earnings, yet yields 4.7%. Cramer called that stock an incredible bargain. Trinseo (TSE) – Get Report was another bargain at five times earnings. Investors looking for more household names can look towards Cleveland-Cliffs (CLF) – Get Report or Nucor (NUE) – Get Report, two of the best steelmakers on Earth that trade for four and five times earnings.
Cramer was also bullish on the home builders. We’re currently building just 1.6 million homes a year, he said, yet we have demand for two million a year. Toll Brothers (TOL) – Get Report, D.R. Horton (DHI) – Get Report, Lennar (LEN) – Get Report and KB Home (KBH) – Get Report are all bargains. So too are the automakers, which also have pent up demand. Shares of General Motors (GM) – Get Report and Ford (F) – Get Report both trade around eight times earnings.
There’s a lot more to the stock market than just the meme stocks making headlines, Cramer concluded. Look closer and there’s still a ton of value to be had.
Executive Decision: Take-Two Interactive
In his first “Executive Decision” segment, Cramer spoke with Strauss Zelnick, chairman and CEO of Take-Two Interactive (TTWO) – Get Report, the video game maker that reported strong earnings, but still disappointed many Wall Street analysts.
Zelnick explained that with $711 million in net bookings, Take-Two is still having its second-best year ever and he feels the company is in a “good place” looking into the back half of the year. He said Take-Two’s post-pandemic sales are stronger than pre-pandemic and it’s only natural to expect that sales would decline slightly compared to last year when everyone was sheltering in place.
Moving beyond Wall Street’s sometimes unrealistic expectations, Zelnick addressed the delays in two of their interactive titles until later in the year. He explained that Take-Two always strives for creativity, innovation and efficiency and sometimes that means delaying titles to ensure they get it right. “It’s painful to delay,” he admitted, but sometimes it’s the right thing to do.
Turning to more positive news, Zelnick was bullish on their acquisition of Nordeus, a mobile game developer and maker of “Top Eleven,” a leading mobile soccer title. He said the addition of Nordeus will be a great one for the Take-Two family.
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Executive Decision: Etsy
Silverman explained that while sales growth slowed from 132% to just 13% in the quarter, Etsy is still going strong on a year-over-year basis. He noted that in the third quarter of 2020, Etsy sellers sold $120 million worth of masks, so obviously, the third quarter of this year wasn’t going to match that performance.
But while sales might not be rivaling that during the height of the pandemic, Etsy remains relevant with its customers and customers are spending more on the platform than ever before.
Silverman was also excited about their acquisition of Depop, an online fashion marketplace that is very popular with younger consumers. He said fashion continues to be a huge growth area for Etsy. Likewise with the company’s purchase of Elo7, a Brazilian marketplace. Silverman said many people forget about South America, but it too remains a huge, untapped market for online commerce.
Executive Decision: On Semiconductor
For his final “Executive Decision” segment, Cramer checked in Hassane El-Khoury, president and CEO of On Semiconductor (ON) – Get Report, the chipmaker with shares up 16% over the past week as record demand for semiconductors continues.
El-Khoury said that On Semiconductor is working around the clock in order to meet the demand for chips, especially in the automotive sector. They continue to add capacity in areas where they can deliver the most value to their customers.
When asked about adding additional capacity, El-Khoury said there is an 18 to 24 month latency period for new product development and On Semiconductor is only looking for long-term commitments from their customers. “We cannot build capacity on hope,” he explained, they have to build where the demand is guaranteed.
Finally, El-Khoury commented on On Semiconductor’s commitment to sustainability, reiterating the company’s plans to become carbon neutral by 2040.
Everything Likes Chips
In his No-Huddle Offense segment, Cramer explained that the reason we have a global shortage of semiconductors is because everything is now connected to the Internet of things.
Case in point, today’s IPO of Weber (WEBR) – Get Report, the storied maker of backyard grills. Weber’s newest line of smart grills use Bluetooth and wifi to alert you when your steaks are cooked and can even turn themselves off to avoid overcooking your hot dogs. Weber is the latest in a long line of new products that need semiconductors in order to function.
If the U.S. has any chance of meeting President Joe Biden’s goal of 50% electric vehicles by 2030, then the U.S. is going to need to seriously ramp up its semiconductor manufacturing here at home, Cramer added. The entire world is going electric, and domestic manufacturing is the only way to ensure our demand can be met.
Here’s what Cramer had to say about some of the stocks that callers offered up during the “Mad Money Lightning Round” Thursday evening:
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At the time of publication, Cramer’s Action Alerts PLUS had no position in the stocks mentioned.