On big down days like today, you can always fall back on long-term bullish themes, Jim Cramer told his Mad Money viewers Monday, the first trading day of the new year. Cramer said investors can “shop the drop” and pickup great stocks as they head lower, but only if they fit one of his 10 investable themes for 2021.
E-commerce is here to stay, making it the first of Cramer’s investable themes. That of course means Amazon (AMZN) – Get Report, but also retailers who have figured out the e-commerce game. The return of travel and leisure was second one Cramer’s list, as was the continuing digitization trend, which includes semiconductor makers like Advanced Micro Devices (AMD) – Get Report and Nvidia (NVDA) – Get Report.
Continuing the technology theme, Cramer said cybersecurity will continue to be a winner, as will anything related to the 5G wireless transition and anything to do with remote working, like Zoom Video (ZM) – Get Report.
Other investable themes include the coming stimulus checks, which were a big win for Home Depot (HD) – Get Report, Lowe’s (LOW) – Get Report and Dollar Tree (DLTR) – Get Report the last time around. Cramer told viewers to keep an eye on the China stocks, like Boeing (BA) – Get Report, Caterpillar (CAT) – Get Report and MasterCard (MA) – Get Report, once Joe Biden takes office. He was also bullish on wealth management, with Goldman Sachs (GS) – Get Report and Morgan Stanley (MS) – Get Report among his favorites.
Finally, Cramer said healthcare will be a major theme in 2021, with stocks like Abbvie (ABBV) – Get Report and CVS Health (CVS) – Get Report both likely to be winners. “The long-term themes work best” in times of uncertainty, Cramer concluded, which is why all 10 of these themes are where you want to be.
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Executive Decision: Paychex
In his first “Executive Decision” segment of the year, Cramer spoke with Marty Mucci, president and CEO of Paychex (PAYX) – Get Report, the payroll processor which fell 3% Monday along with the broader market.
Mucci said despite the pandemic, things are beginning look brighter for Paychex. He said after a big drop in revenue last April, there’s been steady downward pressure, but this quarter, earnings per share were up 4%.
When asked about the health of the economy, Mucci noted that there is still job growth, especially in the southern part of the country. He said in Florida, for example, housing and construction remains strong.
Mucci also commented on some of the non-payroll related services they offer to small businesses. He said Paychex has 800 HR specialists to help companies navigate the sea of regulations when it comes to hiring employees. Whether it’s preparing for a higher minimum wage or providing vital healthcare services to employees, Paychex is there to help.
Paychex even offers cyber insurance for small businesses, Mucci added, helping them reduce the liability from cyber attacks and data breaches.
Cramer said every time shares of Paychex sell off, it’s been a buying opportunity.
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Don’t Be Shocked by EV Stocks
In order to make money in 2021, Cramer told viewers they must stay disciplined and learn to take profits when they have them. That’s especially important when talking about the red-hot electric vehicle sector, which has seen a flurry of new issues via reverse mergers with special purpose acquisition companies, or SPACs for short.
These SPACs are story stocks, Cramer explained. They don’t have revenue or earnings, just momentum and the hopes of becoming the next Tesla (TSLA) – Get Report. But while many of these stocks have seen spectacular gains, they’re not immune to also seeing spectacular losses as well. Shares of battery maker QuantumScape (QS) – Get Report began in the teens before Cramer recommending taking profits in the mid-$70s. Shares continued to rally to $130, but Monday plunged over 40% after the company announced a secondary offering.
“This is what happens,” to companies that are still years away from actually delivering a product, Cramer cautioned. At these levels, however, Cramer would again be buyer.
The same applies to stocks like CIIG Merger (CIIC) , which will soon merge with electric bus maker Arrival. Cramer said he’s a buyer under $20 a share, but a seller over $30 a share. He would also be a buyer of Switchback Energy (SBE) – Get Report, the SPAC which will soon merge with ChargePoint, but only into continued weakness. Today’s 8% plunge in this stock is only the beginning, he said.
Buy into weakness and sell into strength is a time-honored investment strategy, Cramer concluded, and it definitely applies to these high-flying EV stocks.
Executive Decision: VMware
Poonan said that while VMware may not have been top-of-mind for investors in 2020, it’s still a vital component of cloud infrastructure. He said the cloud represents a $120 billion opportunity and is expected to grow 35%. VMware offers a vital bridge between public, private and edge cloud networks.
When asked about the huge SolarWinds cyber attack, Poonan explained that this breach has only heightened the need for cybersecurity, which is why VMware continues to promote basic “cyber hygiene” that every company can do to begin the journey toward making the Internet more secure.
Finally, Poonan noted that VMware continues its commitment to more diversity. It aims to have 50% of all their managers be women, for example, and they aim to increase diversity amongst all ethic groups at VMware. The company is also focused on continuing education, especially in the areas of technology.
Here’s what Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Monday evening:
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At the time of publication, Cramer’s Action Alerts PLUS had a position in AMZN, AMD, NVDA, BA, MA, GS, ABBV, CVS.