Earnings will be front and center when investors return for next week’s trading, Jim Cramer told his Mad Money viewers Friday. And it’s a whole lot easier to buy the stock of companies that are making money versus those that only dream about making money.
Cramer’s gameplay for next week starts on Monday by looking at the fallout from Omicron, as the magnitude of this most recent Covid wave will impact all of the travel and leisure stocks. Monday also begins the week-long JP Morgan Chase Healthcare Conference, the annual event that Cramer said is a “must-follow” for investors.
Next, on Tuesday, we’ll get earnings from grocer Albertson’s (ACI) – Get Albertsons Companies, Inc. Class A Report, and Cramer is expecting good news. He was also bullish about Dell’s (DELL) – Get Dell Technologies Inc Class C Report investor presentation, which promises to also be terrific.
Then on Thursday, Delta Air Lines (DAL) – Get Delta Air Lines, Inc. Report will update us on Omicron. Cramer said it’s not important what the state of travel is today, but what it could look like over the next six months.
Friday begins earnings for the financials, and with interest rates on the rise, the news should be good for Wells Fargo (WFC) – Get Wells Fargo & Company Report, BlackRock (BLK) – Get BlackRock, Inc. Report, Citigroup (C) – Get Citigroup Inc. Report and JPMorgan Chase & Co. (JPM) – Get JPMorgan Chase & Co. Report.
How to fix Twitter
What’s the most undervalued brand in America? According to Cramer, it’s Twitter (TWTR) – Get Twitter, Inc. Report, and he offered up his opinions on how to fix it. Twitter is broken, Cramer explained, but with a new CEO, now is the time to hit the reset button.
The biggest change Cramer would make is to create two Twitters. The free, anonymous, ad-supported Twitter can stay, but it needs to be paired with a new, paid and curated version where everyone uses their real names. This will allow the platform to gain users as the trolls will be eliminated, allowing real conversations to happen.
Cramer’s other big suggestion was to buy Nextdoor (KIND) – Get Nextdoor Holdings, Inc. Class A Report, the locally-oriented social network that would make the perfect addition to the Twitter family by adding small businesses to the mix.
Beyond these two ideas, Cramer advocated creating a rewards program for users with large followings, and using artificial intelligence to target advertising to local events.
Without taking immediate actions to reinvigorate their platform, Cramer said he doesn’t think Twitter can have a bright future.
Techs Stocks With Promise
It’s a new year, and that means “out with the new and in with the old” when it comes to the tech stocks in your portfolio. That’s because with interest rates on the rise, Wall Street has no appetite for companies with no earnings, they want the tried-and-true tech names they can trust. That means buying shares of Apple (AAPL) – Get Apple Inc. Report, Oracle (ORCL) – Get Oracle Corporation Report, Cisco Systems (CSCO) – Get Cisco Systems, Inc. Report, Microsoft (MSFT) – Get Microsoft Corporation Report and even IBM (IBM) – Get International Business Machines Corporation Report.
Apple shares rose 34% last year, but have since pulled back from their highs. With supply-chain issues on the retreat, Apple should continue its reign as the best consumer products company on the planet.
Cisco and Microsoft are in similar positions. Cisco rose 40% last year while Microsoft surged 51%, yet both are now well off their highs with great stories to tell going into 2022.
Oracle now trades at just 18 times earnings, yet has a terrific cloud business that it doesn’t get credit for.
As for IBM, Cramer admitted that this company’s story is complicated, but he is encouraged that IBM is willing to spin off its slower-growing legacy businesses in order to focus on growth and the future. Trading at just 12 times earnings with a 4.9% dividend makes IBM too compelling to ignore.
JPMorgan Chase Healthcare Conference
For a preview of JPMorgan’s annual Healthcare Conference, Cramer once again turned to Lisa Gill, managing director and senior equity analyst for healthcare at JPMorgan Chase & Co.
Gill said there are a lot of things to be watching at next week’s conference. First is the effect Medicare Advantage is having on health plan providers. Today we learned that things are not great at Humana (HUM) – Get Humana Inc. Report, but we don’t yet know if that extends to the rest of the industry.
Gill will alway be paying attention to the continued consumer-ization of healthcare, with companies like CVS Health (CVS) – Get CVS Health Corporation Report leading the charge. CVS currently trades for just 12 times earnings, but Gill noted that with a 14 multiple, shares could see 20% upside.
With America’s aging population, controlling costs becomes more important than ever, which makes a host of smaller startups the hottest commodities. Anyone who can bend the cost curve with value-based care will be in high demand.
The State of Inflation
In his No-Huddle Offense segment, Cramer opined on the state of inflation and what impact, if any, the Federal Reserve can really have on prices.
On one hand, inflation is a good thing. Cramer said he was thrilled to learn that wages for the average worker in America rose 4.7%. But on the other hand, rising prices for items that we buy is a bad thing… or is it?
Cramer used a quart of motor oil as an example. He noted that in 2017, a quart of oil for your car sold for $4.25. Today, that same quart sells for $4.50, or just 25 cents more.
Given that the price of everything, from oil exploration, drilling and pipelines, to refining and transportation, has gone up in price, Cramer said paying just $4.50 is a steal. But the fact remains that there’s nothing the Federal Reserve can do about it.
The Fed can’t drill from more oil. They can’t remove regulations. All they can do is tamp down demand by raising interest rates, which may save you a few pennies per quart of oil, but it will hit that 4.7% rise in wages a lot more.
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