How can the Dow Jones Industrial Average be hitting all-time highs while hospitals are overflowing with COVID patients?, Jim Cramer asked his Mad Money viewers Tuesday. Well, the markets’ surge to new heights stems from 10 “tipping points” which have been driving its momentum, he said.
The first tipping point is certainty about the presidential election. Now that the transition has begun, investors are breathing a sigh of relief. Next are the coming vaccines, which help investors see the light at the end of the COVID tunnel. Along those lines is tipping point No. 3, the hopes that the economy will be reopening soon.
The flight to the suburbs was Cramer’s next market driver, one that’s boosting everything housing-related. Next was the surge in younger, so-called Robinhood investors, which are entering the market for the first time. These investors are helping in the next tipping point, which are buyers overwhelming the sellers as new secondary offerings of stock are hitting the market.
Finally, Cramer said that investors are welcoming the end of the trade war, or at least a de-escalation, as well as a transition to President-elect Joe Biden, who is presumed to be much more market friendly.
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Executive Decision: HP
In his first “Executive Decision” segment, Cramer spoke with Enrique Lores, president and CEO of HP (HPQ) – Get Report, the printer and computer maker that just posted a 10-cents-a-share earnings beat that sent shares soaring 5.7% in after-hours trading.
Lores said the HP saw record shipments for both PCs and printers in the quarter and has strong cash flows, which has allowed it to reward shareholders with dividends and buybacks. The company announced a 10% boost in its dividend for 2021 and it has bought back 9% of its shares through its stock buyback program.
When asked how they were able to deliver such strong results in the middle of a pandemic, Lores explained that HP is a resilient company. So, while the company’s commercial business slowed significantly during the pandemic, their consumer businesses thrived as people set up home offices with new PCs and printers. Lores said he expects their commercial business to return as people begin to return to the office.
Finally, Lores noted that their 3D printing market continues to grow, representing a $500 billion market potential.
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Executive Decision: Nikola
Russell assured investors that despite reports to the contrary, Nikola has “several trucks that work,” and their prototyping and testing continues.
When asked about the cost of hydrogen as a fuel source, Russell said the key metric for green hydrogen is the price of green electricity. As the price of renewable energy falls, so too does the cost of hydrogen that powers its fuel cell vehicles.
Turning to the company’s business outlook, Russell offered no comment on Nikola’s partnership with General Motors (GM) – Get Report, which has not been finalized since fraud allegations surfaced. He also did not comment on the prospects of fueling station partners.
Finally, Cramer asked about share lockup periods that expire next week. Russell was confident that as the company hits their milestones, their large shareholders will continue to hold their shares.
Cramer does his Homework
In his “Homework” segment, Cramer followed up on a few stocks that had stumped him during earlier shows.
He said that Textainer Group Holdings (TGH) – Get Report, the intermodal container leasing company, has an interesting story. As global trade resumes after the pandemic and trade wars, the company’s containers should be in high demand.
Cramer said he’d wait for the stock to pull back after it’s run from $5 to over $19 a share, but the company has a great long-term outlook.
Cramer then followed up on Niu Technologies (NIU) – Get Report, the electric bicycle and scooter maker that’s also been red-hot in recent months. With shares up 72% for the year, Cramer said he simply cannot recommend the stock given that Nui missed earnings by a mile.
Oil Is Over
In his No-Huddle Offense segment, Cramer declared the age of unbridled oil production is over, and that’s a good thing.
Despite his love for fossil fuels, President Trump gave the oil industry too much of a good thing, Cramer explained, and oversupply crushed crude oil prices.
But with Biden taking the White House, drilling and emissions should be curtailed, which will be good news for Chevron (CVX) – Get Report and Pioneer Natural Resources (PXD) – Get Report. Cramer was also bullish on General Electric (GE) – Get Report, makers of natural gas turbines, and of the gas pipeline companies, as new pipelines are unlikely to be permitted over the next four years.
Here’s what Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Tuesday evening:
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At the time of publication, Cramer’s Action Alerts PLUS had no position in the stocks mentioned.