Jim Cramer says it’s not too late to buy the cyclical stocks that will benefit as our economy reopens.
Sometimes the jargon on Wall Street can be confusing, Jim Cramer told his Mad Money viewers Tuesday. That’s why Cramer has dedicated himself to decoding and demystifying the investing gibberish to put things into plain English for every day investors.
You may have heard the term “reflation,” for instance. Cramer said this is simply having inflation after a long period without. During inflation, it’s wise to sell growth stocks in favor of cyclical stocks. Apple (AAPL) – Get Report can’t charge more for iPhones in a growth environment, for example, but airlines, hotels and theme parks can.
But what does “inflation” really mean? Cramer explained it’s an erosion in value of money. Money is worth less in the future. That means those future earnings from the high-flying electric vehicle SPACs are now worth a lot less.
“Inflation scare” was the next term in Cramer’s investing dictionary. He said this is when investors assume the Federal Reserve will raise interest rates to fight inflation. But Cramer noted that with so much unemployment, it’s unlikely the Fed would move rates higher.
Finally, Cramer explained the term “risk off,” which is a confusing way to say investors are looking to take on less risk when interest rates are likely to rise.
What do all of these new terms mean for individual investors? Cramer said it’s not too late to sell the speculative growth stocks that have been getting hammered as of late. It’s also not too late to buy the cyclical stocks that will benefit as our economy reopens.
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Executive Decision: Brink’s Co.
In his first “Executive Decision” segment, Cramer spoke with Doug Pertz, president and CEO of Brink’s Co. (BCO) – Get Report, shares of which surged 6.3% Tuesday after the company reported a strong 63-cents-a-share earnings beat.
Pertz said that cash isn’t going away anytime soon. In fact, the total amount of cash in circulation is up 16% since the pandemic began, which is in line with other recent periods of uncertainty.
But even though Brink’s is best known for its cash processing services, Pertz noted that the company’s future lies in digital cash management solutions which will allow retailers to manage their cash in new ways.
When asked about their environmental efforts, Pertz noted that reducing emissions is a priority for the company. They work hard to plan the most efficient routes possible to reduce the total number of miles traveled. The company is also working on dual-fuel vehicles that can travel on diesel and cleaner natural gas.
Executive Decision: Conagra Brands
For his second “Executive Decision” segment, Cramer also spoke with Sean Connelly, president and CEO of Conagra Brands (CAG) – Get Report, the packaged foods giant with shares down 2% over the past three months.
Connelly said Conagra is always changing with the times. Consumers are now online and on their devices, and that’s why 80% of their advertising budget is now digital. Consumers also don’t want brands preaching at them, which is why Conagra leans heavily on social media influencers and endorsements to tell the world about their many brands.
When asked whether the trend of eating more at home was here to stay, Connelly said he thinks it is. There’s no doubt that people will be working more from home going forward, which means more breakfasts and lunches in your kitchen. There will also be more entertainment at home now that some movies will be released direct to streaming. That means more snacking.
Turning to the topic of brands and packaging, Connelly noted that every generation wants modern products and packaging, which is why Conagra puts a lot of effort into keeping all of their brands current. Consumers are willing to pay more, he said, but only if you embrace design thinking.
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Originally published at https://www.thestreet.com/jim-cramer/reflation-and-rotations-cramers-mad-money-recap-tuesday-2-23-21 on .
