Reasons to Rally: Cramer’s ‘Mad Money’ Recap (Thursday 1/14/21)

There are many things that can make a stock rally, Jim Cramer told his Mad Money viewers Thursday. It’s the day we saw hopes of more stimulus, a helpful Federal Reserve and positive comments from Delta Air Lines  (DAL) – Get Report, just to name a few. But there is […]

There are many things that can make a stock rally, Jim Cramer told his Mad Money viewers Thursday. It’s the day we saw hopes of more stimulus, a helpful Federal Reserve and positive comments from Delta Air Lines  (DAL) – Get Report, just to name a few. But there is another, more investable, reason to buy a stock — shortages.

Cramer explained that there are product shortages, like when Taiwan Semiconductor  (TSMC)  announced a boost in its capital equipment budget to build more chips to meet demand. Shares of the semiconductor maker rallied 6% on the news.

There are also IPO shortages, a tactic used by investment bankers to limit shares to ensure a positive first day of trading. That’s what happened today with Petco  (WOOF) – Get Report, up 63%, Poshmark  (POSH) – Get Report, up 141% and Affirm  (AFRM) – Get Report, which rallied 18% after its IPO Wednesday.

Finally, Cramer said, there are shortages of shares when short sellers get squeezed. Shares of video game retailer GameStop  (GME) – Get Report have been heavily shorted for years as the industry moves online. But with an activist investor involved and strong demand for Playstation 5 and Xbox, the shorts got crushed, sending shares up 121% over the past week.

Similar short-busting can been seen in Beyond Meat  (BYND) – Get Report, which closed up 13% Thursday, and with Bed Bath & Beyond  (BBBY) – Get Report, which ended the day up 18.7%, both on positive news that send short sellers scrambling to buy shares at any price they could.

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