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.
These are just a few reasons individual stocks head higher, Cramer explained, even if they are harder to notice.
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Executive Decision: Signet Jewelers
In his first “Executive Decision” segment, Cramer spoke with Gina Drosos, CEO of Signet Jewelers (SIG) – Get Report, the jewelry store chain with 2,900 locations and booming online sales that sent shares up 6.1% Thursday. Shares of Signet have risen 288% in just the past six months.
Drosos said that Signet has cracked the online jewelry sales model with two initiatives. The first are better visualizations that allow customers to really “see” their item online. The second are expert consultations, just like you’d get in stores. Signet now has 700 virtual sales personnel to help customers with their online purchases. The company also rolled out “buy online, pickup in store” options that customers love.
Signet is also focused on their balance sheet. Drosos noted the company has been paying down debt and using data and analytics to reduce their inventory by making sure only the right items are in all of the right places.
When asked about their retail footprint, Drosos said they have been migrating from mall-based locations to off-mall locations, which have a higher sales profile, and they still see many opportunities for growth.
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Executive Decision: Honeywell
For his second “Executive Decision” segment, Cramer spoke with Darius Adamczyk, chairman and CEO of Honeywell (HON) – Get Report, on his company’s plan to vaccinate one million North Carolinians over the next six months.
Adamczyk explained that the vaccine makers have done an excellent job creating and manufacturing their vaccines, and now it’s up to all of us to get those doses into the arms of everyone as quickly as we can. He said the challenge is not simple. Mass vaccinations involve storage, distribution, administration, supply chains and record keeping, which is why Honeywell is partnering with other entities to get the job done.
What Honeywell hopes to do, Adamczyk said, is build a model that other states and other partnerships can follow to bring the needed supplies, personnel and technology to large venues that can handle the massive flow of people. In the case of their North Carolina efforts, they’ll be using the Carolina Panthers stadium to help get tens of thousands of people vaccinated every day.
Executive Decision: Cisco Systems
For his final “Executive Decision” segment, Cramer also checked in Chuck Robbins, chairman and CEO of Cisco Systems (CSCO) – Get Report, the network equipment maker that just inked a new deal to acquire Acacia Communications (ACIA) – Get Report for $115 a share.
Robbins said the Acacia deal has been a long time coming but he still feels that Cisco is getting a reasonable price and they’re ready to welcome the Acacia team to the Cisco family. He said the 5G wireless buildout is happening now and enterprises will soon be ready with all-new applications to run on it. That’s why it was crucial for Cisco to combine forces with Acacia.
Cramer then asked Robbins about how a CEO of a Fortune 500 company manages in these trying economic and political times. Robbins said that the role of the CEO has been changing a lot in recent years and it changed again last week with the violence we saw in Washington, DC. He said it’s wrong to use technology to incite violence or promote hate and racism and that is something the technology industry needs to come to terms with. CEOs need to be a unifying force for everyone.
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At the time of publication, Cramer’s Action Alerts PLUS had no position in the stocks mentioned.