Market participants are facing a challenging investment environment as more investors turn their attention to reopening stocks, CNBC’s Jim Cramer said Tuesday.
“This is a tricky moment. The stock market has had a tremendous run from below.”Bad money“said the host,” but the vaccine situation is still fluid and we don’t know when we can safely reopen. “
The comments came after the major stock averages during the trading session in which the Dow Jones industry average saw its best trading day since November.
The Dow closed at 30,687.48, up 475.57 or 1.6% from the previous day. The S&P 500 moved 1.4% to a closing price of 3,826.31. The tech heavy Nasdaq Composite also recorded an increase of 1.6% and stood at 13,612.78. All three indices are at least 1% below their record highs.
Market activity was defined by a rotation from stocks that performed strongly in a lockdown environment to stocks that would benefit from an economic reopening, Cramer said.
However, the former hedge fund manager advised viewers not to invest in lockdown and reopening issues, but to invest in companies that are well managed.
“Instead of moving from the nesting stocks to the reopening games, you want stocks from well-run companies that can keep working even if vaccination takes longer than expected,” Cramer said. “When you buy the best of the breed [companies]They will adapt to everything, including the long-awaited conclusion of the worst pandemic in decades. “
Among the reopening names to fit the theme, he recommended Disney and Boeing, two household names whose companies he expects to rebound when travel restrictions are lifted by governments around the world.
Disney, whose entertainment dynasty includes movie studios, cruise lines and theme parks, posted revenue declines of 42% and 22% in its last two earnings reports, respectively. The company will release its latest quarterly results next week.
While travel was limited, Disney doubled video streaming with Disney +, Cramer said, adapting to take advantage of consumers spending more time at home amid the pandemic. Disney stocks never seemed to take a hit, as stocks were now trading 22% higher than they were before the pandemic.
“It became basically the ultimate nesting stock, but you never forgot what [it] could be as soon as the country reopens, “said Cramer.” Sooner or later we know the world will open again and Disney will be ready. “
Regarding Boeing, another reopening game, Cramer pointed out that the aircraft maker is borrowing $ 9.8 billion to refinance its debt. With air traffic dropping dramatically in 2020, the company looked at order cancellations on top of the problems posed by the 737 Max.
The debt movement is a bullish sign for Cramer.
“That will make it easier for them to get through the hopefully final months of the pandemic,” said Cramer. “If there is a travel boom after we reopen,” airlines will need more planes, and Boeing has “all the inventory they need”.
Boeing shares remain more than 40% below their pre-pandemic trading levels. The stock closed at $ 200.94 on Tuesday, down 6% in 2021.
Disclosure: Cramer’s charitable foundation owns interests in Boeing and Disney.