Don't take everything you hear as gospel, Jim Cramer cautioned his Mad Money viewers Thursday. Everyone on Wall Street has a theory as to why things happen, Cramer said, but very few actually know what they're talking about.
It was just a week ago that oil prices spiked to record highs with pundits proclaiming the sky was falling. But in reality, the surge in crude prices was caused by simple market mechanics, and oil producers just needed a little time to respond.
We also heard recently that the rally in semiconductors was over. But the CEO of Marvell Technologies (MRVL) told us earlier this week that nothing could be further from the truth.
Whether it's Williams-Sonoma (WSM) or Signet Jewelers (SIG) closing stores, or Honeywell (HON) declining because aerospace is weak, what you hear isn't always based in fact. Both Williams-Sonoma and Signet are closing stores because so much of their demand has moved online, where they make more money. As for Honeywell, they're not just about aerospace anymore. The company has plenty of other end markets that are red hot.
Many of these doom-and-gloom theories are spread by short sellers, who short a stock, then spread their theory to as many people as they can, creating panic that results in the decline they were hoping for.
Does that mean we should all invest in index funds? Of course not. Cramer said investing in individual companies that make real things and have real earnings is still the best way to make money.
So the next time you hear a theory, remember, it's just a theory, and could be a long way from the truth.
Executive Decision: Signet Jewelers
In his first "Executive Decision" segment, Cramer spoke with Gina Drosos, CEO of Signet Jewelers, which just posted strong quarterly results with strong guidance. Shares of Signet are up 40% over the past year.
Drosos said that Signet was able to grow revenues by 50% last year, which has given them the financial fitness to invest into their business, grow the jewelry category and attract new customers to the segment. Signet now has a number of competitive advantages, including their digital capabilities combined with data and analytics.
Signet is also capitalizing on weddings being at record highs this year, as everyone who postponed their ceremonies during the pandemic gears up to finally share their special day with family and friends. The U.S. expects 2.5 million weddings this year, compared to the usual 2.1 million.
Other bright spots for Signet include the company's digital strategy, which involves 60% of their customers interacting online, and their extended service plans, which help customers take care of their jewelry purchases.
Look for Profitable Companies
The name of the game for the foreseeable future is investing in profitable companies that make real products and return those profits to shareholders. That's why Cramer offered up his favorite stocks that not only have profitable dividends, but also have a history of boosting those dividends.
The bad news is that the average dividend yield in the S&P 500 is the lowest it's been in years. But the good news is 24% of dividend-paying companies have boosted their dividends, and with share prices down big, those yields are a lot more attractive.
First up was energy, where Devon Energy (DVN), Pioneer Natural Resources (PXD) and Coterra Energy (CTRA) all made the list for their variable dividend strategy.
In the retail group, Cramer recommended Tractor Supply (TSCO), Best Buy (BBY) and Dollar General (DG), which just posted in-line earnings, but gave investors a 31% dividend boost and a share buyback.
Next, Cramer suggested NXP Semiconductor (NXPI), which just boosted its dividend by 50%, and ProLogis (PLD), with a 2% yield.
Finally, Cramer recommended Wells Fargo (WFC) in the banking sector. All of these companies are worthy of a spot in your portfolio.
Executive Decision: Williams-Sonoma
For his final "Executive Decision" segment, Cramer also spoke with Laura Alber, president and CEO of Williams-Sonoma, the home furnishings designer and retailer that just posted a 60-cents-a-share earnings beat with a bullish forecast for the rest of 2022. Shares jumped 5.4% Thursday, but still trades for less than 11 times earnings.
Alber said Williams-Sonona doesn't get enough credit for their business-to-business segment, which is growing rapidly in a $80 billion market. Investors also don't appreciate their many competitive advantages, which include their design capabilities, supply chain performance and their digital platform.
When asked about those store closures, Alber explained that locations like their store in Beverly Hills was old and dated. Now, it's been replaced by lifestyle centers that showcase the company in a whole new light. Williams-Sonoma prioritizes the home, she said, and the home is what's important to their customers.
Lightning Round
In the Lightning Round, Cramer was bullish on Alphabet (GOOGL), Ralph Lauren (RL), Norwegian Cruise Line (NCLH), Western Union (WU) and Ventas (VTR).
Cramer was bearish on Canada Goose (GOOS), Sturm Ruger (RGR), Carnival (CCL), Roblox (RBLX) and Omega Healthcare (OHI).
Failure to Communicate?
In his "No Huddle Offense" segment, Cramer called for the end to the pandemic-created tradition of Federal Reserve chair Jay Powell taking questions from a litany of ill-informed reporters.
Transparency is good, Cramer proclaimed, but transparency that only confuses us, isn't. That's why we need to end this senseless game of "reporter piñata."
Instead, Cramer suggested the Fed act like a corporation, reporting to the public every quarter, instead of every six weeks. Then, instead of answering the same questions over and over again, reporters should send in their questions in advance, so the Fed can answer only the ones that fit the narrative they need to convey. That way, everyone wins with a single message that lets everyone know what's coming next.
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