The era of "beat and raise" and "buy no matter what" is over for the growth stocks, Jim Cramer proclaimed during his Mad Money show on Thursday. Growth investors must adjust their strategy or risk getting blown out of the market altogether.
Cramer called it back in November, when the Federal Reserve first announced they were preparing to raise interest rates. When the Fed is no longer your friend, growth stocks with no earnings get pummeled, he cautioned, and since then, that's exactly what happened.
Wednesday, we saw it again with Snowflake (SNOW) and Okta (OKTA), both of which appeared on last night's show and suffered huge losses after reporting strong earnings. The fundamentals at both companies remain basically the same. What's changed is what investors are willing to pay for those future earnings.
Over on Action Alerts PLUS, Chris Versace and Bob Lang are talking to their investment club members about the Fed, the Ukraine crisis and why they're buying Advanced Micro Devices (AMD) and Marvell Technology (MRVL). Get in on the conversation and get more trading strategies with Action Alerts PLUS.
When the momentum is gone, the thrill is gone, and that's when investors start fleeing these high growth names.
There are still plenty of strong sectors in the stock market, Cramer concluded. You can invest in oil, energy or healthcare, he said, but you can no longer invest in companies that trade on a price-to-sales ratio, no matter how much you like those companies.
Executive Decision: Verizon
In his first "Executive Decision" segment, Cramer spoke with Hans Vestberg, chairman and CEO of Verizon (VZ), on the heels of the telco's annual investor day.
Vestberg said Verizon has spent years building its multipurpose network and now has more opportunities for growth than ever before. Verizon's network can support everything from mobile, to fixed-line to edge computing and it's just getting started with the metaverse, having partnered with Meta Platforms (FB) to deliver immersive experiences.
Verizon is also in a strong position financially, with a strong balance sheet. Vestberg said the company remains committed to paying down debt, returning cash to shareholders via dividend and repurchasing shares when it makes sense to do so.
Cramer said in a turbulent market, of stocks like Verizon, "It works."
Procter & Gamble
Now that we know the Fed is poised to take a measured approach to raising interest rates, it's time to circle the wagons around the safety stocks. The only problem? Safety stocks like food, beverage and consumer packaged goods are getting walloped by inflation.
What investors need is a safety stock with the scale and the brand power to raise prices and combat inflation. Fortunately, there is but one such stock, and it's called Procter & Gamble (PG).
Shares of Procter may be down 6% for the year, but the company saw 6% organic sales growth during its most recent quarter and is investing in new products and innovation to keep itself top of mind with consumers.
Gross margins are in decline as costs surge, but operating margins aren't that bad, Cramer said, thanks to increased productivity. Procter offers a 2.25% yield and has a share buyback program. It also has just $24 billion in debt, which isn't a lot for a company of its size.
Add to all of that Procter's global nature, which gives it diversity without making it beholden to emerging markets and it's easy to see why this stock deserves a spot in your portfolio.
Executive Decision: Block
For his second "Executive Decision" segment, Cramer spoke with Amrita Ahuja, CFO of Block (SQ), the payments company formerly known as Square, which fell 8% Thursday after the company reported earnings that included a 30% increase in revenues.
Ahuja explained that Square rebranded itself to Block because it's now a multi-dimensional company. Not only does it offer business payments, but also its Cash app, cryptocurrencies and more.
Block grew 47% year-over-year last quarter and that's a testament to its diversification. Square now offers six products, with Cash app adding another four. Their roadmap is also growing, with new features like a peer-to-peer service that allows you to send fractional shares of stock or Bitcoin to friends and family.
Lightning Round
In the Lightning Round, Cramer was bullish on HP (HPQ), Darling Ingredients (DAR), Innovative Industrial Properties (IIPR), Lowe's (LOW), Valvoline (VVV), Magellan Midstream Partners (MMP), Dow (DOW) and Rio Tinto (RIO).
Cramer was bearish on Desktop Metal (DM), Canada Goose (GOOS), Tilray (TLRY) and Floor & Decor (FND).
How Much Pain Can Putin Take?
In his "No Huddle Offense" segment, Cramer pondered the question, "How much pain can Putin take?" The West has done a lot to sanction Russia for its actions, he said, but collapsing the Russian economy doesn't matter when you're a dictator.
Dictators can always last a lot longer than you think, Cramer said. That means things are going to get uglier before they get better.
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