The stock market is divided into three camps, Jim Cramer told his Mad Money viewers Wednesday. Fortunately, two of those camps aren’t worried about inflation, which is how the market was again able to rally to new highs.
The first camp of investors are old school. They were raised in a world where inflation was everywhere, which makes the Federal Reserve critically important. The Fed was so important, in fact, that these investors tried to predict Fed policy by gauging the size of then-chairman Alan Greenspan’s briefcase. Today, these investors see inflation in chemicals, copper, aluminum, steel and lumber, which affects everything from housing to autos.
The second camp believes, as current Fed Chief Jay Powell does, that the shortages are temporary, caused by storms, COVID and other supply disruptions. These short-term problems don’t justify tamping down the entire economy with interest rate hikes, especially at a time of high unemployment.
The third camp consists of younger investors who don’t pay attention to the bond market or the Fed at all. They’ll be using their stimulus checks to invest in stocks using fractional shares and commission-free trading and buy what they believe in, like Apple (AAPL) – Get Report and Tesla (TSLA) – Get Report.
So while professional money managers fret over bond prices and inflation, the other two-thirds of investors simply aren’t worried, and that’s how we are able to rally to new highs.
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Executive Decision: Angi
In his first “Executive Decision” segment, Cramer spoke with Oisin Hanrahan, CEO of Angi, formerly ANGI Homeservices (ANGI) – Get Report, the listing service that has flourished during the pandemic as Americans spent more time at home.
Hanrahan said that the market for home services totals $500 billion and Angi aims to be the one-stop shop for everything you need for your home. The company’s website and mobile app connects over 20 million homeowners to more than 250,000 contractors and service providers across the nation. Angi also offers many direct-to-consumer services.
When asked why consumers should choose Angi, Hanrahan explained that the old way of doing things is slow, clunky and involves a lot of friction. The process of finding help, getting an estimate, negotiating price and ensuring the work gets done right isn’t a pleasant one. But with Angi, homeowners can eliminate those hassles and even arrange financing and payments, right through the app.
Homeowners know their homes are assets that increase in value. By making home repair and improvement easier, Angi is helping them get the most from it.
Executive Decision: Shopify
For his second “Executive Decision” segment, Cramer also spoke with Harley Finkelstein, President of Shopify (SHOP) – Get Report, the e-commerce platform that is enabling thousands of small businesses across the country. Shares of Shopify are up 229% over the past year.
Finkelstein said small businesses are the backbone of the economy and our country needs more entrepreneurs. This group has proven to be incredibly resilient and adaptable throughout the pandemic. That’s how Shopify has grown to account for 9% of all e-commerce.
Shopify is about a lot more than just selling online, however. Finkelstein said Shopify is a retail operating system that allows merchants to sell both online and offline. The company provides capital, payment services, fulfillment and more to innovative startups.
One of those startups was Denise Woodard, founder of Partake Foods, one of Shopify’s most recent success stories. Woodard explained that for just $50 a month, she was able to get started with Shopify and build a successful food business, even during a pandemic.
Executive Decision: Finance of America
For his final “Executive Decision” segment, Cramer checked in Patti Cook, CEO of Finance of America, the mortgage company that will soon be merging with Replay Acquisition (RPLA) – Get Report, a special purpose acquisition company.
Cook said that Finance of America isn’t yet a household name, but they’re a diversified consumer lending business that includes three segments with fee-for-service and portfolio management services.
Home improvement loans are the company’s primary driver, Cook noted, as those loans give Finance of America access to sell new mortgages, reverse mortgages and refinance services to those customers.
When asked about the loan environment, Cook said there is still a lot of refinance activity left to go. She quipped that Finance of America is in the moving business, not the storage business, and is writing loans and selling them off as quickly as they can.
Cook added that becoming a public company will give her company the name recognition it deserves and as analysts begin covering the company, their stock multiple will improve.
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The Future of EVs and SPACs
After the dot-com bubble of 2000, investors remained disenchanted with stocks for almost two decades. But then came Tesla, a company that was panned for years as an automaker with wild ambitions that was on the verge of bankruptcy. In reality however, Tesla proved not to be an automaker, but a technology company, and one that deserved its rich stock valuation.
Recent successes in Tesla have ushered in a flood of electric vehicle SPACs, all sporting similar pie-in-the-sky valuations, but the Tesla effect doesn’t stop there. Cramer said companies like Lennar (LEN) – Get Report are calling themselves technology focused home builders, and Angi is a technology-powered home services company.
Cramer said the market never stays enchanted forever, but for now, technology again reigns supreme.
Here’s what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Wednesday evening:
Star Peak Energy STPK: “This is a great infrastructure play. I like it.”
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At the time of publication, Cramer’s Action Alerts PLUS had a position in AAPL.