Cramer: This Market's Like a Seafood Restaurant, Always a Catch of the Day

 | Oct 11, 2017 | 6:35 PM EDT
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This market's unique in so many ways that it's a plain out-and-out marvel. Each day it's got a particular stock that seems to ignite and capture the fancy of investors, and the stock provides the leadership that makes the day exciting and lucrative if you happen to land it. In fact, it's like fishing and catching a 40-inch edible fish every day, each different from the day before.

Take today's catch: McDonald's (MCD) . Here's a company with a stock that was knocked down by some small research house not that long ago because of rumors of weak same-store sales. That created a panic that seemed totally out of character with the "slow and steady wins the race" performance of CEO Steve Easterbrook. Now the stock has broken out, admittedly on nothing, unless you call the new vegetarian burger they introduced in Europe the other day something. But it is an example of a stock that just pops, and pops but good, breaking out to all-time highs.

When a stock pops on nothing, that's actually a good sign because what tends to happen the next day is that analysts make some calls about it and present it as a stock that's worth owning. Of course, the reason is usually ginned up. Everyone loves a winner, but a refutation of the boutique house's research would do just fine.

Yesterday's catch of the day, Walmart (WMT) , is still roaring because the story is just much better than people realize. More on this one elsewhere, but suffice it to say that this company's beating the numbers and competing against Amazon (AMZN) , something nobody else in bricks-and-mortar can possibly say.

In fact, of course, there isn't just one catch of the day. We got an upgrade in the stock of Johnson & Johnson (JNJ) , a stock that had recently gotten a rare and, I think, somewhat worthless sell recommendation. This buy recommendation from Jefferies urges people to consider JNJ as an earnings-per-share growth and dividend story with an underappreciated pipeline. It's obviously good enough for investors because the stock's roaring.

Or take PayPal (PYPL) . An analyst at a major firm went from hold to buy today, saying he was no longer worried about some sort of eBay negotiations that most of us stopped worrying about ages and many gobs of points ago. What a gift, a 40-pound striper caught surf-casting. 

Or how about the sushi served up by Bill Chappell today over at Suntrust, a very good analyst who chose to upgrade the stock of Colgate (CL) because he believes its underperformance is about to end. I like this California roll of a call so much because Procter & Gamble (PG) , which isn't as fast growing as Colgate historically, has moved up while Colgate's stock has been plugging along basically flat year over year. Think of the ways you can win with this call: Maybe an activist strikes, maybe the earnings really are better, maybe Kraft Heinz (KHC) , so eager to find a buyer, strikes, or perhaps Unilever (UN) decides it's time to consolidate the sector. Pass the wasabi!

Or Kroger (KR) , so beaten down, decides it wants to bring out value with its convenience stores. The competition is rife in the supermarket business, but the convenience stores are more highly valued and I have to believe this news will cause analysts to upgrade the stock tomorrow. 

Or how about the pesky dollar stores. We keep hearing they are doing better than expected without any analyst sponsorship. Now that they are running, the sponsorship can't be too far behind. All analysts want winners; they can't all pick Walmart to sponsor.

So what's going on here? Why are all these situations working? Why, if you teach a man to fish, will he actually catch dinner every night in this market?

Several reasons.

First, we are at the time of the year where funds need to start showing some performance or they are going to lose assets. You can't show performance in this market without buying stocks. It's that simple, buy or die.

Second, as nutty as it sounds, our president is real pro-stock market and it matters. You can tell from his tweets that he grades himself by the S&P and by the wealth creation of the market, the same way he graded himself with the Nielsen ratings when he starred in The Apprentice. He can't seem to get a lot done for tax reform or push through his economic agenda, but he has created an environment where business feels comfortable that the rules aren't going to change every day. I know he disbanded the councils, but he hasn't disbanded the contacts and he knows what sends the market higher. 

Remember, the previous president came in when the stock market was low and it went up dramatically but he never wanted to be affiliated with it and he put through more promulgations than any president in history. This president rolls back regulations as fast as the previous president tacked them, creating an environment of confidence that business people feel pretty great about.

Third, analysts recognize that clients want stocks to go up and have gotten behind some stocks for the most fanciful of reasons. But I can tell you that if you worked at one of these larger brokerage houses, your research director is in your face begging you to put some new names on knowing they will pop.

Fourth, we used to come in every day and be confronted with some overseas horror from Greece or Italy or Russia or Ukraine or France or Britain. These days you come in and Japan is at a multiyear high, Europe's gaining strength by the day, Brexit has ceased to matter and we are paying homage to Catalonia, not being scared by it.

Fifth and finally, there's been no real news other than the fact that we may have to have a rate hike because the economy is too strong, and in that vacuum we have visions of higher price-to-earnings multiples for the banks that report tomorrow dancing in our heads.

Of course, all this bullishness represents a level of exuberance that is highly unlikely to last forever. But that's what's so amazing about the fishing analogy I presented. We haven't over-fished any species because each day we land a new one. Some are game fish, like Nvidia (NVDA) hitting an all-time high on autonomous driving chips. Some are easy bottom-fishers like Intel (INTC) or Advanced Micro (AMD) or Kroger. Some are just bricks-and-mortar retailers that typically rally for a few days before you have to toss them back into the sea.

And some are just delicious dinners like McDonald's, or Visa (V) or MasterCard (MA) or Walmart, visible from the surface, capable of luring in with some chum and minnows. (Nvidia is part of TheStreet's Action Alerts PLUS portfolio.) 

Sure, there's some inedible crabs down there. The oils have to be thrown back endlessly. The consumer packaged goods that aren't takeover targets trade like seaweed that tangles your lines.

But for the most part, as the legendary Sam Cooke sang in Summertime, the fish are jumping and the cotton is high. If you don't grab a pole, though, and purchase some bait, it's all lost on you, as it is on so many Americans who don't know a rod from a reel. 

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