You can always tell when we are about to have one of these selling squalls. You just need to read my Twitter page and see all the four-letter stocks people are hoping I will mention, all of which have no earnings, some of which have no revenues. You team that with all of unknown stocks with no earnings and no hope that I am getting asked about in the "Lightning Round" -- stocks with charts that look like a lamp shade: a curve and then straight up -- and you know the froth's got to go. These are the stocks that are being crushed. These are the stocks that should be crushed.
How about some examples? I am completely in the camp that we need a vaccine. But last night we have Novavax (NVAX) on "Mad Money," and as much as I have hope for their flu derivative vaccine, I don't want to buy a stock that just went from $6 to $44 in two months' time. Maybe it's the one. Maybe they really have it. But maybe they don't. If they don't you are going to lose a lot of money. If you want a vaccine story, I would go with GlaxoSmithKline (GSK) or Pfizer (PFE) or Johnson & Johnson (JNJ) . If they don't come up with it, you aren't crushed beyond all recognition.
So examine your portfolio. How many potential cancer cure stocks do you have? How many stocks have antivirals? How many have blood antibodies? More importantly, how many have profits? How many have revenues? Those stocks are very much at-risk. Remember, when you buy a drug stock, you want to be thinking, Can I buy more if this sell-off isn't over? Is there more room? Can I afford to buy more?
What else can't be touched? The banks got shelled Wednesday. They look so cheap. They have big yields. Look at Wells Fargo (WFC) . Unbelievable franchise. New, terrific, CEO, Charlie Sharf. A 9% yield. The backing of Warren Buffett. A recovering franchise with a much better board of directors. Scharf bought $5 million in stock personally at $28.69. It's now at $22.5. You get to buy it much lower than he did.
But you will have to buy it without me.
I think that Wells Fargo's loan book is highly diversified, all sorts of different business and personal loans. There are, however, three problems. They don't make much on those loans, those loans are now much more risky and they make much less money on your deposits. As it goes lower, I think, wait a second, maybe something is very wrong here. Maybe not enough businesses are open. Maybe they are giving forbearance to many customers, especially because of their tarnished reputation. Maybe the dividend isn't even safe. As crazy as it is, I would rather own the stock of Paypal (PYPL) , up 31%, than Wells Fargo, down 58%, because if the stock of Wells goes down from here, I would be very worried, but if Paypal's stock went down, I would just buy more.
I read a ton of articles about how PNC Financial Services Group (PNC) sold its precious stake in money manager Blackrock, raising $14 billion to go on the prowl and do some buying. The bankers placed the 28.8 million shares at $420. BlackRock's (BLK) stock then roared back to $470. But PNC's stock went down $4. I think owning BlackRock is a heck of a lot better and less risky than owning any bank stock PNC could buy. I bet PNC needs every dime it can find if we don't get a "V"-shape recovery. Judging from the worrisome outlook Fed Chief Jay Powell outlined Wednesday, including a statement that there could be significant downside risk, you can't buy a bank stock. Even down here.
The airlines are hitting their lows and they may be tempting to you. But they owe the government a ton of money and their earnings are going to be terrible as people are still reluctant to fly. Business travel is drying up as lots of the white collar folks learn to Zoom (ZM) to save their companies money. It's one thing if the other company, the competition, is getting on a plane to try to close a deal you are vying for. But they aren't. They are doing exactly what you are doing. You are equal in your aversion to travel and you are the cream of the airline customer crop.
What makes me really nervous about the group? There's one person who has the most at stake when it comes to the health of the airlines, and that's David Calhoun, the CEO of Boeing (BA) . Who knows more about who can pay or who is going to do well or when there might be traffic returning? I say it's Calhoun. Tuesday he said that a major U.S. airline will go out of business. He said it right on the "Today" show. He's so negative he's willing to come out and say that one of his prime customers or potential customers could be a goner. Who wants to take a chance with a stock of a company that could go bankrupt. He didn't specify which one so you have to sell all of them.
Wait, there's more. He says that traffic is lucky to be back to 25% by September, that, "Maybe by the end of the year we approach 50%."
Who in heck wants to own an airline stock when the man who needs the carriers to have more traffic and be as solvent as possible says, forget about it. Layer on that Warren Buffett pulled out of all of these stocks and I say, not a bargain.
It gets worse.
Planes can't be full without incurring travelers' wrath. And some countries are instituting two weeks of self-quarantine upon arrival. What a vacation buzzkill.
People could be tempted to buy the oils here. We hit bottom at minus $37 per barrel, right? I say so what? Oil bounced from minus $37 to the single digits and ultimately to the mid-twenties based on lower supply from the Saudis and more demand from U.S. drivers as driving picks up. The only problem is that you can count on one hand the number of oils that actually make money at these prices. I don't trust any of the yields except for Chevron (CVX) . In fact, I don't know I trust any oil other than Chevron. I particularly do not trust any of the master limited partnerships so many wealthy people have been addicted to over the years for their tax benefits. They are cutting distributions left and right.
Speaking of cutting distributions, it's become an epidemic in the real estate investment trust business. Kimco (KIM) , Tanger (SKT) , EPR Properties (EPR) are just three of the many that have done so. It's so bad in REIT land that analysts seemed in disbelief that Simon Properties (SPG) , the huge shopping mall company, is going to pay its dividend in cash. Simon has paid out $33 billion in distributions and it wasn't about to skip on this one. You can skip this entire group.
Retail's been eviscerated by the winners, the generalists, Costco (COST) , Target (TGT) , Walmart (WMT) and Amazon (AMZN) , and the do-it-yourselfers, Lowe's (LOW) and Home Depot (HD) taking care of the rest. Almost no one can compete with these, especially if there is no $3 trillion in more stimulus like House Speaker Nancy Pelosi talked about on Tuesday night on "Mad Money."
When it comes to the cyclicals there are some companies that give you tremendous signals, like Emerson (EMR) , the manufacturing conglomerate that reports monthly trailing orders. We got them today, down 12%. I like to watch the stock of 3M (MMM) , because it has its fingers in so many pies: it's off $4, or 3%, and now has a 4.28% yield. Suboptimal.
You know what would save all of these stocks? A vaccine. You know what seems to get further and further away as officials keep talking about 12 to 18 months, the same thing they say in March. Curious, there, right?
What you want are the stocks that do well in a world that looks a lot like today, because that's the world we are in. The money the Fed dishes out, it ends up helping the clients of the Cramer Covid-19 index.
These stocks have all been as hot as those with no earnings or even revenues. That means they have froth. Let the froth wash out. These kinds of sell-offs typically last three days. Thursday by 2:30, things should get better -- that's when the best rallies begin. If it doesn't start then, then wait until Friday. Then start on your faves in the Cramer Covid-19. Unlike all of the other stocks I mentioned here, you can buy some and then buy some more. That's the best you can ask for.
(Amazon, Costco and Johnson & Johnson are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)
