Jim Cramer doesn’t want a stimulus deal to help the stock market; he wants a stimulus deal to help save the hospitality industry, he told his Mad Money viewers Thursday night.
Independent restaurants are clearly under pressure. That much was clear after Darden Restaurants (DRI) – Get Report easily beat earnings expectations despite revenue sinking 28.2% year-over-year to $1.53 billion. The stock rallied 8.1% in response and was the best performer in the S&P 500. The strength in Darden should be terrifying, though, Cramer said.
Cramer reasoned that Darden has all the things that the smaller independent restaurant operators don’t have to survive the shutdown. It has scale, leverage, a powerful balance sheet and the technology to pivot amid the pandemic.
At a time where independent restaurants can’t even accurately estimate how much food they’ll need in a given week, Darden has poured resources into its online ordering app and made curbside pickup a breeze.
It has also reinstated its dividend and repaid a $270 million term loan as it continues to make money despite operating at half capacity or lower. These are simply things that small restaurants cannot do.
Even after Thursday’s run, Darden stock is still a buy, Cramer said. As long as the pandemic is ongoing, Darden is likely to do well.
But, he added, he doesn’t want to see a world where there are no independent restaurants. What we really need is for Washington to figure out a stimulus plan for the smaller hospitality players.
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Executive Decision: Sanofi
On the show’s “Executive Decision” segment, Jim Cramer spoke with Paul Hudson, CEO of Sanofi (SNY) – Get Report.
Cramer said he has liked this company for a long time and likes what it’s doing now. That includes selling its $13 billion stake in Regeneron (REGN) – Get Report and redeploying the capital for growth and working on a COVID-19 vaccine.
The company is working on two vaccines forCOVID-19, Hudson said, adding that “we need to play our part…we know what our duty is.”
Sanofi expects to enter Phase 3 testing in November or December and have a vaccine ready in early 2021. When that happens, it plans to produce a billion doses. That’s not hyperbole, he added, as the company already produces a billion doses of various vaccines each year.
“We’re doing it the right way to high standards and we’re going to play a big part in helping get people back to normal,” he said.
Hudson also reiterated the need for people to get the flu shot this year, as the last thing our world needs is another outbreak. As for the company’s Dupixent treatment with Regeneron, the treatment has serious potential.
Because it treats type 2 inflammation, it can help with multiple issues, like asthma and atopic dermatitis. “This is the real deal,” Hudson concluded.
Nvidia Deal Looks Even Better
On Sept. 13, Nvidia (NVDA) – Get Report announced its plans to acquire Arm Inc. from SoftBank in a $40 billion cash and stock deal. Shares rallied 5.8% that day, because Wall Street knew it was a great deal, Cramer said.
However, now that the stock has gotten caught up in the stock market pullback, Jim Cramer says it looks much more attractive back near its prior levels before the deal was announced.
Talking to Nvidia CEO Jensen Huang on CNBC’s “Squawk on the Street,” Cramer said the two companies will benefit from a bevy of synergies. Arm Inc. is a great asset, although it’s not technically a chipmaker. Instead, it designs and licenses its technology to other semiconductor companies.
That has its technology all over the world, ranging from smartphones to autonomous driving. It’s even a supplier to Apple (AAPL) – Get Report.
In short, “I think it’s worth every penny,” Cramer said of the deal. But that’s if the deal can gain regulatory approval — and that may be a “big if,” he added.
Typically the issue of antitrust arises when the two companies are competitors. Luckily, that’s not the case with Nvidia and Arm. Still, one could make the argument that the company will be too dominant if the two join forces.
It may take 18 to 24 months to close, but it’s worth the wait if Nvidia can get it done. With Arm, it will be unstoppable.
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Am I Diversified?
On the show’s “Am I Diversified” segment, Cramer helped investors with their portfolios by looking at their five largest holdings.
The portfolio for the first investor included Shopify (SHOP) – Get Report, Walt Disney Co. (DIS) – Get Report, Abbott Labs (ABT) – Get Report, Clorox (CLX) – Get Report and Honda (HMC) – Get Report. Cramer blessed the portfolio as being well diversified.
The next caller read off his top holdings, which included Microsoft (MSFT) – Get Report, PayPal (PYPL) – Get Report, Nvidia, Activision Blizzard (ATVI) – Get Report and WingStop (WING) – Get Report.
“We do have a bit of an issue here,” Cramer said, noting the number of tech stocks. Because they are such high-quality companies though, he reasoned that the portfolio is fine, but the investor should know some of them will trade in sync.
The next caller’s portfolio included Amazon (AMZN) – Get Report, Apple, BlackRock (BLK) – Get Report, Lockheed Martin (LMT) – Get Report and e.l.f. Beauty (ELF) – Get Report.
Cramer also gave this portfolio the green light for being diversified.
Rapid COVID-19 Test a Game-Changer
On the show’s No-Huddle Offense segment, Cramer discussed Abbott Labs’ latest rapid Covid-19 test.
The test, called BinaxNOW, is a $5, 15-minute nasal test. Those being tested will have their swab rubbed on a card that is then swiped and gives a false or positive reading with a 97% accuracy, according to the company.
It’s not 100% accurate, Cramer cautioned, so masks will still be necessary.
However, the results can be uploaded to Abbott’s Navica mobile app, which can then be used like a pass to get into events, onto flights and into buildings. Cramer hopes it will get him into the Super Bowl if his Philadelphia Eagles make it.
Abbott Labs says it can start producing 50 million tests by October and Cramer reasons that “this is going to be the game-changer.” If our country can get on board with this system, it will allow the economy to open much more and much faster than expected.
The technology is here, but is the country’s organization and willpower? We can only hope, Cramer said.
Here’s what Jim Cramer had to say about some of the stocks during the Mad Money Lightning Round:
Bioxcel Therapeutics (BTAI) – Get Report: “I’m going to say it’s OK, because it can be your one speculation stock. Everyone can have one speculation.”
Schrodinger (SDGR) : “No, I don’t like this company. It’s just not a great company.”
Dada Nexus (DADA) : “I am recommending Alibaba (BABA) – Get Report, but that’s about all I want to do with China. Or maybe JD.com (JD) – Get Report, but that’s all right now.”
ADT Inc. (ADT) – Get Report: “I don’t like that company and I don’t think it’s run very well.”
HCA Healthcare (HCA) – Get Report: “I don’t want to own HCA yet. It’s very expensive to run a hospital right now.”
Five9 (FIVN) – Get Report: “I am continually impressed by this company. I’m surprised it hasn’t been taken over yet.”
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At the time of publication, Cramer’s Action Alerts PLUS had a position in NVDA, AAPL, ABT, AMZN, DIS, CLX, MSFT.