Sometimes you have to endure a lot of short-term pain to get those long-term gains, Jim Cramer told his Mad Money viewers Thursday. It’s always agonizing watching your favorite stocks head lower, he admitted, but sometimes a company’s long-term outlook is so good, it’s worth the wait.
Case in point, Boeing (BA) – Get Boeing Company Report, a stock Cramer has long championed. Shares of Boeing have been trading sideways seemingly forever as the company struggles with continued delays for its new 787 Dreamliner. Cramer said the 787 has been delayed almost a year from when sources assured him the plane would be ready to fly. Meanwhile, Boeing’s 737 Max is only now returning to service in China.
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It would be easy to give up on Boeing, Cramer admitted, just as he did recently with CVS Health (CVS) – Get CVS Health Corporation Report and Viacom (VIAB) – Get Viacom Inc. Class B Report. But both of these names eventually turned themselves around, and so too will Boeing. You can’t tell when that turn will happen, but it will happen.
The reality is that the majority of people on this planet have never set foot in an airplane. They simply can’t afford it. But in places like China, where hundreds of millions are joining the middle class, the demand for planes is palpable, and there are only two companies in the world that can make them.
Then there are the airlines themselves, all of which are committing to a lower-carbon future. That means retiring older, less efficient planes and buying the latest technology.
As if that wasn’t enough, the pandemic is also winding down, which will unleash a massive travel boom.
All of these point to a bright future for Boeing, Cramer concluded. Eventually, orders have to be placed for new planes, he said, which is why we must endure the short-term weakness in Boeing’s stock now.
Executive Decision: Hormel Foods
In his first “Executive Decision” segment, Cramer spoke with Jim Snee, chairman, president and CEO of Hormel Foods (HRL) – Get Hormel Foods Corporation Report, purveyor of Skippy peanut butter, Planters nuts and everyone’s favorite canned meat, Spam. Hormel just posted strong earnings that included 32% organic sales growth. Shares responded up 4.7% and currently yield 2.3%.
Snee said there’s a lot to be excited about at Hormel. Spam continues to sell very well and see strong growth, while the snack business has been amplified by the acquisition of Planters. The company is now working with new retailers, and he sees strong growth ahead.
Turning to the topic of inflation, Snee said that Hormel is seeing rising costs, from labor and freight to supplies and materials, all of which has been challenging. However, Hormel has created solutions for many of these issues and input costs have started to moderate.
Labor and transportation prices continue to climb, Snee added, and those costs are being passed onto the consumer.
Snee said that Hormel remains committed to its shareholders, which is why it has boosted its dividend.
Executive Decision: Ford Motor
For his second “Executive Decision” segment, Cramer spoke with Jim Farley, CEO of Ford Motor (F) – Get Ford Motor Company Report, about the company’s remarkable turnaround.
Farley said Ford has momentum and is in a great cash position, which has allowed it to reward shareholders by reinstating its dividend.
Much of that momentum is coming from electric vehicles. Farley said Ford is oversubscribed on all of its EVs and it has stopped taking new reservations for the upcoming F-150 Lightning pickup truck. Ford plans to compete at scale with the likes of Tesla (TSLA) – Get Tesla Inc Report and the company is eyeing the lucrative commercial truck and van segment.
Farley noted that Ford has the opportunity to reinvent the brand around EVs, but to do so, it will need to double its EV capacity over the next two years. Batteries remain the biggest challenge, Farley said, but he’s confident it can meet its goals.
“Don’t bet against Ford,” Farley concluded, and Cramer agreed.
Executive Decision: MP Materials
For his final “Executive Decision” segment, Cramer checked in with James Litinsky, founder, chairman and CEO of MP Materials (MP) , the rare earth mining company that’s essential for the production of electric vehicles.
Litinsky said the key to electrifying America is the upstream supply chain. There simply isn’t enough materials for everyone to compete, he explained, and currently, China controls 90% of the magnet market, making it a single point of failure for the rest of the world.
That’s why MP Materials announced it is building a magnet facility here in the U.S. in partnership with General Motors (GM) – Get General Motors Company Report. Litinsky said the deal is a win for both MP Materials, which is beginning to move its operations downstream into magnetics, and for GM, which needs reliable supplies of magnets for its EV motors.
When asked whether it was time to raise cash for expansion, Litinsky noted that MP Materials has $1.2 billion in cash on its books and is in a great position to fund its expansion plans.
Too Few Houses
In his “No Huddle Offense” segment, Cramer pondered how it’s possible that America built 1.4 million homes in 1977, when our country had just 220 million people, but last year, we only built one million homes with a population of 330 million people.
The first answer that comes to mind is of course, the pandemic, but that answer would be wrong. Sure, the pandemic has changed a lot of things, including where people want to live and what types of homes they’re interested in. But the reality is that we’ve been building far too few homes for decades.
The housing market isn’t going to roll over once the Federal Reserve starts raising interest rates, Cramer explained. It’s time to throw out that old “negativity” playbook, he said, and start thinking a lot more positively about housing for the long term.
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