After the Reddit craze, the fundamentals matter once more

On Feb 6, 2021

While the waves on Wall Street caused by Reddit traders seem to have subsided, the advances made in the stock markets this week can be attributed to the impact of last week’s speculative trading frenzy, CNBC’s Jim Cramer said Friday.

After major averages had their best five-day stretch since November, the Mad Money host said last week’s turbulence was largely what drove this week’s climb.

“Last week the Reddit revolutionaries produced some insane action that resulted in a number of key strategists going downright negative,” said Cramer. “Their newfound negativity allowed us to get back on track because we had a lot of bears that were able to turn back into bulls over the course of the week.”

The S&P 500 hit another record after climbing it for the fourth time in a row. The benchmark index moved 0.39% to 3,886.83 on Friday and closed a week up 4.65%. The Nasdaq Composite rose 0.57% on the trading day and gained 6% over the course of the week. The Dow Jones Industrial Average rose 92 points to 31,148.24, an increase of 0.3%, despite the fact that the blue-chip average was the only major index that didn’t finish with a record.

The Dow, about 40 points off its all-time high, will attempt to break its highs from January next week.

“I can’t guarantee the quiet run will resume this week. This was the quiet after the foiled rocket ship emoji revolution,” Cramer said. “But luckily, we’re back in business, making money again by finding the stocks of companies with good fundamentals.”

Cramer announced his schedule for the week leading up to corporate earnings. All profit forecasts are based on FactSet estimates:

Monday: Take-Two Interactive, earnings from Simon Properties

Take-Two Interactive

Q3 2021 Results publication: After Market; Conference call: 4:30 p.m.
Projected EPS: 96 cents
Estimated Revenue: $ 757 million

“Knowing CEO Strauss Zelnick, I bet we’ll get a nice positive surprise, especially now that we’re starting to get leaks about the next Grand Theft Auto, the largest gaming franchise,” said Cramer.

Simon Property Group

Earnings release for the fourth quarter of 2020: after market entry; Conference call: 5 p.m.
Projected earnings per share: $ 2.21
Estimated Revenue: $ 1.13 billion

“Lately, some malls have been getting upgrades for retailers,” he said. “Is the strength real? Can’t wait to find out when we’re getting results from Simon Property Group, the largest mall owner in the world.”

Tuesday: DuPont, Canopy Growth, Cisco, Twitter earnings

DuPont de Nemours

Earnings release for the fourth quarter of 2020: 6 a.m. Conference call: 8 a.m.
Projected EPS: 85 cents
Estimated Revenue: $ 5.15 billion

“I’m expecting great things, which is why I hit the table on my monthly conference call on ActionAlertsPlus.com on DuPont earlier this week,” said Cramer. “DuPont is a great amalgam for making money that spits out.”

Canopy growth

Q3 2021 Results to be published: before the market; Conference call: 10 a.m.
Estimated losses per share: 33 cents
Estimated Revenue: $ 149 million

“A lot of excitement here because the Democrats want to decriminalize [marijuana]but Canopy and his cohort actually need full legalization if they are to keep rising, “he said.

Cisco

Q2 2021 results publication: after market start; Conference call: 4:30 p.m.
Projected EPS: 76 cents
Estimated Revenue: $ 11.93 billion

“Cisco has gradually moved from hardware to more software, and I think we’re nearing the tipping point where the stock should get a much higher valuation,” the host said.

Twitter

Earnings release for the fourth quarter of 2020: after market entry; Conference call: 6 p.m.
Projected EPS: 29 cents
Estimated Revenue: $ 1.18 billion

“Twitter still has a lot of room to run,” he said.

Wednesday: General Motors, Zynga, Coca-Cola revenue

General Motors

Earnings release for the fourth quarter of 2020: 7:30 a.m. Conference call: 10 a.m.
Projected earnings per share: $ 1.64
Estimated Revenue: $ 36.19 billion

“I expect a free cash flow explosion and a commitment to end the internal combustion engine in just over a decade,” said Cramer. “I think CEO Mary Barra did some remarkable things here and created a battery technology that is worth the price of the whole company.”

Zynga

Publication of results for the fourth quarter of 2020: 4:05 am; Conference call: 5 p.m.
Projected EPS: 9 cents
Estimated Revenue: $ 679 million

“The entire video game business is on fire and the rising tide is raising all boats, including the Zynga,” the host said.

coke

Earnings release for the fourth quarter of 2020: ahead of the market; Conference call: 8:30 a.m.
Projected EPS: 42 cents
Estimated Revenue: $ 8.61 billion

“It’s not often that you can get a great company’s stock with a 3.5% return, in part because so many of your restaurant customers are closed,” he said. “As soon as we open again, this business should come back.”

Thursday: PayPal Investor Day; PepsiCo, Disney revenue

PayPal

“I bet you will hear from CEO Dan Schulman at the analyst meeting,” said Cramer. “I recommend buying the stock beforehand if you don’t [own it] already.”

PepsiCo

Earnings release for the fourth quarter of 2020: 6 a.m. Conference call: 8:15 a.m.
Projected earnings per share: $ 1.45
Estimated Revenue: $ 21.76 billion

“I think they’ll do a great number because their snack business gets them a lot more exposure than Coca-Cola,” said the host.

Disney

Publication of results Q1 2021: after market start; Conference call: 4:30 p.m.
Estimated losses per share: 33 cents
Estimated Revenue: $ 15.89 billion

“As I’ve said to you many times, Disney is my favorite reopening. I’m knocking on the table again,” he said. “In the meantime, their Disney + streaming service just won’t end because it’s an incredible bargain.”

Friday: Newell Brands

Newell Brands

Earnings release for the fourth quarter of 2020: ahead of the market; Conference call: 8:30 a.m.
Projected EPS: 48 cents
Estimated Revenue: $ 2.61 billion

“There has been so much rush on this case, mostly because of board challenges and missed quarters,” said Cramer. “Those problems are definitely behind it. I think Newell’s comeback is real and the stock can still be bought.”

Disclosure: Cramer’s charitable foundation owns shares in DuPont, Take-Two Interactive, and Disney.

Disclaimer of liability

Questions for Cramer?
Call Cramer at 1-800-743-CNBC

Would you like to dive deep into Cramer’s world? Open it up!
Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com