Is it finally time to sell everything and wait for the selling to subside? Jim Cramer told his Mad Money viewers Wednesday that despite the day's monster 1,100 point decline in the Dow Jones Industrial Average, knowing when the bottom has arrived and when to buy back into the market is never that easy.
Cramer's mantra has always been to never stop investing. There were only two times in his entire career where selling everything made sense, and this isn't one of those times.
The reason it's so hard to trade in and out of selloffs is because there are too many moving parts. Many of the stocks seeing the biggest declines, like Target (TGT) and Walmart (WMT), will do a lot better once inflation is under control. The only problem, inflation is everywhere.
The Federal Reserve is battling inflation in housing, but demand won't decline enough to meet supply until mortgage rates hit 7% or 8%. Autos also need higher loan rates to give semiconductor makers a breather. Then there's labor, which will require companies to start laying off workers before inflation will cool.
One of the biggest drivers of inflation remains the war in Ukraine, which is pushing up both food and oil prices. Neither of these are in the Fed's control. There's also freight costs, travel and a glut of stimulus savings that consumers still need to work off.
Fed chair Jay Powell needs to slay all seven of these inflation dragons, Cramer concluded. Exactly when that will happen is anyone's guess, which is why you can't risk selling everything and missing the bottom.
Executive Decision: Wingstop
In his first "Executive Decision" segment, Cramer sat down with Michael Skipworth, president and CEO of Wingstop (WING), the chicken wing chain with shares down 60% from their highs.
Skipworth explained that unlike every other restaurant chain, Wingstop is actually in a deflationary environment, after wing prices peaked last year during the height of the pandemic. Wing prices have fallen from $3.22 per pound to just $1.63 per pound, a very meaningful decline.
When asked about that volatility, Skipworth said that chicken farmers make their money from chicken breasts, which leaves wings as a byproduct. And after everyone added wings to their menus during the pandemic, many couldn't make them profitable, as Wingstop has.
Part of the reason Wingstop is so profitable is their labor footprint. A location generating $1.6 million a year can run with just three or four team members, Skipworth said, which is why they ultimately see over 7,000 locations possible in the U.S.
The Bull Market in Lithium
There's always a bull market somewhere, Cramer reminded viewers. They're just harder and harder to find. One such bull market is in lithium, that coveted mineral that's a vital part of the batteries that power EVs. Lithium prices have skyrocketed 800% since 2020 as demand for EV batteries has grown. But due to the capital intensity of mining and refining lithium, new supply has been slow to come online.
Among the major players, Cramer said he likes Livent (LTHM), the spin-off of FMC Materials (FMC), and Albemarle (ALB). Chile's Sociedad Quimica (SQM) also manufactures lithium, but shares are already up 100%, making it too risky to recommend.
The lithium boom won't last forever, which is why Cramer said he's not a fan of the handful of smaller lithium miners. By the time these companies bring their production online in a meaningful way, supply may have already caught up to growing demand.
Executive Decision: Alteryx
For his second "Executive Decision" segment, Cramer also spoke with Mark Anderson, CEO of Alteryx (AYX), the data and analytics company that just wrapped up its annual investor day. Shares of Alteryx are off 24% over the past month along with the broader averages.
Anderson said digital transformation remains a top priority for many companies and using data to make better decisions, has changed from a "nice to have" resource to a "must have."
Alteryx remains laser focused on customers and is thoughtfully deploying capital around the globe to meet the growing demand, Anderson said. The company's total addressable market is estimated to be 65 billion and could top $100 billion in the coming years.
Anderson noted that Formula One racing uses Alteryx to process real-time data from the cars so teams can monitor performance and adjust fuel and tires better. Alteryx is also used for fan engagement and more.
Lightning Round
In the Lightning Round, Cramer was bullish on Vertex Energy (VTNR), Valero Energy (VLO), Marathon Oil (MRO) and BioNTech (BNTX).
Cramer was bearish on Veru (VERU) and Golden Ocean Group (GOGL).
From Walmart to Target
In his "No Huddle Offense" segment, Cramer pondered whether he was too harsh in his criticism of Walmart CEO, Doug McMillan, on last night's show, after the company delivered abysmal earnings. Walmart's shortfall was only amplified Wednesday when Target suffered many of the same issues -- issues that sent shares plunging 25% by the close.
Make no mistake, these were huge errors, Cramer said, and CEOs making millions of dollars a year need to do better. They should have pre-announced the shortfall to help investors stave off their losses. "How did they not see this coming?," Cramer asked. Shareholders deserve better, he said.
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