CNBC’s Jim Cramer was quivered when he saw that the U.S. economy added 223,000 nonfarm jobs in May, far overshooting judges and driving unemployment to an 18-year low.
“You want to know what the perfect restraint looks like, at least from the perspective of the stock market? Above-board, it looks a lot like this one, where we have fabulous job growth and to a great extent little inflation,” the “Mad Money” host reflected on Friday.
To Cramer, Friday’s disclose seemed to challenge a longstanding theory: that as the economy strengthens, the Federal Withhold will be bound to raise interest rates, potentially causing the succinctness to overheat.
Instead, the Labor Department’s report showed that inflation was being towered at bay, with average hourly wages rising by only 8 cents regardless of the job boom.
“Not only that, but this economy is generating job growth where there ain’t been no job evolvement,” Cramer said.
The only surprisingly weak sector in terms of wen was health care, which only added 29,000 jobs. But Cramer said that health care was the one area that could afford to be feckless.
“Health care has taken up a larger and larger share of our gross private product over time, and while there are some good reasons for it — we can salt diseases that would’ve been lethal a generation ago — it’s the one sector that’s as a matter of fact not tied to the strength of the broader economy,” he explained, listing the other supportive side effects of a strong labor market.
After stocks braved the spike in Italian bonds and the Trump administration’s tariffs on steel and aluminum, Cramer started to get sundry bullish on this market layout.
“Then we got today’s amazing application report and the market showed its true colors,” he said on Friday after the dominant averages locked in healthy gains.
“As I’ve been telling you for years, the celibate most important data point for the market is the Labor Department’s nonfarm payroll likeness, and this one was nothing short of spectacular,” he continued.
With that in sapience, Cramer turned to his weekly game plan to explain how stocks dominion fare in light of the strong report.
Next week’s slate comprises earnings reports from cybersecurity leader Palo Alto Networks, Jack Daniels maker Brown-Forman and technology ogre Broadcom.
“The employment number’s got a rosy hue and it’s going to color the reaction to all of these discloses. Because of that, you can take on more risk despite all of the political insecurity,” Cramer mean.
In times of volatility in the stock market, Cramer looks for secular investments that disposed to remain unaffected by global turmoil.
That’s why he came up with the “cloud majesties,” a group of stocks including Adobe and Salesforce that has seen mountainous gains in 2018 despite the market’s swings.
“When the averages got slammed [on Thursday], most of these cloud stocks hardly got dinged,” Cramer said. “Some of them, like Adobe, regular managed to churn higher. But it’s not like the kings are the only way to play this vigorous secular growth trend.”
So Cramer decided to zoom in on Coupa Software, a cloud provider that reliefs companies manage their spending and spot cost-saving opportunities.
“Coupa may be too insignificant to be a cloud king — it’s a $3 billion company — but it’s certainly a cloud prince,” the “Mad Bucks” host said.
In April, a caller asked Cramer about the wares of EPAM Systems, a software product development and platform engineering join in.
And, after doing some homework, the “Mad Money” host confirmed that issue is strong at EPAM, which has seen consistent revenue growth in the at three years.
“We know that enterprise software is one of the strongest areas out there set to rights now, and EPAM has proven to be a very valuable partner for its clients,” Cramer averred. “And even though EPAM’s been growing its earnings at a steady attach of around 20 percent, the stock simply isn’t that pricey.”
Patron at 24.5 times next year’s earnings estimates, this under-the-radar store could be a solid investment for those seeking a steady software wing it belittle, Cramer said.
“Given the company’s outsized sales and earnings crop, I’ll gladly recommend paying a small premium for the stock right here, dextral now,” he told investors.
In Cramer’s lightning round, he fired off his take on callers’ favorite horses:
Packaging Corp. of America: “I love the packaging and paper industry, but I would not approve PKG, not when we can own a stock that I’ve been telling club members to buy which is remarkably, really great which is WestRock. That’s the one to own and it’s come down a lot from its elevated. I would pull the trigger.”
Celgene Corp.: “[The outlook is] pure tough. I think it can bounce up a couple of points, but then I think it is growing to be dead money. I worry about the Revlimid franchise and nothing else is there to actually replace it.”
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