How can the stock markets be hitting new highs while we’re seeing terrifying inflation numbers? Jim Cramer told his Mad Money viewers Thursday night that there’s a simple answer. It’s not a surprise when everyone knows what’s coming and why. On the surface, 5% inflation might sound serious but if you look closely, most of that inflation is only transitory and will resolve itself over time.
The biggest source of inflation in Thursday’s report was a 7.3% jump in the price of used cars and trucks. But with new car production slowed due to semiconductor shortages, it only makes sense that people are bidding up used vehicles. Once chip foundries can ramp up to meet demand, those prices will fall.
Then there are airline fares. Is anyone surprised that the price of a seat is going up while airlines slowly start returning their fleets to service?
In industry after industry, we see the same patterns. Grain prices are up until farmers can plant more crops. Restaurant demand is soaring after countless restaurants closed and supply chains were disrupted. And in the plastics industry, cold temperatures in Texas are only now allowing factories to return to normal operation. Cramer said only in freight do we see sustained inflation and that’s because we need to pay our truck drivers more.
So while some may claim inflation is for real, Cramer told viewers the only inflation he sees is in the price of the the stocks being bid up by the WallStreetBets crowd that refuses to sell.
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Executive Decision: PerkinElmer
In his first “Executive Decision” segment, Cramer spoke with Prahlad Singh, president and CEO of the diagnostics and testing company PerkinElmer .
Singh explained that while their COVID testing business continues to exceed their exceptions, PerkinElmer is about more than just COVID. The company has made a dramatic pivot into life sciences, which now accounts for 75% of their business. Consumables and services is a big part of the company’s recurring revenue streams that are building year after year.
Video: Jim Cramer: The impact of inflation on the bull market (CNBC)
PerkinElmer has also been active on the acquisition front, making five acquisitions over the past six months, all in the life sciences area. Singh noted that cell and gene therapies will be a major trend over the next decade.
China remains an important market for PerkinElmer, accounting for 25% of total sales. Singh noted that food quality, safety and testing has been challenged during the pandemic in China, but is now returning to normal levels.
Cramer reiterated that there are only a handful of life sciences companies worth owning, and PerkinElmer is one of them.
Executive Decision: Chewy
For his second “Executive Decision” segment, Cramer also spoke with Sumit Singh, CEO of Chewy , the online pet emporium that’s seen its shares fall 12% as investors flock to the economic reopening stocks instead.
Singh said the increase in pet adoption is not just a pandemic event. Chewy works with over 6,000 pet shelters across the nation that report adoptions are still growing by double digits.
When asked about their continued success, Singh noted that 69% of Chewy’s volume stems from their auto-ship subscription programs, which delivers supplies without customers even having to think about it. The company is also working hard to reduce the barriers to attaining quality pet health visits and medications to ensure that all pets lead long, healthy lives.
Chewy has also built a culture that supports a great customer experience, Singh added. Items like surprise birthday cards not only delights their customers, it also builds trust, he said. That’s why they make an effort to give back to their communities wherever they can.
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At the time of publication, Cramer’s Action Alerts PLUS had no position in the stocks mentioned.
This article was originally published by TheStreet.