The business of America is small business, and right now, business is booming, Jim Cramer told his Mad Money viewers on Wednesday.
And while you can’t invest directly into the heart of America, you can invest in the enablers, those companies that make small businesses successful.
We heard from two of those companies earlier this week, Shopify (SHOP) – Get Report and Etsy (ETSY) – Get Report. Shopify democratizes business and allows just about anyone to quickly set up an online store. Etsy, meanwhile, connects 4.7 million individual and small business sellers to buyers all around the globe. How do these two stack up as investments? Shares of Shopify are up 4,700% over the past year, with Etsy rising 2,000% over the same time period.
Then there’s Square (SQ) – Get Report, the small business payments platform that’s quickly evolving into the perfect small business lender, as the company already knows exactly how much business you’re bringing in. Shares of Square are up 2,000% over the past five years. Still other small business enablers include Wix (WIX) – Get Report and Adobe Systems (ADBE) – Get Report.
Some names you might not think of when it comes to small business are Ford Motor (F) – Get Report, whose light-duty trucks are the workhorses of small business. There’s also Facebook (FB) – Get Report for advertising, American Express (AXP) – Get Report and Apple (AAPL) – Get Report for your favorite small business devices.
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Looking Ahead to Back-to-School
The consumer economy is booming. That’s why Cramer checked in with Adrianne Shapira, former managing director and retail analyst at Goldman Sachs and the current managing director of Eurazeo Brands, for an update on the upcoming back-to-school shopping season.
Shapira said retailers across the country are gearing up for what promises to be a monster back-to-school season, with kids and parents alike needing new clothes, gear and supplies as they head back to work and school. She highlighted Herschel as one lifestyle brand that’s capitalizing on the trend. She said the brand has been focusing on both product innovation and speed to market to deliver new products faster than ever before.
One of Herschel’s new product lines includes insulated totes, backpacks and lunchboxes that are perfect for summer getaways, back-to-school or a return to the office. The new line is the company’s first direct-to-consumer product, ensuring they can deliver as quickly as possible.
Can Chipotle Deliver?
Chipotle has been one of the biggest pandemic winners because it was one of the pioneers of mobile ordering at scale. But as shareholders became accustomed to perfection, shares dipped as the company delivered less-than-perfect results earlier in the year.
After bottoming in May, the stock of Chipotle has been steadily marching higher. Food prices have begun to retreat and the company was able to push through a 3% to 4% price increase to customers to offset rising labor costs.
With far less post-pandemic competition, Cramer said the stock of Chipotle could rally a lot higher. Shares currently trade for 63 times earnings, but Cramer noted that the earnings estimates continue to rise, making the stock a real bargain.
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Executive Decision: Constellation Brands
In his “Executive Decision” segment, Cramer spoke with Bill Newlands, president and CEO of Constellation Brands (STZ) – Get Report, which delivered strong quarterly results that included a 10.7% rise in beer sales and 16% organic growth in its wine and spirits business. Shares of Constellation closed up 1.6% on the news.
Newlands said now that the economy is reopening, Constellation is seeing tremendous demand for all of their products. Modelo is now the No. 2 beer brand in the country with lots of room to continue growing. Meanwhile Pacifico is proving to have lots of appeal with GenX consumers and is now the fourth fastest growing beer brand. Newlands noted that the growth trajectory for Pacifico is very similar to that of Modelo years ago.
Constellation is also seeing a lot of success in the hard seltzer category. The company sold 10 million cases with just a single SKU last year, Newlands said, and they’re very excited for what they have in store this year.
Newlands added that Constellation remains committed to shareholders as well. The company has pledged to return $5 billion to shareholders, mostly in the form of share buybacks.
In his No-Huddle Offense segment, Cramer took a quick look back at the first half of the year to see which company delivered the most stunning upside surprise. That company was RH (RH) – Get Report, which saw 78% revenue growth that no one saw coming.
How did RH see the strongest demand trends in the industry? Simple. The company has Gary Friedman at the helm.
Cramer explained that RH doesn’t have fashion risk or seasonal risk and investors don’t need to worry about promotions crimping gross margins. RH is truly a lifestyle brand, one with palaces for showrooms and a wealthy clientele that’s second to none. With a continuing strong housing market, high stock prices and pent up demand from the pandemic, Cramer said RH will be the stock to own for the second half of the year as well.
Here’s what Cramer had to say about some of the stocks that callers offered up during the “Mad Money Lightning Round” Wednesday evening:
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At the time of publication, Cramer’s Action Alerts PLUS had a position in FB, AAPL.