Cramer's Mad Money Recap 10/6: Dow, General Motors

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Why did stocks open sharply lower Wednesday morning? Jim Cramer told his Mad Money viewers he struggled to find a reason that explained the weakness. Yes, there were some negative headlines out of Europe and Asia, but nothing new that would have a real impact on U.S. companies. On fact, most of the market’s biggest problems are man made, Cramer said, and those are the easiest to solve.

© TheStreet Cramer’s Mad Money Recap 10/6: Dow, General Motors

If we had the political will, for example, we could solve the looming debt ceiling standoff with the stroke of a pen. Lowering oil prices is as easy as opening the strategic reserves.

How low will the industrials go? Over on Action Alerts PLUS, Bob Lang and Chris Versace say the chart of the Dow Industrials shows we are at an interesting point, the bulls and bears are fighting a turf war. Get the best of their investing insights and more trading strategies at TheStreet’s AAP investment club.

None of these things affect the earnings of Dow Chemical or General Motors , two great companies that gave investors positive outlooks for the future. Cramer said it’s ludicrous that GM trades for just nine times earnings, and shares of Dow should be markedly higher as well. Both of these companies are committed to shareholders and have gotten religion when it comes to the environment.

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That’s why after weeks of carnage in the market, where every rally turned into a trap, Cramer said it’s time to start having some conviction on down openings like Wednesday’s. If your investing theses are still intact, it might be time to start doing some buying when the market gets hit next.

Executive Decision: Marvell Technology

In his first “Executive Decision” segment, Cramer spoke with Matt Murphy, president and CEO of Marvell Technology , the semiconductor company that just wrapped up its annual investor day. Shares of Marvell closed up 7.34% Wednesday at $63.75 and are up 34% year-to-date.

Murphy said Marvell is completing its five-year investment plan and now finds itself in the exciting position of being a leader in 5G wireless, automative and high-performance computing. The cloud is in the middle of a long-term secular growth trend, he added, and Marvell is in the “sweet spot” of cloud-optimized silicon that will help drive that growth for years to come.

When asked about the automative sector and the many chip shortages there, Murphy explained that Marvell is busy building the next generation of chips for autos, those that will provide networking, storage and computing for autos with even more capabilities than we see today. Marvell had zero automative business just a few years ago, but now has $100 million in revenue from that industry.

Executive Decision: Constellation Brands

For his second “Executive Decision” segment, Cramer also spoke with Bill Newlands, chairman, president and CEO of Constellation Brands , the beer, wine and spirits company that just raised forecasts despite running into headwinds this quarter. Shares of Constellation current trade at 18 times earnings.

Newlands said that despite rising commodity prices and a one-time charge on their hard seltzer business, Constellation was still able to raise their guidance thanks to the growth profile of all of their brands. For example, the beer market remains flat in the U.S., but Constellation is still taking market share and saw 8% growth in the quarter.

When asked about the disappointment with seltzer, Newlands explained that everyone seemed to overestimate the growth in this hot new category. Seltzer seemed to hit a wall over the past eight weeks, however, which prompted the write-down. Seltzer will be an important part of Constellation’s portfolio, he said, but at a lower growth rate going forward.

Newlands also commented on Constellation’s share buy-back program. He said despite the headwinds, the company remains committed to returning $5 billion to shareholders and is already about 60% complete in its efforts.

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Executive Decision: Levi Strauss

For his final “Executive Decision” segment, Cramer checked in Chip Bergh, president and CEO of Levi Strauss , the apparel and denim maker that just posted strong results that included an 11-cents-a-share earnings beat.

Bergh said he was very pleased with this past quarter, noting that Levi’s is benefitting from both a denim replacement cycle and also internal changes that are driving the company into more premium markets that are boosting gross margins, including 57.5% this quarter.

When asked about the supply chain, Bergh explained that Levi’s is fortunate to have a diverse supply chain that’s not beholden to any one country. He said products typically can be made in multiple countries, if needed, which gives the company flexibility. Also, given its scale, it can lock in cotton products at great prices.

Bergh was also bullish on next-gen retail locations, which continue to expand throughout the country. He said these smaller-footprint stores are more premium and offer customized products for the local market. Next-gen locations are proving to be highly profitable.

Cramer said he’s always on the hunt for great brands that know how to execute and Levi’s is at the top of his list.

What Could Go Right for Nucor

In his No-Huddle Offense segment, Cramer opined on steelmaker Nucor , saying he takes Goldman Sachs’ downgrade of the stock Wednesday personally.

According to Goldman’s analyst, the good news is already baked into the share price. But Cramer noted that shares are already down 20% from their August highs, which has “baked out” all of the good news.

There’s still a lot that could go right for Nucor. The company’s steel is still in high demand for autos and pipelines and that’s not even counting the possibility of infrastructure spending from Washington. Nucor is also buying back stock and returning capital to shareholders, all of which makes Nucor best in show.

Cramer said regular investors are nimble enough to follow Goldman’s recommendation and sell now and get back in at lower prices. He said it makes no sense to sell now, down 20%, and risk missing all of the upside potential.

Lightning Round

Here’s what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Wednesday evening:

DraftKings : “I think this is well-run and has an incredible share of the market. I’m a buyer.”

REE Automotive : “I like Tesla and Ford Motor . Let’s get in those.”

JFrog : “I’m surprised this stock is down so much. “

B&G Foods : “I wish I liked this one more, but I like Campbell Soup more than B&G right now.”

Skyworks Solutions : “Skyworks is a fantastic buy. They are in the sweet spot.”

Apellis Pharmaceuticals : “Why not just buy Regeneron Pharmaceuticals . They have the best franchise there is.”

Keysight Technologies : “Their last quarter was terrific. This makes me angry to see this stock so low.”

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