I'd wait on Nvidia right now, says Jim Cramer
Speakers
Jim Cramer -- Host, Mad Money
— CNBC host, Mad Money
Summary
- The market is being driven by geopolitical fear (potential war with Iran), leading to a broad sell-off (Dow -469, S&P -1.74%, Nasdaq -2.38%).
- Cramer's core teaching is to separate stocks declining due to general war anxiety from those with intrinsic problems.
- He analyzes NVIDIA as a case study: its recent decline is attributed to war-related market sentiment and its status as an easy-to-trade stock, not a fundamental business issue.
- Demand for NVIDIA remains "incredibly strong" per his attendance at the GTC conference days prior, and a new Google technology could alleviate memory chip shortages that have been a headwind.
- Despite strong fundamentals, Cramer advises waiting to buy NVIDIA, as the stock may get cheaper in the near term, but he maintains a long-term bullish view.
- He introduces the "Chem Seven" (e.g., Celanese, Dow, Huntsman, LyondellBasell, Olin) as a thematic trade that would benefit from prolonged Middle East conflict but cautions it has a short "shelf life" and is not recommended.
- Chewy and Lemonade are cited as examples of stocks that have come down dramatically and might be worth buying, but timing is exceptionally difficult ("threading the needle") due to war uncertainty.
- In a caller segment, Cramer expresses a positive view on Medtronic (MDT), citing its attractive valuation (15x earnings) and recent execution, recommending buying more.
- The overarching market view is one of caution; the bottom is unpredictable and not in investors' control.
Trade Ideas
Cramer explicitly states, "ALL THINGS EQUAL I'D WAIT ON NVIDIA" and later clarifies, "I want to be in it long term." The stock is falling due to broad war-related market fear and because it is an easy trading vehicle, not due to weak business fundamentals. Demand is strong, and a Google innovation may help its supply chain. Wait for a better (lower) entry point in the short term, as the stock is likely to get cheaper, but maintain a long-term bullish stance given its strong underlying business. A sudden, positive geopolitical resolution could cause the stock to rally sharply, causing investors to miss a lower entry.
Cramer lists these chemical companies as the "Chem Seven," says they are "easier to own" than NVDA right now, but concludes, "I DON'T WANT THE CHEM SEVEN EITHER THOUGH." These companies are levered to a prolonged Middle East conflict and high petrochemical demand. Their appeal is entirely conditional on the war continuing. Avoid because the thesis has a short "shelf life" (could be two weeks) and is purely event-driven, making it a speculative and unreliable trade. A swift end to hostilities would immediately invalidate the investment rationale.
When a caller asks about Medtronic, Cramer says, "I WOULD BUY MORE." The stock has pulled back to the high $80s, which he finds surprising given the company's positive execution. It is valued at 15 times earnings, which he considers "very inexpensive." The current level is a good opportunity to buy or average down, as the company is doing everything right. Continued broad market weakness could pressure the stock further despite its attractive valuation.
