Mad Money 06/02/26 | Audio Only
Speakers
Jim Cramer
— Host, Mad Money
Summary
Jim Cramer highlights growing vulnerabilities in AI-driven tech stocks due to massive capital needs for data centers, and recommends rotating into undervalued non-tech sectors like banks, healthcare, consumer staples, and fast food. He interviews CEOs of Palo Alto Networks, Signet Jewelers, and Cisco, and offers specific picks including JP Morgan, Johnson & Johnson, Kimberly Clark, Yum Brands, Kraft Heinz, Signet Jewelers, Elanco, and Energy Transfer. He also reflects on his Salesforce trade as a lesson in asymmetric risk and holding through panic.
- Cramer warns that AI buildout costs may pressure tech stocks as companies like Alphabet raise huge capital.
- He recommends buying non-tech stocks as an antidote: JPM, JNJ, KMB, YUM, KHC.
- Signet Jewelers CEO discusses strong quarter and undervaluation; Cramer endorses the stock.
- Palo Alto Networks CEO emphasizes platformization and AI-driven cybersecurity demand.
- Cisco CEO discusses silicon ownership and quantum-safe networking as competitive advantages.
- In the Lightning Round, Cramer prefers Elanco over Zoetis and likes Energy Transfer.
- Cramer uses Salesforce as a case study for asymmetric risk after buying at 13x earnings.
- Overall theme: investors should prepare for a potential tech pullback by owning cheap, defensive names.
Trade Ideas
JP Morgan cheap at 13x earnings.
JP Morgan is the best bank in the world with balanced growth, trading at only 13 times earnings, down 7% year-to-date, making it a rare opportunity to buy a fortress franchise cheaply.
J&J undervalued with no patent cliffs.
Johnson & Johnson has 10 commercialized drugs each generating over $1 billion, a growing medtech business from acquisitions, no major patent expirations, and a low 19x P/E multiple, but should be bought slowly due to lack of near-term support.
Kimberly Clark cheap with safe yield.
Kimberly Clark is a premier consumer staples company with world-class brands, merging with Kenvue, trading at 13 times earnings with a 5.25% safe yield, and CEO Michael Shu can exploit synergies.
Yum Brands to rally on Pizza Hut sale.
Yum Brands is likely to sell its Pizza Hut business to LongRange Capital, leaving KFC and Taco Bell, which are amazing performers, and the stock should trade much higher without Pizza Hut.
Kraft Heinz bet on CEO turnaround.
Kraft Heinz is a faith-based investment in CEO Steve Cahillane, who successfully turned around Kellogg, and the stock yields 6.85%, though it carries risk from past management issues.
Signet Jewelers strong and undervalued.
Signet Jewelers reported a strong quarter with consistent growth, free cash flow of $600 million, 30% EPS growth, and is undervalued relative to its performance; a good time to buy before the fall season.
Elanco is top animal health play.
Elanco is preferred over Zoetis in animal health because CEO Jeff Simmons has come on very strong recently.
Energy Transfer cheap with good dividend.
Energy Transfer is a terrific situation: inexpensive and offers a good dividend.
Salesforce too cheap to sell at 13x.
Salesforce was bought at 13 times earnings when it was too hated, and the stock now has asymmetric risk-reward; holding is better than selling, and any dip back to the 170s would be a compelling buy.
