Cramer says investors are rotating stocks in a ‘tricky moment’

Market players face a challenging investing environment as more investors turn their attention to reopening stocks, CNBC’s Jim Cramer said Tuesday.

“This is a tricky moment. The stock market’s had an enormous run from the bottom,” the “Mad Money” host said, “but the vaccine situation is still fluid and we don’t know when we’ll be able to safely reopen.”

The comments came after the major stock averages all surged more than 1% during the trading session, in which the Dow Jones Industrial Average saw its best trading day since November.

The Dow closed at 30,687.48, a 475.57, or 1.6%, rise from the day prior. The S&P 500 moved 1.4% to a 3,826.31 close. The tech-heavy Nasdaq Composite also posted a 1.6% gain to settle at 13,612.78. All three indexes are down about 1% or more from their record highs.

Market activity was defined by a rotation from the stay-at-home stocks that performed strongly through the lockdown environment into stocks that would benefit from an economic reopening, Cramer said.

The former hedge-fund manager, however, advised viewers to invest not along lockdown and reopening themes but to invest in companies with good management.

“Rather than swapping out of the nesting stocks and into the reopening plays, you want stocks of well-run companies that can keep working even if it takes longer than expected for us to get vaccinated,” Cramer said. “If you buy the best of breed [companies], they’ll adapt to anything, including the long-awaited conclusion of the worst pandemic in decades.”

Among the reopening names that fit this theme, he recommended Disney and Boeing, two household names whose businesses he expects will rebound when travel restrictions are lifted by governments around the globe.

Disney, whose entertainment dynasty includes movie studios, cruise lines and theme parks, saw revenue declines of 42% and 22% in each of its past two earnings reports. The company is set to report its latest quarterly results next week.

While travel was limited, Disney doubled down on video streaming with Disney+, Cramer said, adapting to capitalize on consumers spending more time at home in the pandemic. Disney shares seemed to never skip a beat with shares now trading 22% higher than their pre-pandemic levels.

“It basically became the ultimate nesting stock, but you never forgot what [it] could become once the country reopens,” Cramer said. “Sooner or later, we know the world will reopen, and Disney will be ready.”

As for Boeing, another reopening play, Cramer highlighted that the plane manufacturer is borrowing $9.8 billion to refinance its debt. With air travel down dramatically in 2020, the company dealt with order cancellations on top of woes brought on by the 737 Max.

The debt move is a bullish sign for Cramer.

“That will make it easier for them to get through what are hopefully the final months of the pandemic,” Cramer said. “If there’s a travel boom once we reopen” the airlines will need more planes, and Boeing has “all the inventory they need.”

Boeing shares remain more than 40% below their pre-pandemic trading levels. The stock closed at $200.94 on Tuesday, down 6% in 2021.

Disclosure: Cramer’s charitable trust owns shares of Boeing and Disney.

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