Jim Cramer presents methods to capitalize on the subsequent market sell-off
With stock market trading at record levels, CNBC’s Jim Cramer on Tuesday gave advice on how investors can capitalize and make profits if stocks fall in the future.
“The market is often wrong, especially during the profitable season. You need memory to take advantage of these temporary multi-day declines,” said the Mad Money host.
The comments come after a mixed day on Wall Street as the Dow Jones and S&P 500 averages fell from their highs the previous day and both indexes had a six-day winning streak. The Dow fell 10 points to 31,375.83 and the benchmark S&P 500 index fell slightly 0.11% to 3,911.23.
The Nasdaq Composite was the exception. It rose 0.14% on a record close of 14,007.70 and extended its winning streak to four days.
“There’s always a sell-off … so on a balmy day when not much has happened,” said Cramer, “let me tell you how you can take advantage of the next sell-off. You have to remember what the last time it was plastered and then bounced back right away, so you’re ready for the next opportunity. “
Cramer used recent deals at Chipotle and Constellation Brands as examples.
Chipotle stocks retreated nearly 3% in two trading days after the restaurant chain released a mixed quarterly report a week ago. While some investors disliked the company’s vacation quarter results, Cramer called it a mistake, as Chipotle saw 11% revenue growth in the same business in January, the first month of the current quarter.
Shares have rallied 4.8% since then, hitting a new closing high of $ 1,550.49 on Tuesday.
“This stock was crushed by people who didn’t like the neighborhood. I told you they were wrong. Why? Because these people didn’t know,” Cramer said. “Sure enough, today Chipotle hit a new all-time high. Don’t sell it. For now, the company is only beating it with delivery and all sorts of new ways to deal with takeaway.”
Constellation Brands, the spirits and wine company whose brands include Modelo and Corona, lost 8% in market value after posting sales and earnings spikes in the third quarter of fiscal about a month ago. After falling below $ 211 in late January, Constellation stock has since rebounded nearly 11% to $ 233.8 on Tuesday.
The alcohol company is also heavily involved in Canadian cannabis producer Canopy Growth, which reported mixed results in its fourth quarter report on Monday. Canopy stocks are up nearly 63% over the past month.
“The market was just plain stupid. It was stupid as a bag of hammers. Today Constellation hit $ 233,” said Cramer. “This will hit its all-time high of $ 240. Canopy is up from $ 29 to $ 49. [CEO] Bill Newlands came [this show] and he gave you a two-fer, but you had to listen. You had to know he was right and the market was wrong. “