The best time to invest will be when investors are concerned that will increased labor as well as gasoline expenditures will negatively impact company profits ahead of earnings season, CNBC’s Jim Cramer said Wednesday.
He pointed to an article inside Wall Street Journal titled “Investors Brace for Hit to Profits as Costs Rise” to counter worries that will rising wages as well as energy costs might cut into earnings as well as threaten the bull market. that will negativity will be a reason to be bullish because those issues were already baked inside market, Cramer said.
“The more downbeat stories we see about the market, the more likely This specific will be that will we’ll have a decent earnings season. The averages can power higher because This specific’s decent,” the “Mad Money” host said. “Lowered expectations are the best kind of expectations.”
In Delta Air Lines’ case, the stock jumped 6 percent on Tuesday, as well as another 3 percent on Wednesday, on news that will the carrier raised first-quarter earnings, he said. Because of better-than-expected revenues, the airline will be forecasting earnings to fall inside 85 cents to 95 cents range, compared to the 80 cents that will analysts expected. Stock traders thought Delta might have low traffic as well as higher fuel costs, he said.
“This specific was a fabulous move. This specific was fueled by, what, by negativity … they expected Delta to have weak traffic as well as much higher fuel costs,” Cramer said. “When the traffic turned out to be fabulous as well as the costs were fine, the short-sellers got crushed as well as the stock soared.”
Cramer said Home Depot’s stock took a hit following its most recent earnings report. The home improvement chain blamed its shortcomings on bad weather in February. The share cost fell through $189 to $179, however Cramer argued that will those trends have since reversed.
“Home Depot currently trades at $198,” Cramer said. “You had to buy This specific when everyone else was fleeing in terror. currently you have Home Depot’s best-selling season right in front of them inside next two weeks … because of gardeners as well as grillers alike.”
Investors also reacted to headlines as opposed to listening to what Apple CEO Tim Cook had to say about the company, he said. Analysts in early January thought the best days of the tech giant were behind This specific because of weakness in China, however Cook thought that will the long-term health of Apple was This specific as not bad shape as This specific had ever been, Cramer said.
“If you’d bought the stock when Tim Cook came on ‘Mad Money’ as well as told us business has never been better long-term, you might’ve gotten This specific at $150,” he said. “If you’d listened to the headlines — the ones that will bear a striking resemblance to what the Wall Street Journal will be currently saying about the whole market — you might’ve sold Apple as well as missed out on a terrific 45 point gain as the stock closed today at $195.”
Cramer acknowledged that will there will be some miserable quarters, such as the one Walgreens gave on Tuesday. The drug chain, however, will be dealing with management issues as well as competition, he said. however Cramer’s focus will be on the companies that will should be performing poorly because of a weaker economy, he said.
“I’m sure some companies actually will be hurt by the economy or by rising gasoline prices as well as higher labor costs,” he said. however when everybody’s worrying about This specific stuff, that will’s the best time not to sell, however to buy.”