Jim Cramer reveals why you shouldn't worry about TJX, Ross, and Burlington — and why they should even be bought into weakness.
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By Elizabeth Gurdus, CNBC
Investors are wasting their time if they're worried about the demise of off-price retailers like TJX Companies, Ross Stores and Burlington Stores, CNBC's Jim Cramer said Tuesday.
The "Mad Money" host's argument came on the heels of UBS' research arm initiating coverage on a number of retail stocks. The lead analyst, Jay Sole, argued that off-price retailers could be pressured from not having enough of an online presence and predicted that they would hit their peak in North America by early 2021.
But "so far, their lack of serious online exposure doesn't seem to be hurting them one bit and for now the treasure hunt experience is clearly drawing in a lot of customers," Cramer said.
"At the same time, all three companies are a heck of a lot more profitable than they used to be and this is something Sole mostly seems to ignore," he added.
And even if Sole is right about the 2021 peak, that still gives TJX, Ross and Burlington two and a half years of growth, Cramer said.
"Please don't sell a stock because of some theoretical long-term worry that might, maybe, could be play[ing] out over the next three years," he concluded. "The stock market is a shorter-term beast — typically six to nine months — and for now, TJX, Ross and Burlington are doing very, very well. They've run a lot, but I'd be a buyer into any weakness here."
Wall Street often worries about headwinds, detrimental trends that could weigh on the market and eventually stall its march higher. But as stocks rose on Tuesday, Cramer focused on the positives.
"We've got two colossal tailwinds, two hugely bullish tailwinds," he said after the Dow Jones Industrial Average hit a record high.
"One is cyclical, meaning it's ephemeral, and one is secular, meaning it's going to go on for a long time," he continued. "These are hard to see, but I think they're responsible for much of the market's levitation."
The first tailwind Cramer sees is "the cyclical boom in hiring," as demonstrated by the higher-than-expected employment growth the Labor Department reported in early September.
The September report also showed wage growth hitting a post-recession high, a sign of economic recovery bolstered by Tuesday's news that Amazon would raise the minimum wage to $15 for some 350,000 of its employees.
"When jobs get created, more people can afford to put money away, so they save," Cramer said. "And they save, in part, by investing in the stock market. As long as employment continues to grow, this process will keep playing out and it's hugely positive for stocks."
Contrary to what many believe, former General Electric CEO John Flannery wasn't removed by the ailing industrial's board because of the pace of his planned turnaround, Cramer said Tuesday.
"It wasn't about speed," the "Mad Money" host argued. "It was about the charges, the unexpected charges that, quite frankly, shouldn't have been unexpected."
The charges Cramer referred to were the hefty costs incurred by several of GE's struggling businesses, namely the long-term health insurance and energy divisions.
And while Flannery, who was replaced by former Danaher chief Larry Culp, should have known about the instability of the businesses, individual investors could have known too, Cramer said.
Behind every cloud king, there's a semiconductor company making its technology work. But recently, semiconductor stocks have been on the fritz, so on Tuesday, Cramer decided to check in on some key players.
"Lately, the chip stocks have become a lot more inconsistent — some big winners, some big losers — leaving the broader group kind of, let's say, directionless," Cramer said.
So he recruited Carolyn Boroden, the technician behind FibonacciQueen.com and his colleague at RealMoney.com, to take a closer look at the charts of four major chipmakers: Nvidia, Intel, Texas Instruments and Broadcom.
Paychex CEO on small businesses waiving drug tests
As the job market tightens, smaller businesses are being forced to simplify the hiring process to attract workers, Marty Mucci, the president and CEO of payroll and human resources outsourcing giant Paychex, told CNBC on Tuesday.
"We are definitely seeing smaller businesses, mid-sized businesses that are starting to even waive some of the drug-testing requirements because they are having so much difficulty getting certain employees," Mucci told Cramer in an interview.
"You could have someone that becomes a little bit more lenient because it's so tight out there to hire employees, that's for sure," said Mucci, whose company provides small and medium-sized businesses with various administrative solutions.
This trend ties in with the rising competition among employers to secure the best possible employees as more and more jobs open up with fewer people to fill them, the CEO said, agreeing with Cramer that it's a good time to be an employee.
"What you're seeing is [employees] have more choices, and that's why, as an employer, you've really got to make sure your benefit package[s] are up very competitively and that you're offering personal development and training to those employees to keep them," the CEO said.
To watch Marty Mucci's full interview, click here.
Lightning round: 'Comparisons are odious'
In Cramer's lightning round, he rattled off his take on some callers' favorite stocks:
- PayPal Holdings Inc. and Square Inc.: "Comparisons are odious, as my mom would say. Now, I've got to tell you, PayPal's been a great long-term winner. We've been telling members of the ActionAlertsPlus.com club that it was time to sell a little bit. We sold some in the $90s. I don't think it's worth selling the rest. Square is just, what can I say? It's one of the great stories. Square is expensive, but Square is really good. And we had Sarah Friar on, the CFO, and she told a great story. I think both are good. They are both fintech."
- Cypress Semiconductor Corp.: "This stock has fallen out of bed. I think it's kind of ridiculous. I think at the level of $14 after we just spoke with the company recently, it's just a plain out-and-out buy and I think you should take some down at $14."
Disclosure: Cramer's charitable trust owns shares of Amazon, Danaher, Nvidia and PayPal.
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