Jim Cramer deciphers speculative and blue-chip stocks driving the market

CNBC’s Jim Cramer on Wednesday deciphered between what he sees as speculative and blue-chip stocks in a market that’s shaped by the coronavirus pandemic.

“The whole market’s being upended by the pandemic and the lines they are shifting,” the “Mad Money” host said. “Formerly rock-solid companies are now on dangerous footing. Formerly speculative outfits have become titans of emerging industries.”

After daily new Covid-19 cases topped 40,000 on Tuesday and more states placed restrictions on business activity, the S&P 500 and Nasdaq Composite both rose less than 1% in Wednesday’s session. The Dow Jones Industrial Average was the outlier, slipping almost 78 points, or 0.30%, to 25,734.97 on the first trading day of the third quarter.

“This is a terrible situation for our country, it’s really bad for the economy as a whole, but incredibly that doesn’t necessarily mean it’s bad for the stock market,” Cramer said. “Think of the stock market like a casino for a moment... When Covid cases spike, people don’t cash in their chips and go home, do they? No, they go where the action is. They go where the hot tables are, the hot slots, the hot wheels.”

Stocks were lifted in part by new positive information about a coronavirus vaccine being developed by Pfizer and BioNTech. The data indicated its capability to produce neutralizing antibodies, though the study has yet to be peer reviewed. Pfizer shares rallied 3% during the trading day.

Among Wednesday’s winners, Cramer pointed out FedEx shares, which popped 12% on a strong quarterly report driven by shipping demand in the stay-at-home economy.

“If we can get a vaccine sooner than expected, that’s huge for vast swathes of the economy, although it’s terrible for the smaller vaccine plays, which is why they got eviscerated,” the host said.

“FedEx and Pfizer are blue chips that spurred all sorts of high-flying stocks to become even more expensive, and with good reason,” he added.

There are other “super-speculative names” that Cramer said are “classic Lotto stocks.”

On that list includes: Workhorse, up 500% this year despite the utility vehicle manufacturer “losing a fortune,” NIO, a Chinese car maker that’s up nearly 100% this year, Tortoise Acquisition, which fell 8% Wednesday, VBI Vaccines and Vaxart, he said.

“There’s a sane part of this market where high-quality stocks roar because they benefit from the stay-at-home economy. Think about all that FedEx pin action,” Cramer said. “Then there’s the crazy part of the market that’s driven by rampant speculation, and that’s a very different … likely ill-fated story.”


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[kennyd]

There will be at least 5-8 different vaccine options when all is said and done.

[andymc]

"Nikola haven't sold a truck". Heck, they haven't even MADE a truck to sell. You'd need a BIG leap of faith to get onboard with them

[Bradgilliswhammyman]

TESLA is priced like everyone on the planet owns a tesla and has 2 spares in the garage :P

[hassanhamid]

My fellow brothers from Indian, I would advise you to trade with Mr Andrew FELDSTEIN whose strategies are very unique and mind blowing he is a trader with a difference, He is so unique and trustworthy. Kindly invest with him

[hooverelondono]

One trader made $100, 000 dollars in 2 minutes bought 200, 000 shares of workhorse for 19.50 sold for 20 in less than 3 minutes Top that Charitable Trust

[hooverelondono]

Workhorse has a pending contract with the govt July 14 th 6 billion dollars . What are you talking about .

[kaylamoore]

Work horse by far the most legitimate company he spoke about and is honestly undervalued! I seriously dont understand his take on thid company. Nikola suspect, others semi suspect but workhorse?

[veronica]

I really don’t understand a word of what he says.

[parkosrice]

I think he suggested to take some Tesla stock off the table; I cannot bring myself to trim a single Tesla share.

[Bradgilliswhammyman]

stocks are becoming priced to perfection, any weakness in earnings or surprises to the downside and the nasdaq will vomit. TESLA will drop 200 points Zoom willdrop 60 points.

[tatymax]

Unemployment rate, bankruptcies do not matter . We have Fed

[kaylamoore]

I mean seriously how can you put work horse in the same category? It has earnings? It has more eps than a lot of companies that is over a hundred dollars a share! Then you have two companys one of which looks as if its an obvious scam and another that looks as if it is a copy an paste version of the other. The reason workhorse stock finally went up is because they passed their safety test for multiple vehicles they actually have! They are located right down the street from me and its a actual company unlike the other companies you mentioned. I really hope they get this ups bid and what you said blows up in your face! Maybe then you will be able to differentiate a reap company from a fake one. Honestly wouldnt be surprised if you had people secure put positions before saying this after close, that is the only way it makes since and if thats the case ill be contacting the commission right away.

[azsral]

Pretty sure your comment about small pharma stocks being eviscerated was aimed at INO. Lets not forget that you also bashed NVAX at 19, then again at 33, then again at 55. Now its above 80. So it's time to BUY BUY BUY.

[coveyking]

Made over 100% on VBIV. Still holding. Thoughts?

[dwr]

You r right the virus, we are a major fail....our response is ridiculous. The leadership is absolutely pathetic.

[ScoutSniperMC]

VBIV is an awesome sleeper play for their work with cytomegalovirus or CMV. Truly impressive stuff for immuno-oncology. That’s what has the price up.

[randallpaul]

more tests more cases like in italy but the death rate is minimal.

[jason]

they corona is dying people are testing positive with no symptoms, NBA and NFL players are testing positive and still training like nothing happened.

morality rate isn't rising with the cases the numbers dont look good but theres number that make it look good too.

[Jfromes]

I think we're about a month away from having a much clearer picture on stocks like Vaxart. I'm holding on to my shares till then.

[Bypass]

this is the same company who told them about closing strak industries...