Thursday, March 16, 2023
Homemad moneyDemanding stock buyers insisting on ‘this’

Demanding stock buyers insisting on ‘this’

(Click for video linked to a searchable transcript of this Mad Money segment)

Of all the S&P 500 companies, more than a third have already released their quarterly reports this earnings season. After sifting through the results, Cramer thinks there are a few important takeaways.

1. Street wants growth

"Buyers are demanding growth, but not just any growth, real growth, top line growth," said the Mad Money host.

That is, buyers are no longer willing to reward a company simply for generating profits. A company must show strong sales or revenues –so-called top line growth, rather than generate profits through other measures such as cost cutting.

And Cramer adds, buyers are most willing to pay a premium for unlimited growth; "companies that have no fences around growth." Those are companies such as Facebook, Twitter and Google.

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2. Retail dark hole

Also Cramer notes that over the past few weeks, the viability of the retail sector has been called into question. "With a few exceptions, earnings were a disaster," Cramer said.

The Mad Money host sees earnings as a referendum on troubles facing the sector. Whether it's the unusually cold winter in the Northeast, or the ripple from the government shutdown or a migration from brick and mortar to online shopping, Cramer sees plenty of causes for concern.

"Retail is a dark hole and I don't want to crawl into it," he said.

3. EM tarnishes appeal of staples

And Cramer noted that, post earnings, consumer staples have not attracted new money as you might otherwise expect in this environment of uncertainty, despite relatively strong results from companies such as .

Cramer thinks investors are avoiding these stocks due to worries about emerging markets and how developments overseas might impact these businesses. "I think people are worried about the EM exposure," Cramer noted.

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Now that's not to say these takeaways will endure indefinitely. Developments can shift on a dime.

However, looking back at the themes that have emerged from this earnings season, Cramer thinks it's worth noting that 1) the Street has rewarded growth, 2) it has remained skeptical of retail and 3) it's struggled with jitters triggered by events in emerging markets.

"Don't know how long these biases will last but they're in full force right now and I suspect they're not going away any time soon," Cramer said.

Call Cramer: 1-800-743-CNBC

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