How can equity markets hit new highs as we see terrifying inflation numbers? Jim Cramer told his Mad Money viewers Thursday night that there is a simple answer. It is not a surprise when everyone knows what is coming and why. On the surface, the 5% inflation may seem dire, but if you look closely, most of that inflation is only transitory and will resolve itself over time.
The biggest source of inflation in Thursday’s report was a 7.3% increase in the price of used cars and trucks. But with new car production slowing due to semiconductor shortages, it only makes sense that people are bidding for used vehicles. Once chip foundries can scale up to meet demand, those prices will drop.
Then there are the airfares. Is anyone surprised that the price of a seat is rising as airlines are slowly starting to put their fleets into service?
In one industry after another, we see the same patterns. Cereal prices rise until farmers can plant more crops. Demand for restaurants has exploded after countless restaurants closed and supply chains disrupted. And in the plastics industry, low temperatures in Texas are only now allowing factories to return to normal operation. Cramer said that only in freight do we see sustained inflation and that is because we have to pay our truck drivers more.
So while some may claim that inflation is real, Cramer told viewers that the only inflation he sees is in the price of stocks that the WallStreetBets crowd is going up and refusing to sell.
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Executive Decision: PerkinElmer
In his first segment of “Executive Decision,” Cramer spoke with Prahlad Singh, president and CEO of diagnostic and testing company PerkinElmer. (PKI) – Get report.
Singh explained that while its COVID testing business continues to exceed its exceptions, PerkinElmer is more than just COVID. The company has made a dramatic turn toward life sciences, which now accounts for 75% of its business. Consumables and services are a large part of the company’s recurring revenue streams that are accumulating year after year.
PerkinElmer has also been active on the acquisitions front, making five acquisitions in the last six months, all in the life sciences area. Singh noted that cell and gene therapies will be a major trend over the next decade.
China remains an important market for PerkinElmer, accounting for 25% of total sales. Singh noted that the quality, safety and testing of food has been questioned during the pandemic in China, but is now returning to normal levels.
Cramer reiterated that there are only a handful of life sciences companies worth owning, and PerkinElmer is one of them.
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At press time, Cramer’s Action Alerts PLUS had no position in the listed stocks.