Wall Street is flooded with companies damaged by the global pandemic, and investors need to stay away from many industries, CNBC’s Jim Cramer said Thursday.
The coronavirus outbreak and associated lockdowns have drastically redirected or wiped out consumer demand, and economic activity has nearly evaporated, creating an uncertain future for many businesses.
“Unfortunately, there are a lot more losers than winners here and many of them have become uninvestible,” the “Mad Money” host said. “These stocks are this market’s Achilles heel, and whenever they bounce, you’ve got to sell them and swap into the winners, like the tech and health-care companies that are helping us overcome the pandemic.”
Below are Cramer’s thoughts on industries and some stocks that he has deemed untouchable.
Millions of people are now working, studying and doing most other things from home. Additionally, tens of millions more have lost their jobs in the past four weeks. As more time is spent at home, less is spent on the road.
“Once you get used to skipping your commute, I think driving becomes a lot less appealing,” Cramer said.
“There’s only one automaker that I am recommending. Of course, that’s Tesla.”
Oil and gas
Global crude prices sank as Saudi Arabia and Russia, two key figures in OPEC and OPEC+, toiled over oil production guidelines before agreeing to a historic supply cut earlier this week. Furthermore, stay-at-home mandates and travel restrictions have depleted demand for oil. The price per barrel of West Texas Intermediate crude tanked more than 66% year to date to just over $20 as of Thursday afternoon.
“If we’re no longer commuting to work, that means we use a lot less gasoline,” Cramer said. “That whole group’s untouchable, and those big dividends [are] not safe.”
Whenever the federal government decides to lift travel restrictions, the airline industry may find a slump in business travel demand, Cramer said. Remote work tools, such as Zoom Video, make holding teleconferences more feasible and accessible, decreasing the need to fly across country for important meetings.
This is bad for future revenues for carriers and lodging companies, Cramer pointed out.
“Now that everyone’s comfortable with video sessions and the economy’s rolling over, cutting down on air travel seems like an obvious way to save money,” he said.
“You’re not staying at a popular chain of hotels if you’re not going around the country or the world. Anything that’s levered to travel is in trouble, including American Express.”
Well-run commercial real estate operators face a lot of headwinds, Cramer said. On top of the challenges brick-and-mortar retailers were already facing, demand for office space is shrinking due to the number of businesses closing up shop and taking advantage of newfound telework capabilities.