“I don’t want companies that make excuses, I want companies that make money,” Jim Cramer told his Mad Money viewers Monday. That’s why if you want to own a growth stock, you have to pick one that doesn’t have any supply chain, semiconductor or Covid staffing woes.
It’s no secret that growth stocks have been out of style since the Federal Reserve signaled it will soon be raising interest rates. The latest wave of selling began on Jan. 20 after Netflix (NFLX) – Get Netflix, Inc. Report reported a miserable quarter that sent shares sharply lower.
But then last week, investors were reminded of why they liked growth stocks in the first place, after a host of value stocks also disappointed. Shares of General Electric (GE) – Get General Electric Company Report, 3M (MMM) – Get 3M Company Report, Boeing (BA) – Get Boeing Company Report and Caterpillar (CAT) – Get Caterpillar Inc. Report, all stopped the value-stock rally in its tracks. These companies had all sorts of excuses, from supply chains to semiconductors to staffing problems — things growth stocks mostly don’t have.
Over on Action Alerts PLUS, co-portfolio managers Bob Lang and Chris Versace are looking at whether Friday’s market action is the start of a more pronounced rebound, and if investors should buy the dip. Get in on the conversation and hear what they’re telling their investment club members at Action Alerts PLUS.
Both Microsoft (MSFT) – Get Microsoft Corporation Report and Service Now (NOW) – Get ServiceNow, Inc. Report delivered great results, as did Apple (AAPL) – Get Apple Inc. Report and Mastercard (MA) – Get Mastercard Incorporated Class A Report. These growth stock wins were followed by Chevron (CVX) – Get Chevron Corporation Report, another value stock miss.
Combine all of this with the fact that the IPO and SPAC pipeline has finally stopped, and the news that Netflix CEO Reed Hastings is buying more shares as a sign of confidence, and it looks like growth is coming back into style. That is, if the company doesn’t have any of the excuses the value stocks have and can make money, even in this difficult environment.
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