Airline stocks are soaring. Casino, hotel and cruise ship stocks are surging, too. It’s all part of Wall Street’s shifting focus to the reopening of the U.S. economy from its coronavirus-driven downturn.
The surge in the tech-heavy Nasdaq, Cramer said, is “more representative of this market than the endless rebound in the hospitality and travel stocks in response to the opening of America.”
Shares of Apple are now up more than 13% for the year, having recovered from a March sell-off that occurred as investor concern over the coronavirus heightened. Cramer noted that some on Wall Street had really soured on the stock, predicting that perhaps its “best years were behind it.”
But he argued its service revenue has helped fuel its rally. “When people who are stuck at home with nothing to do, they go online, the Amazon, the Apple stores,” said Cramer, who added that the iPhone giant’s Apple Pay stands to benefit in a world where contact-less technology grows in importance.
Additionally, the work-from-home shift due to the pandemic also helps Apple because IT professionals who may have favored other companies have had to accept Apple, Cramer argued. “With a few notable exceptions, they’ve been locked out of the enterprise for years, and that’s now over.”
Microsoft and Amazon are two additional stocks that have powered the Nasdaq’s forceful recovery from coronavirus-induced lows, Cramer said.
Cramer said Microsoft, shares of which are up nearly 20% this year, has been boosted by management’s strong execution and strength in the company’s cloud business. During the pandemic, cloud use has surged, Cramer said.
Cramer noted that Amazon, which ended Monday’s session at $2,524, has seen a new price target north of $3,000 from RBC. “I find that plausible, if not totally conservative,” Cramer said, arguing that people who became reliant on the e-commerce giant during the pandemic will continue using it.
“Once you are hooked on Amazon, it’s very hard to go back to the mall,” he said.
Cramer said another contributor to the Nasdaq rally is Facebook, which is up nearly 70% from its March trough. That rebound has been helped by some of the social media giant’s savvy moves to help its small- and medium-sized business customers through Facebook Shops, Cramer said.
Cramer also pointed to the performances of Alphabet, Tesla and Nvidia as key reasons for the Nasdaq’s strength. In addition, Cisco, with its Webex video conferencing, and PayPal, with its digital payment services, have both been key contributors to the index’s move higher, Cramer said.
“It’s the same as the Apple Pay story. PayPal wins in a world where cash and credit cards are too risky to use,” Cramer said.
The final Nasdaq component Cramer highlighted as being important to its rally: Intel. Shares of the chip maker have rallied more than 46% from their March 16 low, but Cramer said he had not seen “good numbers” from the company.
“I think Intel got on this list because its stock was cheap and the company has been selling a lot of chips to a big Chinese company that’s worried about being locked out of the American market,” Cramer said.
Cramer said the bottom line from these 10 stocks is that “old dogs can pivot to new tricks.” The stocks may not be rocketing higher like some of the once down-and-out stocks being helped by the economic reopening, but those companies have largely been well-timed trades, he said.
By contrast, Cramer said, “these high-quality tech stocks are great long-term investments.”
Disclosure: Cramer’s charitable trust owns shares of Apple, Amazon, Facebook and Nvidia.