Silly as it may sound, "thinking like a millennial" can give investors an edge on upside surprises and takeovers in the market, CNBC's Jim Cramer said on Wednesday.
"By sheer numbers, if you don't focus on their buying patterns, you're going to miss what's happening with a huge chunk of the consumer economy," the "Mad Money" host said.
Cramer's theory that millennials like protein, particularly chicken, may have gotten laughs from his "Squawk on the Street" colleagues, but two key takeovers — Restaurant Brands buying Popeye's Kitchen and Arby's buying Buffalo Wild Wings — seemed to support his thesis.
"It makes perfect sense that these two buyers understand that they're too meat-oriented in a time when the millennials are moving toward what's perceived to be the healthier poultry offerings," Cramer said. "I'm just putting two and two together."
Rotation Nation
Cramer will forever remain a fan of diversification, which he calls "the only free lunch" in the business of investing, because of days like Wednesday.
"Days like this one show you why I find it so worrisome that stocks within the same sector often trade in tandem, in unison. We just don't know which direction they'll head in," Cramer said.
As fast-growing technology stocks got clobbered and retail, bank and transportation stocks rose, Cramer felt it was essential to break down the widespread rotation for investors.
The suddenly heightened changes of the GOP passing tax reform served as a boon for domestic companies, which would see taxes come down and earnings inch up as a result. But, with the exception of massive players like Apple, which would be incentivized to repatriate money from overseas if taxes were lowered, positive tax news did next to nothing for the tech cohort.
PVH CEO: Tax reform disappoints, holiday sales don't
Even though PVH Chairman and CEO Manny Chirico told CNBC he was "disappointed" by the GOP tax bill, he couldn't be dismayed by the momentum behind this holiday shopping season.
"It's the strongest holiday season so far that I've seen in the last four years, especially here in North America," Chirico told Cramer on Wednesday. "I think inventories in particular are under much tighter control as we go in, and I think you're going to see sales improvements and I think you're going to see, if the trends continue, gross margin improvements across retail."
Chirico noted a "strong surge" in November among the perpetually struggling department stores, many of which carry his company's Calvin Klein and Tommy Hilfiger brands.
While the fourth quarter is commonly seen as a strong one for retailers, most of which capitalize on holiday shopping, Chirico said the recent strength has blown away even his powerhouse company's estimates.
Stitch Fix: Needs fixing?
As shares of newly public e-retailer Stitch Fix climbed on Wednesday, Cramer backtracked to its quiet initial public offering to see if the fresh-faced stock was worth buying.
"Here's a company that occupies a very interesting niche: Stitch Fix provides monthly curated shipments of apparel, shoes and accessories to their customers — called fixes, hence the name — and these shipments are supposedly put together with great care by the company's excellent stylists," Cramer explained.
Founded in 2011, Stitch Fix is part of a cohort of services that shop for consumers so that they don't have to, charging fees for each package and offering free returns for unwanted items.
While its pitch may not sound attractive to the traditional brick-and-mortar lover, the company serves some 2.2 million active clients with a repeat rate of roughly 86 percent, meaning that customers tend to come back after using the service.
CBRE Group CEO: Tax reform will help us grow
PVH's Chirico may not have been thrilled with the GOP's tax proceedings, but CBRE Group President and CEO Bob Sulentic told CNBC that one piece of the proposed reform would be particularly good for his massive real estate business.
"What's really going on that's important to our industry is that corporations are going to pay lower taxes," Sulentic told Cramer. "Corporations are our biggest clients. If they have more money to invest to serve their clients, more money to invest in their people, they're going to grow, they're going to do more business, and that's going to help our business grow."
CBRE, which has $98 billion in assets under management, also recently raised roughly $1.5 billion for a fund investing in what Sulentic called "value-add real estate," or properties that have decent performance but present upside opportunity.
"There were a billion and a half dollars' worth of investors that wanted to get into that fund to invest in real estate here in the U.S.," the CEO said, highlighting the growing awareness of the value possibilities in the U.S. real estate market.
Lightning Round: NRZ's yield is a red flag
In Cramer's lightning round, he zipped through his take on some callers' favorite stocks:
New Residential Investment Corp.: "Here's my problem: when I see that yield, an 11 percent yield, that, to me, is a red flag. I don't really know what they own, they're investing in residential housing, who really understands? I'd like to see more of the product and, mostly, I want to see them come on the show and then we can make a judgment."
NetEase Inc.: "Oh, jeez. Man, that is up 50 percent. It's another one of these companies from China. Let's not take any chances. Let's just cut that one in half and let the rest run."
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