Raphael Stevens

Monday – Friday, 6:00 – 7:00 PM ET

CNBC’s Jim Cramer on Monday highlighted six stocks in the travel and leisure space that he believes are investable due to their affordable price and growth potential.
“With the [Federal Reserve] tightening [interest rates], the market prefers something called growth at a reasonable price, or GARP. … In other words, you want companies with better-than-average growth rates as long as their stocks have relatively cheap valuations,” the “Mad Money” host said. 

CNBC’s Jim Cramer on Monday highlighted six stocks in the travel and leisure space that he believes are investable due to their affordable price and growth potential.
“With the [Federal Reserve] tightening [interest rates], the market prefers something called growth at a reasonable price, or GARP. … In other words, you want companies with better-than-average growth rates as long as their stocks have relatively cheap valuations,” the “Mad Money” host said. 

“Get used to the world according to GARP, okay? It’s the old, new way to invest,” he later added.
The Fed approved a 25 basis point interest rate hike in March, which is expected to be the first of several increases this year to tamp down soaring inflation. The minutes for the Fed’s March meeting, released April 6, signals that the Fed could raise interest rates by 50 basis points in upcoming meetings. Fed officials also plan to shrink the balance sheet by around $95 billion a month.
To come up with the list of investable travel and leisure stocks, Cramer first ran a screen for companies in the S&P 500 that can put up double-digit earnings growth this year and next year. Then, Cramer examined the companies’ price to earnings growth multiple, or PEG ratio. “This is a metric that tells you how much we’re willing to pay for a company’s growth rate. … When we’re talking about a reasonable valuation, anything at 1 or less would generally be considered cheap,” he said.
Using the two metrics to whittle down the list of companies, Cramer was left with 51 names. 
“We’ll be going through our favorites over the course of the week,” Cramer said. He added that he believes the travel and leisure stocks he picked will benefit from “the great reopening, even if the Fed really hits the brakes on the economy.”

Here are Cramer’s picks for the six “GARP-iest” travel and leisure companies:

Expedia
Booking Holdings
Marriott International
Disney
Darden Restaurants
Sysco 

Disclosure: Cramer’s Charitable Trust owns shares of Disney.
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Monday – Friday, 6:00 – 7:00 PM ET

It’s that time again! “Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.

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DraftKings Inc: “They are in a battle, a pure battle to try to get market share and right now, there is no sign that the battle is over. … I do think they’ll win.”

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SoFi Technologies Inc: “I can’t tell you to sell it. But I can also tell you, maybe I’m not the answer on this stock because holy cow, it hasn’t stopped [going down in price] and I thought it would have.”

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Editas Medicine Inc: “You can not buy growth stocks that have no hope of making money. Not in this environment.”

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Altria Group Inc: “It is tobacco, and that’s not what I’m fond of. … If you don’t care, then it’s fine.”

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Monday – Friday, 6:00 – 7:00 PM ET

CNBC’s Jim Cramer on Monday advised investors to pick up stock of Hershey for their portfolios.
“Hershey’s the most consistent growth stock in a group where safety’s first, and you know what they say, safety never takes a vacation. I would buy some here, then wait to buy more if the stock gets hit the next time we have an inflation scare,” the “Mad Money” host said.

CNBC’s Jim Cramer on Monday advised investors to pick up stock of Hershey for their portfolios.
“Hershey’s the most consistent growth stock in a group where safety’s first, and you know what they say, safety never takes a vacation. I would buy some here, then wait to buy more if the stock gets hit the next time we have an inflation scare,” the “Mad Money” host said.

Hershey stock rose 0.09% to $223.93 on Monday, reaching a new 52-week high of $226.45 earlier in the day. The company beat Wall Street expectations in their fourth quarter earnings.
“One of the best kept secrets of this market is how well this company, this simple confectionary maker, has done in the era of inflation. Put simply, Hershey is the best performer in the group by any measure, but it’s never talked about,” Cramer said.
Hershey has diversified its brand portfolio in recent years, acquiring Pirate’s Booty, SkinnyPop-parent Amplify Snack Brands and most recently Dot’s Pretzels last year. “These were the perfect pick-ups as Covid hit the nation and turned us all into stay-at-homers who snack,” Cramer said.
He also praised Hershey’s “awesome pricing power,” which he said gives the company an edge over competitors struggling with skyrocketing raw costs and helps boost Hershey’s sales growth and gross margin.
The company said in its 2021 fourth quarter question-and-answer call that they expect “more pricing in the first half of the year” as well as “tougher” gross margins, but expect gross margins to slowly improve as the company gets closer to the fourth quarter of 2022.

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Disclaimer

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Questions, comments, suggestions for the “Mad Money” website? [email protected]

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Almost all of Shanghai’s 26 million residents remain in lockdown about a week after a two-phase shutdown in the city was supposed to end.
China is grappling with its worst Covid outbreak since the virus was discovered in Wuhan over two years ago.
Though low by most countries’ caseloads, mainland China reported a record 1,184 new, symptomatic and 26,411 asymptomatic Covid cases on Sunday, according to its National Health Commission.

Shanghai, home to the world’s largest container shipping port, began a two-part lockdown on March 28 and has yet to announce when restrictions will lift.
Yang Jianzheng | Visual China Group | Getty Images

The World Health Organization on Monday said it is monitoring a major surge in Covid cases in mainland China, an outbreak that local officials have attributed to the more contagious omicron BA.2 subvariant. 
Dr. Kate O’Brien, director of WHO’s immunization and vaccine program, said the agency is in contact with public health authorities in China about its Covid resurgence. WHO officials said they need to monitor the effectiveness of regional lockdowns and the country’s vaccines, but said it doesn’t have enough information to make an assessment yet.

“We will continue to follow that situation as it continues to emerge and as they’re responding to the situation so that we can understand the nature of the cases, underlying vaccination status and other components there,” O’Brien said during a press briefing from the organization’s Geneva headquarters. 

The remarks come as the country grapples with its worst Covid outbreak since the virus was discovered in Wuhan over two years ago. Though low by most countries’ caseloads, mainland China reported 1,184 new, symptomatic and 26,411 asymptomatic Covid cases on Sunday — the most cases recorded in a single day so far, according to its National Health Commission.
To contain the outbreak, Beijing has reinstituted lockdowns in some parts of the country and put into place online learning for some students, especially in Shanghai where more than 26,000 cases were reported Sunday.
Almost all of Shanghai’s 26 million residents remain in lockdown about a week after a two-phase shutdown in the city was supposed to end. The citywide lockdown involves orders to work from home and the suspension of ride-hailing and public transit. 
It is a part of China’s zero-tolerance Covid policy of using regional lockdowns to contain outbreaks, which helped the country rebound from the initial wave of the pandemic in early 2020. 

Dr. Alejandro Cravioto, chair of WHO’s Strategic Advisory Group of Experts on Immunization, said it “would be important” to see whether such lockdowns are fully effective in containing the latest outbreak, especially with the rapid spread of BA.2 in the country. The subvariant is more transmissible than the original Covid strain, though its infections are primarily mild or asymptomatic. 
Cravioto added that WHO lacks sufficient information on the Covid vaccines being administered in China. 
The group has most recently reviewed data on an mRNA vaccine developed by CanSino Biologics, a clinical-stage vaccine company in China, according to a WHO press release. However, Cravioto’s group “will not issue any recommendations until such time as the product is listed by WHO for emergency use,” the press release said. 
“Until we really see the data coming out, we won’t be able to make any further comments,” Cravioto said, referring to the effectiveness of China’s severe lockdown measures.
CanSino Biologics has yet to be administered to Chinese citizens. The vaccine developer said last week its mRNA vaccine has been approved by China’s medical products regulator to enter clinical trials. 
Covid vaccines already administered in China have been updated to fight against omicron and other strains, Chinese officials said last month, according to Bloomberg. China’s vaccines are inactivated, meaning they work by using dead or weakened viruses to produce an immune response. 
Preliminary lab studies have found that vaccines developed by Chinese companies Sinovac Biotech and Sinopharm offer less protective antibodies against omicron than mRNA vaccines from Pfizer and Moderna, Bloomberg reported. 
As of April 5, 88.5% of China’s population has received at least one dose of a Covid vaccine, according to Our World In Data.

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Oil pumping rigs are situated next to a vineyard of table grapes as viewed on July 8, 2021, north of Bakersfield, California.
George Rose | Getty Images

Oil prices slid Monday, falling to the lowest level since February and building on two straight weeks of declines as lockdowns in China sparked demand fears.
International benchmark Brent crude fell 4.18% to end the session at $98.48 per barrel, the first settle under $100 since March 16. West Texas Intermediate crude futures declined 4.04% to settle at $94.29. During the session the contract traded as low as $92.93, a price not seen since Feb. 25.

“The spread of Covid in China is the most bearish item affecting the market,” said Andy Lipow, president at Lipow Oil Associates. “If [Covid] spreads throughout China resulting in a significant number of lockdowns, the impact on oil markets could be substantial.”

China is the world’s largest oil importer, and the Shanghai area consumes roughly 4% of the country’s crude, according to Lipow.
The potential hit to demand comes as the supply side of the equation has been front and center given Russia’s role as a key oil and gas producer and exporter.
Last week the International Energy Agency announced that its member countries would release 120 million barrels from emergency stockpiles, of which 60 million barrels would be from the U.S. The announcement followed the Biden administration saying it would release 180 million barrels from the Strategic Petroleum Reserve in an effort to alleviate soaring prices.
WTI fell 1% last week while Brent declined 1.5%, with both contracts posting their fourth negative week in the last five.

Oil prices have been on a roller-coaster ride since Russia invaded Ukraine. WTI briefly traded as high as $130.50 on March 7, the highest level since July 2008. The contract has fallen nearly 30% since. Brent meantime spiked to $139.13 in March.
Part of the move is thanks to fears over what a disruption in Russian supply would mean for an already tight market. The IEA previously predicted that three million barrels per day of Russian oil output was at risk.
Traders also attributed oil’s wild swings to non-energy market participants exchanging contracts as a way to hedge against inflation, among other things.
Still, Wall Street firms were quick to point out that tapping emergency oil stockpiles will alleviate the price spike in the near-term, but doesn’t address the fundamental issues in the market.
“[S]ome of the market tightness caused by the self-sanctioning of Russian crude buyers — either in fear of future sanctions or for reputational reasons — should ease,” UBS wrote in regards to the emergency releases.
“But it will not fix the the oil market’s structural imbalance resulting from years of underinvestment at a time of recovering global demand,” the firm added.

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Clean Start

Lithium-ion batteries are vital to a lower-carbon future. But they come with a downside: It requires a lot of energy to produce them, especially with the mining and refining of the metals.
The worldwide lithium battery market is expected to grow up to tenfold in the next decade, according to a recent report by the U.S. Department of Energy, and to be integral to everything from electric vehicles to power storage for renewable energy sources like solar and wind.

On the upside, while the cathode materials that store electricity in the battery degrade, the materials that make them up don’t. They are infinitely recyclable.
And while several companies are already in the battery-recycling business, one claims it’s not just recycling but “upcycling,” putting raw materials from discarded lithium-ion batteries directly back into the supply chain.
That company, Massachusetts-based Ascend Elements, has developed a process to capture battery metals and formulate them into new battery materials, rather than just recycle whole components as competitors do. Ascend can then sell those materials directly to manufacturers.
While the process seems simple, it has taken decades to perfect. Ascend shreds spent batteries as well as manufacturing waste, and turns them into a blackish sand, the company says. It then removes all the chunks of plastic, aluminum and copper and leaches out the impurities, leaving behind the valuable nickel, cobalt and lithium that make up a battery’s cathode material.
“We’re effectively urban mining, bringing that material in and transforming it into very usable material for the battery manufacturers. Therefore, we’re offsetting the amount of mining that’s needed,” said Michael O’Kronley, CEO of Ascend Elements. “We are able to reduce that carbon footprint 90% to 93% by just recycling these batteries and producing new cathode material.”

A study in the scientific journal Joule, co-authored by the scientist at Ascend who formulated the recycling technique, found the batteries made from the cathode-recycling method not only performed as well as batteries made from scratch, but also lasted longer and charged faster.
There are other battery recyclers in the market, but they don’t break components down to this high-value cathode material.
“That’s really the core of our intellectual property. That’s what we’re commercializing now,” said O’Kronley, adding that he expects to double his nearly 100-person workforce this year as the company opens its first commercial-scale facility in Georgia. It has three smaller facilities in Massachusetts and Michigan.
Ascend has raised $95 million so far from investors including Jaguar Land Rover’s InMotion Ventures, Hitachi Ventures, Orbia, Doral Energy, as well as At One Ventures, TDK Ventures and Trumpf Ventures. It is currently in a new fundraising round.

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Fanatics has grown rapidly and, according to the company, recently hit a valuation of $27 billion.
The e-commerce company, which sells a variety of official sports merchandise directly to fans, is expanding into online sports betting as investors pile in, fueling speculation about an IPO.
While Fanatics boasts investors from the NFL to Fidelity to SoftBank, a source said the company doesn’t aim to go public this year.

Michael Rubin arrives at the 2019 Fanatics Super Bowl Party on Saturday, Feb. 2, 2019, in Atlanta.
Paul R. Giunta | Invision | AP

Sports e-commerce company Fanatics is growing quickly, but it’s still nowhere near where it aims to be. Recently, the company said, it reached a $27 billion valuation and it wants to grow into a $100 billion empire over the next 10 years.
Its recent funding round, which included $320 million from the NFL, is making its investors optimistic.

The NFL, MLB, NBA, NHL, MLS and various players unions have a combined stake in Fanatics worth $5 billion, according to people familiar with knowledge of the company’s business. The people spoke to CNBC about the company on condition of anonymity, as Fanatics doesn’t publicly discuss its finances.
Fanatics is a major hub for sports merchandise such as jerseys and other apparel, as well as sports-themed home, office and automotive consumer products. It could get a boost as governments lift Covid restrictions and allow more fans to attend games. The company is expanding into online sports betting, too.
CEO Michael Rubin is emboldened and says he’s on a mission to conquer the sports e-commerce sector and beyond.
“I’m 100% locked into making Fanatics the most incredible digital sports platform in the world,” Rubin said at a conference in March.
Fanatics has some skeptics, too.

“I’m still not buying that it’s worth that level,” one executive said when asked about Fanatics’ $27 billion valuation.
The executive, who spoke to CNBC on the condition of anonymity, said Fanatics’ private status is a reason for skepticism. Private companies can conceal revenue struggles, as they aren’t required by the SEC to report earnings.
“They can get away with a hell of a lot more because they have to anticipate the contribution of each business line to the revenue and EBITDA and how it will change for the future,” the executive said. “And the leagues are also partners, so it’s in their best interest to elevate the value.”
Fanatics declined to comment for this story.
The latest investment round came after Fanatics had two years of apparently quick growth. The company had a $6.2 billion valuation in 2020, hit $12.8 billion in March 2021 and reached $18 billion in August. People familiar with the inner workings of the company suggest the goal is $10 billion in earnings before interest, taxes, depreciation and amortization, or EBITDA, over 10 years.
Fanatics is anticipating roughly $6 billion in revenue in 2022 and targeting $10 billion in revenue over the next few years, according to people familiar with the company’s business.

Building a juggernaut

The comments from Rubin and the executive came days after it was revealed that Fanatics’ most recent $1.5 billion funding round was driven in large part by the NFL, MLB, NHL and Qatar Investment Authority — the sovereign wealth fund that owns UEFA soccer club PSG.
“We’re thinking about how to build a company that’s beloved by billions of sports fans globally,” Rubin said at the MIT Sloan Sports Analytics Conference in Boston on March 4. “Valuation just follows the business results.”
Much of Fanatics’ growth has been generated through acquisitions, particularly during a pandemic shopping spree. The company expanded its e-commerce business in 2020, when it purchased WinCraft, a company that makes sports-themed merchandise. It acquired the Topps trading card company for $500 million to jumpstart 2022, while also forging partnerships with major sports leagues and their players unions to end 2021.
The WinCraft purchase landed Fanatics 700 licensing rights to NCAA schools. The company also leveraged MLB’s e-commerce rights to align future blockchain revenue when it launched NFT company Candy Digital in 2021. So far, Candy Digital is valued at $1.5 billion.
Fanatics already had exclusive licensing deals with the NFL and Nike to make jerseys and an exclusive e-commerce deal with Walmart. Add in the new revenue streams from Topps, a team e-commerce deal with the Dallas Cowboys, and global rights to the Olympics, and the people familiar with the company’s business suggested Fanatics would lure in $1 billion in EBITDA in 2022.
Sports leagues are attracted to Fanatics’ future around its products, and investors like that it deals directly with consumers.
Revenue keeps growing as a result, too, according to the company. Rubin said Fanatics is projecting $4.5 billion in revenue for its e-commerce business in 2022. That would be a jump from $2.3 billion before the pandemic.
Fanatics is also looking to technological capabilities to spur further growth. It aims to leverage its artificial intelligence, cloud computing and machine learning tech to advance it. The company touts its 80 million users. Rubin has said Fanatics has up to 16 data attributes per consumer. Data attributes, which contain characteristics about consumers, help companies personalize offers to consumers.

Green Bay Packers fan cave
Source: Fanatics

IPO in the cards?

Several major investors are sold on Fanatics’ future as it inches closer to a potential initial public offering, which would deliver big returns.
Firms including Fidelity, Thrive Capital, Franklin Templeton and Neuberger Berman are among investors. They joined investing firm SoftBank and Chinese e-commerce giant Alibaba Group.
NFL legend Peyton Manning is an investor. Entertainer Shawn “Jay-Z” Carter joined in August. Hip-hop star Lil Baby, Dell founder Michael Dell, and Joseph Tsai, the Alibaba co-founder and Brooklyn Nets owner, are also investors.
In addition, Silver Lake, Insight Partners and entertainment company Endeavor are investors in Fanatics’ projected $10 billion trading cards business.
Investors will likely have to wait a bit longer for an IPO. The company doesn’t plan to go public this year, according to people familiar with the company’s business.

Andrew Harrer | Bloomberg | Getty Images

Fanatics targets sports betting

Fanatics’ quest for a $100 billion valuation could run into several obstacles.
Inflation is surging, giving rise to recession fears. Geopolitical strife could hit international growth as war rages in Ukraine and U.S.-China relations become chillier. (Fanatics launched operations in China in February 2021.) Antitrust concerns have also surfaced over Fanatics’ agreement with the NFL, which competitors allege is a form of collusion that harms competing online retailers. That could attract a future challenge with the government.
But publicly and behind the scenes, Rubin remains optimistic about what lies ahead.
“Every industry changes radically,” the CEO said. “I think sports is the greatest entertainment in the world, but we’ve got to keep making it relevant, and we’ve got to keep it fresh and innovative.”
Expect more acquisitions and an integration of online betting at some point. Rubin has long shown an interest in online betting. Fanatics hired former FanDuel Chief Executive Matt King in 2021 and applied for a gambling license in New York as it looks to take on DraftKings, FanDuel, Caesars and MGM in the space.
It’s not clear what gambling company Fanatics will target, but people familiar with the business downplayed speculation about a potential acquisition of WynnBET. That betting company is reportedly on the market for $500 million.
Rubin projected Fanatics would lead the category in 10 years. The advantage: Fanatics’ 80 million users and $19 per customer acquisition cost, which is lower than average for betting companies. The cost is money spent to acquire new customers through methods such as marketing and promotion.
Fanatics can use that low cost in the e-commerce space to bring in new customers and then leverage sports betting while consumers are within Fanatics’ ecosystem.
“The average cost to acquire a customer in online sports betting today is $500 on a good day,” Rubin said at the conference. “I’d much rather look at the different places that I could acquire customers and cross-sell them into online sports betting than go out and spend $500-plus and have a multiyear payback in a highly promotional environment.”

Fanatics is a two-time CNBC Disruptor 50 company. Sign up for our weekly, original newsletter that goes beyond the annual Disruptor 50 list, offering a closer look at private companies like Fanatics that continue to innovate across every sector of the economy.

Clarification: This story was updated to reflect more specific revenue projections for Fanatics.

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