Stocks were rising Wednesday amid low trading volumes as investors looked ahead to a Federal Reserve gathering at the end of the week.
Jim Cramer and TheStreet Senior Portfolio Analyst Jeff Marks talked about meme stocks and Toll Brothers latest earnings.
GameStop (GME) – Get Report shares moved higher Wednesday, alongside gains for AMC Entertainment (AMC) – Get Report, as investors scrambled to find clues behind the strongest rally in so-called meme stocks in more than two months.
“The AMC [surge] was probably a short squeeze because box office was good this week at Disney Movies, for the second time. And there was a belief that with the Delta variant, that would start dropping,” he explained.
“So, I think the longs press the shorts. … Watch the out-of-the-money calls because those are the ones that are historically very hard to hedge,” Cramer added.
Toll Brothers: Buy Or Sell?
For the fiscal 2021 third quarter ended July 31, revenue at the luxury-home builder totaled $2.26 billion, up from $1.65 billion in the year-earlier quarter. The FactSet analyst consensus called for $2.25 billion in the latest quarter.
Cramer said that “a lot of people, and this is more for the [Action Alerts PLUS club], looked at the number of housing units closed and that number was 10,000 or 10,300 and therefore they presumed it was a bad quarter. That’s the kind of lazy thinking that I want to operate against.”
Cramer said investors instead should be looking at gross margins, which widened, “and that means they have a secular growth story going, particularly because millennials are looking for homes.”