Why to own individual retail stocks over the sector ETF

Money managers in the wake of June’s jobs report have been getting behind stocks that tend to benefit from a strong labor market, CNBC’s Jim Cramer said Monday.

A number of dominant retailers, too, have emerged as winners from the employment data, he said pointing to names such as Walmart, Costco and Lululemon.

The “Mad Money” host added Home Depot and Amazon to the list. While some portfolio managers like to buy the VanEck Vectors Retail ETF, Cramer advised viewers against doing so. An ETF, or exchange-traded fund, is a bucket of stocks that track a particular sector.

“I think that’s a mistake, though, because 20% of this thing is Amazon. Home Depot and Walmart are both 10%, Costco’s 5%,” Cramer said. “You’re getting a lot of exposure to good retailers, but then you also got the lower-quality names in there, too.”

Cramer said investors should find individual equities to get behind in the space. He also explained why he stays away from sector ETFs in general.

“I’d rather own the best than a mix of the best, the mediocre, and the worst,” he said.

Get his full thoughts here

Wall Street is busy betting whether Federal Reserve Chair Jerome Powell will cut interest rates later this month.

But Cramer is turning his attention to the looming earnings season as investors try to gauge the central bank’s move.

“I’m not saying the Fed doesn’t matter,” the host said, after the major averages all retreated between 0.43% and 0.78%. “I will be watching him like a hawk, or maybe a dovish hawk, when he speaks to Congress this week. However, I think far too many people are misreading the Fed here and, more important, they are misreading the moment.”

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Canopy Growth is in the best position to win in the emerging marijuana space and a new chief will be able to guide it through the next stage of the business.

That’s what Constellation Brands CEO Bill Newlands told Cramer, days after the company abruptly ousted founder Bruce Linton from the seat. The former co-CEO told CNBC last Wednesday he was fired. Shares fell 5% on the news.

“Our board was uniform. We were unanimous that we needed a different leader to take us to the next phase of growth,” he said in the interview. His company has invested $4 billion into Canopy for a 38% stake.

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Cramer applauded the CEOs of software companies Symantec and Broadcom for orchestrating a blockbuster deal leading into the Fourth of July.

The Wall Street commentator praised Symantec interim CEO Rick Hill — who has been on the job for less than two months — for turning the narrative of the troubled cybersecurity firm into a takeover candidate and creating value for shareholders. He also called Broadcom CEO Hock Tan a “brilliant dealmaker” in his efforts to expand its offerings outside of hardware.

“Basically, [Tan’s] trying to get a larger piece of the information-technology-spending pie,” the host said. “Symantec gives them a truly excellent security offering that they can sell alongside their chips, and I think it could be a potent combination.”

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Real estate investment trust Vici Properties last month landed a deal with Eldorado Resorts to acquire land and real estate assets in the Harrah’s hotel brand, including in New Orleans.

CEO Ed Pitoniak visited Cramer to talk about the move and the broader gambling industry, including sports betting.

Asked about what the New Orleans acquisition means for the company, he told Cramer: “When you take all those demand drivers and funnel them into really one and only one downtown casino in New Orleans we are going to be very happy the day we get the keys to that property.”

Catch the full interview here

In Cramer’s lightning round, the “Mad Money” host zips through his thoughts about callers’ stock picks of the day.

Adaptive Biotechnologies: Life science equipment is always going to give you to Danaher. That’s where I’m going to send you, especially after Danaher doubled down with that GE acquisition. It was so brilliant. “

General Electric: “Don’t sell here. I know Steve Tusa is a terrific analyst over at JP Morgan, but Larry Culp is a terrific CEO over at GE and we’re going to bet with Culp. We think Culp’s got a long-term plan.”

Vector Group: “People know me, I will not recommend tobacco stocks. I’m just not going to do that.”

Disclosure: Cramer’s charitable trust owns shares of Amazon and Home Depot.