All is well in the stock market universe from airline, hotel and cruise ship stocks to casino operators and everything in between. But does this rally make sense in the challenging environment?
What Happened? The majority of "recovery stocks" are still trading at low levels and this makes it "irresistible" in the eyes of many investors, Jim Cramer said Monday on "Mad Money." But this doesn't begin to explain why the Nasdaq index is trading at historic all-time highs.
It's important to understand the Nasdaq index is not composed of "recovery stocks," nor does it have exposure to department stores and a "bankrupt rental car company," Cramer said. Rather, the Nasdaq index is more representative of the economy and its reopening and where people are spending money.
As an example, Apple Inc.'s AAPL Services revenue is seeing strong momentum, including many people starting to use Apple Pay for its ability to offer a contactless payment transaction.
Microsoft Corporation MSFT is benefiting from the transition to the cloud that has become "one of the only ways to operate," Cramer said. Microsoft CEO Satya Nadella said the COVID-19 pandemic has resulted in multiple years worth of digitization in just a few months.
Why It's Important: The big tech stocks leading the Nasdaq's surge may not be up as much as "rebound stocks," Cramer said, but these companies are best of the breed in their respective fields and are akin to old dogs that "can pivot to new tricks."
See Also: Markets Soar As US Economy Ends Its Longest Expansion In History, Enters Recession
What's Next? Mega-cap tech giants are great long-term investments as opposed to "recovery stocks" that represent short-term trades that some have "mastered," Cramer said.
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