The auto industry is seeing a shift in consumer purchases, with more and more people opting to buy used cars rather than pay up for new ones. Naturally, Cramer wanted to steer investors in the right direction.
“If you want to see the biggest winner here, look no further than Carvana, the online used car dealership,” the “Mad Money” host said. “This stock has pulled back pretty dramatically from its recent highs, but get this: it’s still up more than 500 percent from where it bottomed a few days after its IPO roughly 18 months ago, and it’s given you a terrific 185 percent gain just for 2018.”
Carvana’s premise is simple. Rather than asking customers to physically go to car dealerships and spend their time fielding salesmen and filling out paperwork, the company puts all the relevant information on its website, letting people do research, secure financing or buy a car online. Once they buy, they can pick up the car from a Carvana “vending machine,” an automated garage that simplifies the pickup process.
The stock, however, has run a lot, and even though it’s not yet expensive, investors shouldn’t put their hard-earned bucks towards investing in the stock if they don’t have some money to lose, Cramer said.
“I would only buy Carvana for speculation as the stock’s a real wild trader,” he said. “You need to be prepared to be building your position gradually on the way down if it keeps falling.”
“Even after its near[ly] 25 percent decline from its recent highs, the stock remains hot, hot, hot. So, yes, you have my blessing to buy it here, just don’t be too aggressive and don’t buy it all at one level,” he added.