Morning Bell With Jim Cramer: How to Trade GameStop

Nasdaq futures are going higher Monday morning as Dow futures are falling. GameStop continues to rise as WallStreetBets continues its battle with Wall Street analysts.

In the last episode of Mad Money, Jim Cramer said investors need to stay focused on strong earnings, as he laid out his weekly game plan.

TheStreet's Katherine Ross and Cramer are talking about the earnings of IBM, American Eagle Outfitters stock surge and how to trade GameStop, particularly for younger investors.

GameStop: Buy or Sell?

Shares of videogame retailer GameStop  (GME) - Get Report skyrocketed Friday, after Andrew Left, managing partner of short-seller Citron, said it’s abandoning the stock because of harassment from bulls. GameStop is moving higher again Monday morning.

Cramer said the company should do ok. "There is a shortage in hardware, I saw that from Best Buy. I don't like to bet on short squeezes because I don't know where they are going to end. It's something that I don't control. This is definitely a short squeeze."

IBM: Buy Or Sell?

Last week, tech giant  (IBM) - Get Report posted fourth-quarter revenue that did not exceed Wall Street expectations and fell 6% to $20.4 billion. The numbers marred an otherwise solid first year for the cloud-focused computer group under new Chief Executive Arvind Krishna.

Cramer said there is no way analysts are going to downgrade IBM at this point. "But the quarter was weak and while it covers the dividend this year and maybe even the year after that. The free cash flow wasn't good. It wasn't as good as we'd thought. This company generates a huge amount of cash. But the stock is being correct. This is a very tough stock to own but I'm not telling you to sell it."

American Eagle Outfitters: Buy Or Sell?

American Eagle Outfitters  (AEO) - Get Report said Thursday it expects fourth-quarter revenue to drop in the low single-digit percentages due to weak in-store traffic and store closures caused by the pandemic. But it outlined a plan for improved growth and profitability by fiscal 2023.

Cramer said the retailer's teen-focused girl brand Aerie has taken the world by storm."Would I add it? [AEO stock], yes, it's good. The presentation by the company was masterful, they've got the blessing of the best analysts' in retail. Even though it's at a 52-week high. I think the stock goes higher."

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