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NEW YORK (
TheStreet) -- Before you buy a stock, ask yourself if the company's products can easily be duplicated. If the answer is yes, then think twice, Jim Cramer said on
"Mad Money" Tuesday. Today's markets are all about commodities versus proprietary products, and those companies that are commodities are getting tossed aside, he said.
Some companies can turn commodities into something proprietary, said Cramer, which is exactly how
Starbucks(SBUX) can charge twice as much for a cup of joe and why its stores command twice the same-store sales as rival
Dunkin Brands(DNKN). That's also why shares of
DuPont(DD) vaulted over 10% in today's trading, after management just hinted it may be leaving the commodity business that is titanium dioxide.
Things like fertilizer are true commodities, Cramer explained, but for things like paper,
International Paper(IP) has been able to transcend the market by expanding into emerging markets. The airlines have made the jump as well, thanks to a string of mergers and bankruptcies. But in technology, companies such as
SanDisk(SNDK) struggle to differentiate themselves.
Retail brands such as
PVH Corp(PVH) are unique, said Cramer, so they can command great margins. So, too, can orphan drug makers. But carbonated beverages? Not a chance. That's why those stocks are also under a lot of pressure of late.
Off the Charts
In the "Off The Charts" segment, Cramer went head to head with colleague Carly Garner over the direction of crude oil, which after a big spike in June and July has fallen sharply from $108 to $103 a barrel in just the past few days.
According to Garner's research, the price of West Texas Intermediary, or WTI, crude had a huge rally in June and July, fueled initially by worries over the Middle East, but later on by pure speculation. She noted the commitment of traders report, which measures the positions held by large and small speculators as well as those hedging their positions, shows a record level of long positions being held by speculators. The last time these traders made such a bullish bet was May 2011, and they lost big as oil declined sharply by $20 a barrel and kept on falling from there.