The most shocking thing about today's market rally was that it made perfect sense, Jim Cramer told his Mad Money viewers Thursday. Investors are finally starting to figure out which stocks win and which ones lose from the ongoing trade war with China as earnings per share are again starting to matter.
The surprise winners of today's session included Walmart (WMT) - Get Report , which rallied 1.4% on a solid 3.4% rise in same-store sales. Cramer said Walmart may see less impact from tariffs than people expect, given the retail giant can source products better than anyone. Cisco Systems (CSCO) - Get Report was another big winner, rallying 6.6% on the day, as it too will see little impact from trade troubles.
On the flip side, Macy's (M) - Get Report shares were under pressure as that company struggles with tariffs. Many of the chipmakers also fell on news that President Trump is banning U.S. companies from doing business with Huawei. Qualcomm (QCOM) - Get Report fell 4%, while Cramer favorite Xilinx (XLNX) - Get Report plunged 7.7%.
Cramer said Trump is now in charge of who does business in China and it's beginning to reflect in stock prices. While Walmart wins, Xilinx loses. And there appears to be little China can do to retaliate. He said tariffs on produce don't matter to farmers used to government subsidies, while China selling U.S. Treasuries would be welcome news for investors. China could boycott U.S. goods, but there aren't that many U.S. companies doing business in China in the first place.
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Stocks Catching Up
Not all stocks have been soaring in this market, Cramer told viewers. Some stocks have been lagging behind and are only now starting to play catch up. He featured seven stocks that fit this pattern.
Stanley Black & Decker (SWK) - Get Report surged 2.4% Thursday after the company announced it will expand U.S. manufacturing. Cramer said this stock is now being given a higher price earnings multiple because it's choosing the U.S. over China. Next was Centene (CNC) - Get Report , the health plan operator that's been a big winner, but still trades for less than 13 times earnings.
On Real Money, Cramer takes a closer look at these stocks that were left behind, but are now getting their due. Get more of his insights with a free trial subscription to Real Money.
Reasonable Expectations for Cannabis
Conviction always needs to be tempered with discipline, Cramer reminded viewers. When you hear a CEO making bold claims, you must always ask questions, including "What if they're wrong?" and "How long will it take for them to be right?"
Cramer said he's a big fan of the cannabis industry over the long term, but this group is already fraught with irrational exuberance that far exceeds reality and many CEOs are too promotional for their own good.
He cited Tilray (TLRY) - Get Report as one example. After Canada legalized cannabis in October, shares rocketed from $100 to almost $300 before falling back to $100 a month later. Shares today trade in the $40s. Cramer said Tilray shares never should have been over $100 in the first place. The company touts a huge total addressable market and the possibilities of multiple $100 billion players, but already it's seeing prices and gross margins collapsing as it attempts to push beyond its current size.
Cramer said the privately held MedMen is another company with lofty dreams and a showcase location in New York City, which still has yet to even legalize its product.
You can't afford to invest on faith, Cramer concluded, no matter how exciting the business prospects may be.
Off the Tape: SoFi
In his "Off The Tape" segment, Cramer sat down with Anthony Noto, CEO of the privately-held SoFi, the financial technology company that landed as No. 26 on this year's CNBC Disruptor 50 list.
Noto started off by saying this was the first quarter than SoFi was able to grow revenue, volume and profits at the same time and he's very excited about his company's outlook. He noted that their members remain at the heart of everything they do and they continue to help their members borrow, save, spend and invest.
Regarding investments, Noto explained that many younger investors don't know a lot about investing and simply look for inexpensive stocks under $10 a share. That's why SoFi began offering ETFs to help members keep a diversified portfolio while still being able to invest in smaller increments.
Noto was also quick to note that all of SoFi's products are now available via mobile apps, giving members quick access to products on the go.
Executive Decision: Zendesk
In his second "Executive Decision" segment, Cramer also sat down with Mikkel Svane, founder and CEO of Zendesk (ZEN) - Get Report , the customer engagement software provider provider with a stock that's rallied 52% so far this year.
Svane said that Zendesk has been around for over 10 years and during that time, customer expectations have been changing. It's no longer enough to have a great product or service if you can't also back it up with a great customer service experience. Zendesk helps companies big and small interact with customers to provide those experiences.
Svane added that the shift is partly a generational change, with younger customers simply not accepting calling a call center and being put on hold. He said today's customers want a fast, seamless experience when interacting with a company, no matter if they're talking to sales, marketing or support. That's why Zendesk works had to integrate multiple channels into a single experience.
When asked about their accelerating revenue growth, Svane said Zendesk is simply keeping up with the growing demand.
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At the time of publication, Cramer's Action Alerts PLUS had a position in CSCO, PANW, AMGN.