At times like these, we need big secular growth themes that can last, Jim Cramer told his Mad Money viewers Tuesday. Themes propel earnings and earnings propel stocks, Cramer said, and betting on great themes is a great way to make money.
There are plenty of great long-term themes to choose from. The data center is one. Every year the world creates and processes more data than ever before. In fact, 90% of all data on the planet was created in just the past two years. That means data centers will be in demand for a long time to come.
Much of retail has been challenged lately, but AutoZone (AZO) - Get AutoZone Inc. Report delivered spectacular results, sending shares up 6.9%. AutoZone is the best run auto parts chain in the nation, Cramer explained, and it's riding the trend of people keeping their cars for longer. The average age of a car on the road is now 12 years and that's great news for AutoZone.
Perhaps the biggest theme of all is 5G wireless. Cramer said his picks in this space are Skyworks Solutions (SWKS) - Get Skyworks Solutions Inc. Report, Qorvo (QRVO) - Get Qorvo Inc. Report, Qualcomm (QCOM) - Get QUALCOMM Incorporated Report and Marvell Technologies (MRVL) - Get Marvell Technology Inc. Report. The 5G transition is so big that Cramer said T-Mobile (TMUS) - Get T-Mobile US Inc. Report and Sprint S will have to be allowed to merge, otherwise they won't likely be able to compete with the likes of Verizon (VZ) - Get Verizon Communications Inc. Report and AT&T T.
All of these are multi-year themes, Cramer concluded, and they can all be bought on any short-term market weakness.
Off the Charts
In his "Off The Charts" segment, Cramer checked in with colleague Dan Fitzpatrick for a read on the direction of the markets after a 25% gain in the S&P 500 for the year. Fitzpatrick's favorite sector in the S&P was an unlikely one, mining and materials.
Fitzpatrick first looked at a chart of the S&P Metals And Mining ETF (XME) - Get SPDR S&P Metals & Mining ETF Report, noting that while the ETF had been making a series of lower highs this year, the lows were flat. The resulting triangle formation recently caused a breakout above the 200-day moving average and Fitzpatrick felt it has more room to run.
The S&P Materials ETF (XLB) - Get Materials Select Sector SPDR Fund Reporthad the opposite pattern, with a series of rising lows while the ceiling remained flat at $59. A few weeks ago however, this pattern also gave way, breaking out to the upside.
Cramer said while he's not as bullish on the group as Fitzpatrick, he is intrigued by the recent breakouts and sees them as positive news for the S&P 500 overall.
Ready for Yeti?
After a rocky start to begin the year, is it time to take a second look at Yeti Holdings, the outdoor and camping equipment maker beloved by all?. With shares up 75% from the 2019 lows, Cramer said yes.
Most of Yeti's problems in 2019 have been self inflicted. The company has repeatedlyy posted stronger-than-expected earnings, but with disappointing forecasts that have rattled the analysts. Yeti has also executed not one, but two, secondary offerings, allowing its private equity backers to cash out at shareholders' expense. Lastly, Yeti sources about 50% of its merchandise from China, stoking tariff fears.
But Cramer said these fears have been overblown and 2020 is the year Yeti can shine. He said the company is getting better at managing analyst expectations with better forecasts and the private equity selling is in the past. Most importantly, Yeti has pricing power and has been able to raise prices to offset increased tariffs. Trading at 23 times earnings with strong growth, Cramer said he'd be a buyer.
Executive Decision: Extreme Networks
Extreme Networks is a very different company than it was in the past, Meyercord said. The company has made a number of important acquisitions and entered into strategic partnerships that are getting them noticed among enterprise networking providers.
Meyercord said Cisco Systems (CSCO) - Get Cisco Systems Inc. Report is the old model of networking. Today's networking is software based and in the cloud, he said, which is why their partnership with Broadcom (AVGO) - Get Broadcom Inc. Reportis so important. Now Extreme can write custom software directly to Broadcom's processors.
Some of Extreme's notable customers are the NFL, where the company partners with Verizon VZ to bring fans a world-class stadium experience. And if you're buying presents online this year, Meyercord said your packages at FedEx (FDX) - Get FedEx Corporation Report and UPS UPS are all running through Extreme Networks.
In the Lightning Round, Cramer was bullish on GW Pharmaceuticals (GWPH) - Get GW Pharmaceuticals Plc Report, Boston Scientific (BSX) - Get Boston Scientific Corporation Report, Medtronic (MDT) - Get Medtronic plc. Report, Amarin (AMRN) - Get Amarin Corporation plc Report, Western Digital (WDC) - Get Western Digital Corporation Report, Activision Blizzard (ATVI) - Get Activision Blizzard Inc Report, United Continental (UAL) - Get United Airlines Holdings Inc. Report and American Airlines (AAL) - Get American Airlines Group Inc. Report.
Cramer was bearish on Zuora (ZUO) - Get Zuora Inc. Class A Report, Enterprise Products Partners (EPD) - Get Enterprise Products Partners L.P. Report,, Enphase Energy (ENPH) - Get Enphase Energy Inc. Report, MiMedx Group (MDXG) - Get MiMedx Group Inc Report, Zynga (ZNGA) - Get Zynga Inc. Report, Outfront Media (OUT) - Get OUTFRONT Media Inc. Report, and JetBlue Airways (JBLU) - Get JetBlue Airways Corporation Report.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer told viewers the secret to playing the trade war. "Stop playing and start investing," he said, as it's simply too unpredictable.
President Trump thrives on unpredictability and uses it as a negotiating tactic, Cramer said. There's simply no way to get the upper hand on what he might do or when. That's why the smart money invests for the long term in companies that will thrive with or without tariffs. So, when you see a great stock like Home Depot (HD) - Get Home Depot Inc. (The) Report knocked down on trade fears, that’s the time to pounce.
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At the time of publication, Cramer's Action Alerts PLUS was long MRVL ATVI CSCO and HD