When it comes to stocks, expectations matter, Jim Cramer reminded his Mad Money viewers Tuesday. With so many companies exceeding expectations, it's easy to see why stocks are rallying.
Case in point: Netflix (NFLX - Get Report) , which is now up 50% from its lows, extending its gains today after the company announced it would be raising subscription prices for the popular streaming media service. Cramer said Netflix has been undercharging for years, and today's increases flow right to the company's bottom line.
Everyone loves recurring service revenue streams, Cramer said, and that bodes well for the rest of FANG, including Amazon (AMZN - Get Report) , which could charge more for its Prime, as customers are equally addicted to that service as well. It's also good for Apple (AAPL - Get Report) , which has terrific service revenues, yet trades for 11 times earnings.
Beyond tech however, JPMorgan Chase (JPM - Get Report) blew away its expectations, as did UnitedHealth (UNH - Get Report) , which ended the day up 3.5%. Perhaps the biggest surprise of the day was United Continental (UAL - Get Report) , which rose 5.7%.
Cramer said in a market where everyone is negative, beating expectations matters more than ever.
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Off the Charts: VIX
In the "Off The Charts" segment, Cramer checked in with colleague Mark Sebastian for the latest read on the CBOE Volatility Index, known better by its ticker, the VIX.
In a typical relationship, the VIX will rise as the markets fall, and vice versa. But Sebastian noted that when many VIX and inverse-VIX futures products collapsed early last year, many of those investors walked away from the VIX, which may change the way it measures risk from now on.
This new chapter for the VIX was seen in the fourth-quarter meltdown. While the VIX spiked in October as the markets fell, it remained the same throughout much of November, and failed to capture the extent of the fear throughout much of December.
That's not to say the VIX is broken, Cramer concluded, but rather we may need to look at this indicator differently from now on.
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Future of Healthcare Technology
What does Cramer remember most about his interview last week with Apple CEO Tim Cook? He said it was Cook's assertion that Apple's biggest contribution to mankind will be health-related products. Cramer said this statement is significant, because on Wall Street, Apple is viewed solely as a hardware company, and not for its services involvement in healthcare.
Cramer posited that what Apple needs is a splashy acquisition in the healthcare space, and he recommended buying the privately-held Epic Systems, the leading provider of electronic medical records.
Cramer said the problem with medical records today is a lack of interoperability. Records from one system aren't likely to pass to others and vice versa. But Apple could become a universal repository, helping to establish universal standard for how records get shared. Apple is the perfect company for this, given its stance on privacy and customer loyalty.
Executive Decision: VMWare
For his "Executive Decision" segment, Cramer sat down with Sanjay Poonen, CEO of VMWare (VMW - Get Report) , the cloud computing virtualization provider with shares that rose 2% in Tuesday's session and are up 7% for 2019.
Poonen explained that VMWare is the de facto standard in private cloud virtualization, but today we find ourselves in a multi-cloud world that includes both public and private clouds, both on-premise and otherwise. Companies need a bridge to connect all of these clouds, he said, and VMWare has a unique story to tell in this space.
Poonen added that while VMWare focuses largely on Amazon's Web Services (AWS), the clear leader in the cloud, they are not exclusive to AWS and have products for Microsoft (MSFT - Get Report) and Google's (GOOGL - Get Report) cloud offerings as well.
In the end, Poonen said, VMWare is in business to help customers be successful, which is why they approach their business with humility, while still being a fierce competitor.
In his "No-Huddle Offense" segment, Cramer reminded viewers that the retail sector is not just one big ETF and investors cannot take their cues from a single player. Instead, they must go category by category to find both the winners and the losers.
It was no surprise that Macy's (M - Get Report) was forced to slash its guidance, Cramer said. Mall-based retailers continue to struggle. But that was not the case for Lululemon Athletica (LULU - Get Report) , which saw same-store sales growth in the mid-teens. Clearly, Lulu has a winning formula that Macy's does not.
When it comes to the discount retailers, both Target (TGT - Get Report) and Kohl's Stores (KSS - Get Report) performed well, but are being overshadowed by a resurgent Walmart (WMT - Get Report) . Meanwhile, investors looking for an experiential retail play can look towards Dave & Busters (PLAY - Get Report) .
In the Lightning Round, Cramer was bullish on Barrick Gold (ABX , CSX (CSX - Get Report) , Aurinia Pharmaceuticals (AUPH , Verizon (VZ - Get Report) , AT&T (T - Get Report) , Dominion Energy (D - Get Report) , IBM (IBM - Get Report) , Exxon Mobil (XOM - Get Report) and Nike (NKE - Get Report) .
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