The Federal Reserve's comments to investors this week represent a sea change for the stock market, Jim Cramer explained to his Mad Money viewers Thursday. That means investors need to get themselves into the right frame of mind for the new market we now find ourselves in.
Our economy may be cooling but, Cramer said, more companies do well in a low-growth environment than do in a high-growth one. That also means stocks that were working last week won't be working this week. Investors now need to look for stocks with high dividend yields and those that have fast growth, as well as those that prosper from a weaker U.S. dollar.
Stocks like Amazon (AMZN) - Get Report and Apple (AAPL) - Get Report fit the bill, even with the latter rallying 3.6% on Thursday. The cloud kings are also perfect in this environment, and investors can look to Salesforce.com (CRM) - Get Report , ServiceNow (NOW) - Get Report and Twilio (TWLO) - Get Report .
Cramer was also bullish on the semiconductor stocks, including Nvidia (NVDA) - Get Report , Advanced Micro Devices (AMD) - Get Report , Micron Technologies (MU) - Get Report , and semiconductor equipment maker Lam Research (LRCX) - Get Report .
As for which sectors to avoid, Cramer said the banks will be problematic both because of a slowing economy and falling interest rates.
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Executive Decision: CVS
For his "Executive Decision" segment, Cramer sat down with Larry Merlo, president and CEO of CVS Health (CVS) - Get Report , the drugstore chain that acquired Aetna in a deal that closed four months ago. Shares of CVS trade at just eight times earnings with a 3.6% yield.
Merlo said the merger is off to a great start and they're excited about the opportunities for the combined company. He said the healthcare system is complex and difficult to navigate for many people, but CVS sees that as an opportunity for change. The company's new pilot locations in Houston feature an expanded clinic at the front of the store, where Aetna members can get their questions answered and assistance with many common medical services.
Merlo admitted that 2019 will be largely a transition year for CVS, and his company's skilled nursing business will continue to be under pressure. But the opportunity for growth remains, he said, and CVS will continue to reduce costs, increase convenience, and help increase memberships.
Finally, Cramer asked why CVS, which boldly removed tobacco from its shelves years ago, is now offering topical CBD products derived from cannabis in eight states. Merlo explained that many customers are using these products to treat arthritis pain and it's working for them. He said it's important to respond to consumer demand and help people whenever they can.
Off the Charts: Zendesk, Zebra, Zendesk
In the "Off The Charts" segment, Cramer checked in with colleague Bob Lang over the charts of the three Z's in tech: Zendesk (ZEN) - Get Report , Zebra Technologies (ZBRA) - Get Report and Zscaler (ZS) - Get Report . Shares of Zendesk have rallied 44% for the year so far, while Zebra has gained 37% and Zscaler has vaulted 78%.
Lang noted the daily chart of Zendesk is above all of the stock's moving averages, and the bullish move is confirmed by a bullish crossover in the MACD momentum indicator. Furthermore, the stock's relative strength indicator has remained in overbought territory for so long it has become what technicians call "embedded" in bullish mode.
Lang noted the same patterns in both Zebra and Zscaler, making all three stocks strong buys.
The Right Price for Levi's
Today's IPO of Levi Strauss (LEVI) - Get Report was a huge success, with shares rallying more than 31% by the close. But does that make the stock a buy? Cramer said he likes the company and the stock, but not at this price.
Levi's has a lot going for it, Cramer explained. It's an iconic apparel brand name that's beloved around the globe. The company makes a lot more than just jeans, including outerwear and footwear. And after doubling down on their key businesses in 2015, Levi's revenues and margins are once again expanding.
The only problem with Levi's? The price. Cramer said shares trade for 20 times last year's earnings, putting them well above even great apparel makers like PVH (PVH) - Get Report and Ralph Lauren (RL) - Get Report , which trade for 11 and 17 times earnings. Even factoring in a 30% growth rate, Levi's is still trading for 16 times next year's estimates.
Cramer said he'd take a pass at current valuations and preferred to be a buyer only below $20 a share.
Don't Focus on Apple's Gadgetry
In his "No-Huddle Offense" segment, Cramer pondered exactly what Apple would have to introduce at next week's event in order to meet the out-of-control expectations on Wall Street. Shares of Apple are up over $22 in March ahead of the event.
Cramer said investors need to look beyond any gadgets the company may introduce next week and focus instead on what's most important: the company's ecosystem which makes its products a must-have and its services revenue. Those focused on gadgets will only be disappointed and sell on the news, he said, but those who focus on services will see the potential and prosper.
On Real Money, Cramer says Apple products and services are ubiquitous and indispensable. Get more of his insights with a free trial subscription to Real Money.
In the Lightning Round, Cramer was bullish on Centene (CNC) - Get Report , Callaway Golf (ELY) - Get Report , Berkshire Hathaway (BRK.B) - Get Report , Zimmer Biomet (ZBH) - Get Report , Intuitive Surgical (ISRG) - Get Report , Tandem Diabetes Care (TNDM) - Get Report and Aqua America (WTR) - Get Report .
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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, AMZN, CRM, NVDA, LRCX, CVS, MSFT.