Stocks are falling into different categories this earnings season, Jim Cramer told his Mad Money viewers Thursday. There are those who are oblivious to the trade war and economic weakness -- and everyone else.
ServiceNow (NOW) - Get Report told Cramer on Wednesday night's show that the company is not seeing any weakness from the trade war. Instead, it's riding the long-term secular trend of digitization. That's why shares rallied 8% Thursday.
Other companies rising about the macroeconomic news include Microsoft (MSFT) - Get Report , which is firing on all cylinders, Nike (NKE) - Get Report , which is prospering despite protests in Hong Kong, and Chipotle Mexican Grill (CMG) - Get Report , which saw a stunning 11% rise in same-store sales.
Even companies like Coca-Cola (KO) - Get Report and PepsiCo (PEP) - Get Report are strong, as are retailers like Costco (COST) - Get Report and Walmart (WMT) - Get Report . Cramer even gave the nod to Dow Chemical (DOW) - Get Report , which is turning itself around and has an impressive 5.7% yield.
Winning in China
Is it possible to win in China in the middle of a trade war? Some companies are doing it, Cramer said, and this past quarter proved it.
PayPal (PYPL) - Get Report talked a lot about China on its conference, with the company noting that its investments there have been a long time coming and took a lot of work. But by working within the existing financial system, paying close attention to the regulators and trying to be both innovative and differentiated while not being disruptive, PayPal was able to win.
We heard a similar story from Tesla (TSLA) - Get Report . The automaker built a new Gigafactory in just 10 months by working closely with the Chinese government and providing innovative technology. Semiconductor equipment maker Lam Research (LRCX) - Get Report was another winner, as the company told investors that the coming 5G evolution is creating lots of demand for its equipment inside China. Shares of Lam popped 13% by the close.
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Forecast for Cloud Stocks
It's finally time to circle back to the cloud stocks, Cramer announced to viewers -- but only those with reasonable valuations. This sector has been out of favor on Wall Street, and racked up big losses over the past few months. But Cramer said the bottom may finally be at hand thanks to a strong quarterly report from ServiceNow.
Cramer's "Cloud Kings" remain among his favorites, as this group has fallen the least. The kings include ServiceNow, Salesforce.com (CRM) - Get Report , Adobe Systems (ADBE) - Get Report and Workday (WDAY) - Get Report .
The smaller, "Cloud Princes" have fared slightly worse, falling an average of 25% from their highs. Cramer noted that these names, which include Coupa Software (COUP) - Get Report , Okta (OKTA) - Get Report and Atlassian (TEAM) - Get Report , are still up an average of 41% for the year.
As for the rest of the cloud stocks, Cramer said they've fallen an average of 30% from their highs, making names like Ring Central (RNG) - Get Report , Zendesk (ZEN) - Get Report and Zscaler (ZS) - Get Report still hard to own.
The worst of the sector have been the IPOs of 2019, which include Zoom Video (ZM) - Get Report , Cloudflare (NET) - Get Report and Slack (WORK) - Get Report . This group has plunged an average of 40%.
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Executive Decision: Centene
Neidorff said Centene just posted their ninth "clean" quarter in a row, with strong earnings and the ability to buy back stock and retire debt to strengthen their balance sheet.
When asked about the Affordable Care Act, Neidorff said the legal wrangling remains an overhang for his industry, but he's confident the courts will uphold the law. He said the fact is that people like these exchanges, and Centene is retaining customers longer than they expected.
Turning to proposed single-payer healthcare systems, Neidorff said they could cost as much as $25 trillion over 10 years, which simply makes them unsustainable.
Executive Decision: American Electric Power
In his second "Executive Decision" segment, Cramer again sat down with Nick Akins, chairman, president and CEO of American Electric Power (AEP) - Get Report , which just posted a 15-cents-a-share earnings beat that sent shares to new highs.
Akins said American Electric Power continues to make investments into its generation and distribution systems and has been very lucky to have avoided problems like we're seeing in California, where the local utilities are facing significant challenges.
When asked about the economy, Akins said the industrial sector is still seeing some slowing, but there also are improvements.
Turning to the topic of their power generation portfolio, Akins explained that their preferred investment is renewable energy backed up by U.S. natural gas facilities. He said it's possible to generate 40% of their power from renewable sources and AEP continues to make big investments into wind and solar facilities.
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At the time of publication, Cramer's Action Alerts PLUS had a position in JNJ. MSFT, PEP, LRCX, CRM.