Skip to main content

Today started a market rotation, Jim Cramer told his Mad Money viewers Thursday. Money managers are selling the safety stocks and buying into the economically sensitive names that have gotten too cheap to ignore.

Case in point, today's trifecta of semiconductor earnings that included Texas Instruments (TXN) - Get Texas Instruments Incorporated Report , Xilinx (XLNX) - Get Xilinx, Inc. Report and LAM Research (LRCX) - Get Lam Research Corporation Report . Shares of Texas Instruments rose 3.7%, despite the company's cautionary words. Xilinx had a fantastic quarter, as many of its end businesses did well, including defense, AI and the red-hot 5G wireless. Meanwhile LAM Research posted a better-than-expected quarter and announced a $5 billion stock buyback that sent shares soaring 15.7%.

Cramer said he thinks the run in the semiconductors can continue, despite the earnings miss from Intel (INTC) - Get Intel Corporation Report . He endorsed picking up shares of Texas Instruments or LAM Research.

But not everything goes up in a rotation, Cramer warned. There's simply not enough new money coming into the market, which means all of this buying has to come from somewhere. Today, somewhere included spice maker McCormick (MKC) - Get McCormick & Company, Incorporated Report , which plunged 10.5% even after a solid quarter.

Executive Decision: United Rentals

For his "Executive Decision" segment, Cramer sat down with Michael Kneeland and Matthew Flannery, the outgoing and incoming CEO of United Rentals (URI) - Get United Rentals, Inc. Report , which just posted a strong quarter that included a 27% rise in revenues.

Kneeland said that United Rentals continues to grow because the sharing economy continues to make renting equipment a far better option than owning it for more and more customers. That's part of the reason why United Rentals' customer base keeps diversifying.

Flannery added that United Rentals is also actively on the acquisition trail, making nine deals over the past 24 months. Despite all of those acquisitions, the company's leverage remains at the bottom of their range at just 2.5%. United Rentals continues to drive productivity by investing in technology, as it builds a true national rental platform.

When asked whether the government shutdown has affected their business, Kneeland said they haven't seen any effects yet but eventually it will begin to affect companies and consumers alike.

Cramer continued his recommendation of the company.


Pay no attention to the day-to-day gyrations of the stock market, Cramer reminded viewers. It's the long-term trends that matter to individual investors, Cramer said, trends like what's been happening at Merck (MRK) - Get Merck & Co., Inc. Report , which is up 18% over the past 12 months, but still has a lot more room to run.

Investors have been excited by Keytruda, Merck's lung cancer treatment. Sales have been growing like a weed since its debut. But Cramer said there's a lot more to like at Merck, including it's low valuation of just 14 times earnings. That's far less than the 17 time earnings at rivals like Eli Lilly (LLY) - Get Eli Lilly and Company Report .

Lilly's higher multiple stems from the company unlocking value by spinning off Elanco, it's animal health business. Cramer noted that Merck also has an animal health division and could follow in Lilly's footsteps. If it did, shares could rise from $70 to $93 a share, Cramer argued.

Cramer added that Merck also has a 3% dividend yield and a generous stock buyback program, which are two more reasons to like this pharma giant that has returned itself into a growth company.

TheStreet Recommends

Executive Decision: Okta

In his second "Executive Decision" segment, Cramer also spoke with Todd McKinnon, co-founder and CEO of Okta (OKTA) - Get Okta, Inc. Class A Report , the cybersecurity company that just celebrated its tenth anniversary and its 100 millionth registered user.

McKinnon explained that Okta sometimes helps its customers in the public-facing way, but most of the time remains behind the scenes, keeping infrastructure secure and helping to provide a better, more secure customer experience. Cloud adoption is still in its early days, he added, which is why they still see plenty of growth ahead.

When asked about one of their marquee customers, Adobe Systems (ADBE) - Get Adobe Inc. Report , McKinnon said that Okta helps Adobe both by helping their customers connect to the Creative Cloud and their employees connect to company applications. He noted that Adobe is also a perfect example of a successful cloud computing company.

McKinnon added that part of Okta's customer-centric culture stems from its six years working at another successful cloud company, (CRM) - Get, inc. Report .

Lightning Round

In the Lightning Round, Cramer was bullish on EPR Properties (EPR) - Get EPR Properties Report , Valero Energy (VLO) - Get Valero Energy Corporation Report , Marathon Petroleum (MPC) - Get Marathon Petroleum Corporation Report , Kemet (KEM) - Get KEMET Corporation Report and Brunswick (BC) - Get Brunswick Corporation Report .

Cramer was bearish on Charles Schwab (SCHW) - Get Charles Schwab Corporation Report , American Finance Trust (AFIN) - Get American Finance Trust, Inc. Report , CVR Refining (CVRR) and Malibu Boats (MBUU) - Get Malibu Boats, Inc. Class A Report .

No Huddle Offense

In his "No Huddle Offense" segment, Cramer outlined some of the long-term themes that are still working, even in out less-than-ideal macroeconomic environment.

First up was aerospace, where Boeing (BA) - Get Boeing Company Report and Honeywell (HON) - Get Honeywell International Inc. Report were among his favorites. Second was the aforementioned 5G wireless, where Xilinx was Cramer's favorite in the group.

Biotech was Cramer's third macro theme. He said there are a number of winners in this space, including Merck and Eli Lilly. Digitization was his fourth theme. He said investors should be thinking about companies like VMWare (VMW) - Get VMware, Inc. Class A Report .

When it comes to retail, Cramer said all of the discounters like Walmart (WMT) - Get Walmart Inc. Report , Costco (COST) - Get Costco Wholesale Corporation Report and Five Below (FIVE) - Get Five Below, Inc. Report , along with the dollar stores can all be bought.

Among the sectors to avoid? Cramer said there's nothing good happening in autos or housing and he'd steer clear of both.

Salesforce, Honeywell and Five Below are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells CRM, HON or FIVE? Learn more now.

Cramer and the AAP team are looking at how end-of-the-year market volatility is affecting their portfolio. Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts PLUS.

Over on Real Money, Cramer is calling it like it is, and sharing his perspective on the markets. Get more of his insights with a free trial subscription to Real Money.

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.