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 Report , Xilinx (XLNX) - Get Report and LAM Research (LRCX) - Get 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%.
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 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 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 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 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.
Executive Decision: Okta
In his second "Executive Decision" segment, Cramer also spoke with Todd McKinnon, co-founder and CEO of Okta (OKTA) - Get 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 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.
In the Lightning Round, Cramer was bullish on EPR Properties (EPR) - Get Report , Valero Energy (VLO) - Get Report , Marathon Petroleum (MPC) - Get Report , Kemet (KEM) - Get Report and Brunswick (BC) - Get 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 Report and Honeywell (HON) - Get 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 Report .
When it comes to retail, Cramer said all of the discounters like Walmart (WMT) - Get Report , Costco (COST) - Get Report and Five Below (FIVE) - Get 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.
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.