Market Conundrums

"Expectations matter," was Cramer's lesson to viewers, as he tried to explain how Cisco ( CSCO) could report a one-cent-a-share earnings beat and get a 10% haircut, while graphics chip maker Nvidia ( NVDA) could report an eight-cent miss, and jump 4.7%.

Cramer said conundrums like these may make the stock market seem maddening, but factor in the markets' expectations, and all becomes clear. He said everyone was expecting Cisco to do well, so when it did, no one noticed. But when Nvidia, a stock that everyone had given up on, did less poorly, ears perked up.

Cramer said he expected Nvidia to report a bad number when he featured it on July 13 as a second half of the year comeback story. With the quarter now behind us, Cramer said Nvidia is now worth buying. He said the expectations may now finally be low enough for the company to beat them, and its consumer business for smart phones and tablets is starting to pick up.

Cramer said Cisco is another story. The stock had run up ahead of its quarter, making it almost inevitable that shares would pull back as CEO John Chambers tempered the enthusiasm. With shares now trading at just 11 times earnings, Cramer said Cisco is now also safe to buy.

Satellite Imagergy Play

"The satellite imagery business is terrific," Cramer told viewers, as he highlighted the sectors only two players, GeoEye ( GEOY) and DigitalGlobe ( DGI).

Cramer explained that the satellite imagery business, which started as a government necessity, is now a private sector boom town, as new technology is turning imagery into big business for companies like Google ( GOOG) and Motorola ( MOT), as well as countless others.

Making the business even better, the lack of competition. Cramer said it would take several years and countless millions for a new competitor to surface in this happy duopoly. From judging demand by viewing Wal-mart ( WMT) parking lots, to assessing grain output from Russian fields, the possibilities for satellite imagery is limitless.

So which company should investors buy? Cramer said both companies have a ton of cash and incredibly high margins, but the edge goes to DigitalGlobe since that company has two satellites in orbit compared to GeoEye's single satellite.

Cramer said while DigitalGlobe is the better company, it hasn't been the better stock, making it even more appealing. The company is currently trading at a 7% discount to GeoEye. Of the nine analysts covering the company, only six rate it a buy, leaving room for upgrades.

Cramer said even with all DigitalGlobe has going for it, he'd still wait for a pullback before pulling the trigger.

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