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Pricing power. Some companies have it, others don't. Jim Cramer told his Mad Money viewers Wednesday that companies who have pricing power see their stocks rally, but those who don't are fated to tread water at best.
That's why Cramer owns shares of Apple (AAPL) , Alphabet (GOOGL) and Facebook (FB) for his charitable trust, Action Alerts PLUS. Apple, he said, may have released a smaller iPhone this week, but it still commands a premium price. Meanwhile, both Facebook and Google can pretty much charge whatever they want for advertising and companies are happy to pay it.
Tobacco is another industry with pricing power, Cramer said. It's the only industry where the product is literally addictive.
Those without pricing power include the oil companies, where oversupply has crushed pricing, and quick serve restaurants, which have been struggling against McDonald's (MCD) new low-cost menu.
Then there are the drug stocks, where companies struggling against each other in patent wars and against the government, which perpetually accuses them of gouging.
Those with price power flourish, Cramer concluded, but those that can't raise prices flounder.
Blink and You'll Miss It
If it seems like the market has been giving you whiplash lately, you're not alone, Cramer told viewers. It used to take investors days or even weeks to change their mind about a stock, but in today's market those decisions are being made in just hours or even minutes of events occurring.
That's how after yesterday's terrorist attack in Brussels, the markets could sink lower, only to end the day mostly flat to higher by the end of the day. It's also how Nike (NKE) could report what seemingly were good earnings, only to see its shares tank but then quickly recover.
Cramer said these re-valuations on the fly are a new trend that's popping up more and more in the markets, and investors need to keep an eye out for them.