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When the basics are working in your favor, investors will throw money at the stock market, Jim Cramer told his Mad Money viewers Tuesday. That money usually sticks to the companies with the best global stories. Cramer said it's tough to remember sometimes what makes stocks go higher, which is why he offered up this little reminder.
First, the stock market likes low inflation. High inflation erodes future earnings, against which stocks are valued. But low inflation maximizes those future returns.
Second, stocks compete mainly against bonds. With interest rates still incredibly low, stocks with high yields, like Caterpillar (CAT - Get Report) at 4%, can overcome weakness in oil, coal and China and still see gains.
Third, the market likes a weakening dollar, which inflates the earnings of international companies. Just look at the action in Johnson & Johnson (JNJ - Get Report) , International Flavors & Fragrances (IFF - Get Report) and 3M (MMM - Get Report) .
Finally, the markets want high oil prices, as they see it as a sign the world economy is growing. As oil prices rise, stocks including Pioneer Natural Resources (PXD - Get Report) and Anadarko Petroleum (APC - Get Report) have been rallying.
Executive Decision: Meg Whitman
For his "Executive Decision" segment, Cramer spoke with Meg Whitman, president and CEO of Hewlett Packard Enterprise (HPE - Get Report) , which recently announced the spinoff of its enterprise services division, which will be merged with Computer Sciences (CSC) .
Whitman explained that Hewlett Packard is unlocking value and the new enterprise services company will be a pure play in that space, while the remaining company will focus on the data center, edge networks and software.
Edge networks are those that will be needed inside smart devices like hospital beds or self-driving cars, which will need to process huge amounts of data in real time.
Whitman said the turnaround at Hewlett is almost compete. Over the past four and a half years, the company has gotten costs in line with revenue, repaired the balance sheet, reignited innovation and reshaped the product portfolio, all while unlocking value for shareholders.
Cramer said there's still a lot of growth ahead at Hewlett Packard Enterprise.
Flying With Cramer
Travel and leisure stocks have been heading higher, Cramer told viewers, but the airlines have been left behind. Is it finally time to take a second look?
Conventional wisdom would say that rising oil prices mean rising fuel costs for the airlines, but Cramer noted that it's not oil that has been holding these stocks back. It's the same thing as always, competition. When fares go up, airlines add capacity, and with more capacity comes lower fares.
But there it hope, Cramer said. JetBlue (JBLU - Get Report) has increased prices and American Airlines (AAL) is changing its frequent-flier program from miles to dollars spent, which may be a harbinger of things to come. Also, the weaker dollar is helping international carriers like the airlines.
Cramer said he's always been a fan of Southwest Airlines (LUV - Get Report) , which always makes money, but given how low the group is trading, he also blessed Delta Airlines (DAL - Get Report) and American, which trade at a paltry six and five times earnings, respectively.
Executive Decision: Avishai Abrahami
In his second "Executive Decision" segment, Cramer sat down with Avishai Abrahami, founder, chairman and CEO of Wix.com (WIX - Get Report) , the cloud-based web development platform with 85 million users and shares that are up 20% so far in 2016.
Abrahami said his company's recent Super Bowl ads have been very successful, helping to net 5.3 million new customers in the first quarter. He said there is still a large percentage of small businesses without a website, and countless other groups and events, such as weddings, that can also use a website.
Many businesses come to Wix update their websites, making it more modern looking and mobile-friendly. Vix recently introduced a new intelligent website builder that can look at the content uploaded by a user and automatically turn it into a great looking website.
Cramer remains a fan of Wix.
Off the Charts
In the "Off the Charts" segment, Cramer checked in with colleague Bruce Kamich over the chart of Advanced Micro Devices (AMD - Get Report) the microprocessor and graphics chipmaker that has seen declining sales thanks to competition from Intel (INTC - Get Report) and Nvidia (NVDA - Get Report) .
With PCs in secular decline, Cramer said that AMD has investors worried about bankruptcy risks. But as Kamich noted, the daily chart shows a reinvigorated stock that's up 140% from its February lows, with the on-balance volume indicator confirming the move.
Kamich also noted that the weekly chart shows AMD building a base since 2012, but now that the on-balance volume and MACD momentum indicator are turning bullish, he felt it was clear sailing until $8 a share.
Cramer said he'd never recommend AMD for an investment, but as a trade the stock is compelling given the company just posted its second quarter in a row with expanding gross margins and is raising cash to meet its looming debt obligations.
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