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The heart of earnings season is the most challenging time for investors, Jim Cramer told his Mad Money viewers Tuesday. The markets are in non-stop grading mode, Cramer said, and there's little time for subjectivity.

Case in point, Johnson & Johnson (JNJ - Get Report) , which delivered a stellar beat on both the top and bottom lines. This one was an easy one, Cramer told viewers, as was Netflix (NFLX - Get Report) , which missed subscriber growth targets big time, sending shares plunging 13%.

But for other stocks, the choice is far less binary and more subjective. Take IBM (IBM - Get Report) . Cramer said he liked IBM's growth in its new businesses, but others disliked the deceleration in its legacy businesses. Then there are companies like Goldman Sachs (GS - Get Report) , which ran up ahead of the quarter, meaning no matter what the company reported, it wasn't going to be enough.

Cramer had four takeaways from this quarter's earnings. First, if a stock has a big run up, expect traders to take gains. Second, remember there are people more powerful than the company itself. If a prominent analyst says he or she doesn't like a company's earnings, the stock is likely going lower.

Third, remember that stocks are a relative game. So while Goldman's earnings were great in absolute terms, they were not as good as JPMorgan Chase (JPM - Get Report) . Finally, Cramer said when it's bad, as it is with Netflix, expect the selling to continue for days. But if it's good, expect the stock to soar for days.

In the end, Cramer told viewers to stay away from the subjective stocks and stick with those binary ones that are easy to judge and for which you can profit, starting with  Johnson & Johnson.

Man's Best Stock

When earnings season makes trading tough, stick with strong multi-year themes, Cramer told viewers, themes like Americans spending more on their pets. Pet care spending has exploded, from $28.5 billion in 2001 to just over $60 billion in 2015. That makes groups like veterinary care red-hot.

The vet care space includes Zoetis (ZTS - Get Report) , the largest animal health company around; Idexx Labs (IDXX - Get Report) , makers of vet testing equipment; VCA (WOOF) , operators of 680 vet hospitals and clinics; and PetMed Express (PETS - Get Report) , which sells medication directly to pet owners.

Of the group, Cramer said he likes Idexx but not at 38 times earnings. He recommended buying this one only on weakness. Zoetis has been a wild trader, and Cramer said he'd wait for the company to report another strong quarter before buying in. He was also bullish on VCA, which only trades at 21 times earnings.

Cramer's only criticism was for PetMed Express, which has limited upside. Cramer said he prefers to own the drug makers, such as Zoetis, over just a retailer.

A Tale of Two Earnings Calls

What should investors do with the misfits of this quarter's earnings season? Cramer dug into the conference calls of Hasbro (HAS - Get Report) and Netflix to find out.

Hasbro has a compelling story, Cramer concluded, after interviewing the company's CEO on last night's show. While uninformed investors assumed the company's inventory buildup was unsold toys, in fact, the build represented toys that haven't even come to market yet. When comparing Hasbro's terrific results to rival Mattel (MAT - Get Report) , which bombed, it's easy to ascertain the winner.

But then there's Netflix, which missed subscriber targets big time and cited "un-grandfathering" as the cause. The company said that as price increases began hitting older subscribers, a larger-than-expected number of them decided not to renew. Cramer said this trend left him baffled because previously subscribers were so enthralled with Netflix they would've paid anything for the service.

So while Cramer saw Hasbro as a screaming buy, Netflix left him "dazed and confused," which is not when you want to make investment decisions.

Off the Charts

In the "Off the Charts" segment, Cramer checked in with colleague Mark Sebastian to see how the CBOE Volatility Index (VIX) was faring in a post-Brexit world. Readers may recall that Sebastian correctly called the market bottom on June 28, and stock have rallied 6% from those lows.

Cramer recounted what Sebastian saw in June, noting that normally the VIX will rise as the markets fall. But on June 27, as the markets continued their selloff, the VIX also retreated, signaling a change was at hand. Indeed, the markets immediately rebounded, with the VIX retreating ever since.

So what's next? Sebastian thinks the bull market has legs as the VIX and S&P 500 have returned to normal patterns, which confirms the rally. Sebastian felt the S&P could see 2,200 over the next month as long as the current pattern remains intact.

Lightning Round

In the Lightning Round, Cramer was bullish on Bristol-Myers Squibb (BMY - Get Report) .

Cramer was bearish on Abiomed (ABMD - Get Report) , Harman International (HAR) and Juno Therapeutics (JUNO) .

The New Danaher

On July 2, Danaher (DHR - Get Report) completed the spinoff of its industrial business as a new company, Fortive (FTV - Get Report) , leaving the company's life sciences, diagnostics and environmental businesses under the Danaher banner. The natural question on investors' minds now is, are both companies worth holding onto?

Cramer explained the new Danaher is much more focused, deriving half of its revenue from life sciences and diagnostics. All the company's businesses have high margins and growth, making it a consistent earner that portfolio managers will love.

Danaher has a long history of smart acquisitions, and now has multiple avenues where it can continue that legacy. Cramer is a fan of the company's dental and water technology businesses in particular.

Fortive, on the other hand, focuses on professional instruments such as power and air quality monitors, as well as industrial technologies such as motion control systems and truck fleet tracking.

Cramer said he's a big fan of the new Danaher, which trades at 21 times earnings. Fortive however, needs a strong global economy to shine and the company's cyclical nature makes it far less attractive at just under 20 times earnings.

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

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At the time of publication, Cramer's Action Alerts PLUS had no position in stocks mentioned.