Stocks Are Guilty by Association: Cramer's 'Mad Money' Recap (Thursday 7/20/17)

Guilt by association is a powerful concept in the stock market, Jim Cramer told his Mad Money viewers Thursday, a concept that was on full display today.

What was it that sank shares of Home Depot (HD)  by 4% today and rival Lowe's (LOW)  by 5.5%? Cramer said it was a one-two punch, the first of which was weak sales at paint maker Sherwin Williams (SHW) . Paint may only be a part of what the home improvement stores sell, but that alone was enough to get the selling started.

The second punch hit much harder, as Amazon (AMZN) announced it's moving into appliances with Sears Holdings (SHLD) as its partner. Shares of Sears rocketed over 10%, but investors continued selling anyone who sells appliances.

The same pattern was seen when Amazon announced it was buying Whole Foods Market (WFM) . Shares of Costco (COST) tanked on the news, despite just posting a strong quarter. Shares of Blue Apron (APRN) are down a full 35% from their IPO for the same reason.

Cramer said he sold shares of Walgreens Boots Alliance (WBA) for Action Alerts PLUS also out of concern that Amazon may come knocking on the door or the drug market.

But all of these Amazon fears don't mean the whole market is doomed. Money was flowing into Johnson & Johnson (JNJ) , up 1%, UnitedHealth Group (UNH) , up 1.2%, and Abbott Labs (ABT) , which tacked on 2.8% by the close.

On Real Money, Cramer says investors need to understand that the guilty taint has proven to be difficult to shake if your company is in the sights of Amazon. Get his insights with a free trial subscription to Real Money.

Innovate and Thrive

How can shares of FANG -- Cramer's acronym for Facebook (FB) , Amazon.com , Netflix (NFLX) and Alphabet (GOOGL)  -- all keep going higher on seemingly no news? It's because these companies never stop innovating, Cramer said, and all that innovation is eventually additive to earnings.

Just today we learned that Facebook is looking to create a news service that's more friendly to news outlets. Meanwhile, Amazon is moving into appliances with the help of Sears' Kenmore brand.

Netflix has many analysts scratching their heads, but the company hit one out of the park this quarter, especially internationally, where a hot flick in South Korea of all places, led to a surge of new subscribers.

Finally, there's Alphabet, which is also looking toward news as a growth engine, as the company is working on a new personalized news feed service.

All of these stocks continue to go higher because there's always something new, Cramer concluded, and investors can't wait to see what's next.

Executive Decision: KeyCorp

For his "Executive Decision" segment, Cramer once again spoke with Beth Mooney, chairman and CEO of Keycorp (KEY) , the regional bank which just posted a two-cents-a-share earnings beat with net interest margins up 54 basis points year-over-year. Shares of Key responded by falling 3.6% on the bank's tepid commentary for the rest of 2017.

Mooney said that while her guidance was conservative this quarter, Key remains positioned to profit from any increase in consumer confidence during the second half of the year. The bank still has work to do integrating its First Niagara merger, which closed last year, but is already seeing good value for its investment.

Mooney added that "we have everything we need to be successful and compete," including full-service mortgage origination, which it acquired with First Niagara. Those services can now be rolled out to Key's entire footprint, she said.

In addition, Key was also given permission by regulators to increase its dividend and reinstate an $800 million stock buyback program.

Cramer said that Key Corp shares had run up too far ahead of the quarter and investors aren't likely to get another opportunity to buy them this low again.

Cramer and the AAP team say Danaher beat earnings expectations, but shares are under pressure. Get in on the conversation and find out what they're telling their investment club members with a free trial subscription to Action Alerts PLUS.

Executive Decision: Baozun

In his second "Executive Decision" segment, Cramer sat down with Vincent Qiu, chairman and CEO of Baozun (BZUN) , a company helping to lead the ecommerce charge in China.

Qiu described Baozun as a full-service ecommerce provider, offering companies big and small everything from digital marketing to website design and management to order fulfillment services. They act as a middleman between companies like Nike (NKE) and PVH (PVH) and commerce platforms in China such as Alibaba (BABA) .

When asked how his company makes money, Qiu said typically they have a fee-plus-commission structure with their clients. For customers like Nike, Baozun runs the entire online operation, while for other brands, like Haagen Dazs ice cream, they focus on brand awareness by selling coupons that can be redeemed in local stores.

Cramer said he's only recommending one Chinese stock at the moment, and that's Alibaba, but Baozun seems to be an excellent companion that investors need to look into.

Lightning Round

In the Lightning Round, Cramer was bullish on Procter & Gamble (PG) , Darden Restaurants (DRI) , Schneider National (SNDR) , Union Pacific (UNP) and Adobe Systems (ADBE) .

Cramer was bearish on Energizer Holdings (ENR) , Blackberry (BBRY) , Cheesecake Factory (CAKE) , Ensco International (ESV) and Triton (TRTN) .

Am I Divsersified?

In the "Am I Diversified" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer to see if investors' portfolios have what it takes for today's markets.

The first portfolio included Abbott Labs (ABT) , Wyndham Worldwide (WYN) , Hartford (HIG) , Coca-Cola (KO) and American Tower (AMT) .

Cramer said this portfolio was properly diversified.

The second portfolio's top holdings included Apple (AAPL) , Allergan (AGN) , Cisco Systems (CSCO) , Dell (DVMT) and Exxon-Mobil (XOM) .

Cramer said this portfolio has too much tech. He advised selling Cisco and Dell and adding Honeywell (HON) and KeyCorp.

The third portfolio had Apple, Skyworks Solutions (SWKS) , Gilead Sciences (GILD) , Twilio (TWLO) and Twitter (TWTR) . as its top five stocks.

Cramer said this portfolio also has too much tech. He said to sell Skyworks and Twilio and once again add Honeywell and KeyCorp.

The fourth portfolio's top stocks were Bank of America (BAC) , Johnson & Johnson (JNJ) , Verizon (VZ) , Carnival (CCL) and Viacom (VIA.B) .

Cramer blessed this portfolio as diversified.

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At the time of publication, Cramer's Action Alerts PLUS had positions in KEY, ABT, FB, GOOGL, ADBE, AAPL, AGN, CSCO.

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