Cramer Remix: This one stock leading many higher ·CNBC
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Every once in a while, Jim Cramer likes to go back to basics of investing to explain the market environment and its impact on the investor portfolio.
On Wednesday, the "Mad Money" host saw a large rotation in dedicated money. This is the money-management core principle stipulating that once a chunk of money has been allocated to a specific sector, it has to stay in that sector no matter what. The cash just gets shifted to different stocks within the sector.
Where is this money rotation taking place? Tech. Cramer even speculates that a company like Salesforce.com will take the whole group higher.
"For most of the last year, money's been pouring into what I call plain vanilla technology," Cramer said.
This group is an umbrella for the semiconductors that fuel industries such as auto, cell phones, computers and the big-ticket items that power businesses today.
Cramer saw that investors became dissatisfied with vanilla tech when both Intel (NASDAQ: INTC) and Microsoft (NASDAQ: MSFT) failed to deliver the upside surprises that the Street expected in order for their stocks to keep climbing.
"Now, I have to tell you, don't get too complacent about the longevity of this rotation. We have an analyst meeting from IBM (NYSE: IBM) on Thursday, and if it tells a better tale than it did last quarter, we could see a reversion right back to old tech," Cramer added.
However, the "Mad Money" host thinks it is important to point out how quickly the market changes. If you don't do your homework and catch the rotations-your portfolio could see a seismic shift as well.
Cramer remembers when Salesforce.com (NYSE: CRM) blew away the numbers last year and reported a fabulous quarter, only see its stock quickly jump and then plummet, ultimately falling to $62 from $66. That marked the beginning a six-month hammering of cloud stocks.
Salesforce.com reported again on Wednesday, and this time the stock has managed to make a comeback. Cramer was delighted to see strong results, with in-line earnings and higher-than-expected revenues, up 26 percent year-over-year.
The company also provided strong guidance for 2016, which could take the stock even higher. For the fiscal year, Salesforce was the fastest enterprise software company to reach $5 billion in revenue, and Cramer wouldn't be surprised to see that it is the fastest to $10 billion in the next few years.
Has Salesforce found creative ways to reach markets it wasn't previously able to penetrate that could explain the robust growth? To find out, Cramer spoke with CEO Marc Benioff.
"We just finished an unbelievable fiscal year, with 32 percent growth. We are the fastest to $5 billion for software. It's unbelievable. But our guidance is that, next year, we will be the fastest to $6 billion," Benioff said.
Cramer has been absolutely perplexed by the housing market in America. How the heck could there be such vigorous spending on housing, yet the number of new homes being built remains so low?
Both Home Depot (NYSE: HD) and Lowe's (NYSE: LOW) reported earnings this week and blew away the numbers. The quantity of materials being purchased to improve homes skyrocketed. Things such as tools and appliances for kitchen and baths flew off the shelves. How this possible, if the number of new homes is has flatlined?
Cramer finally cracked the case, thanks to the Carol Tomé, the chief financial officer of Home Depot. The answer is that these materials aren't going into new homes. They are going into undermaintained houses that have been rented out for years and are now entering the market to be sold.
The lower price of gasoline has consumers all over the U.S. taking to the road and willing to drive further for vacation. This puts hotels like La Quinta (NYSE: LQ) in the perfect position to reap the benefit of low oil prices.
La Quinta is a mid-tier, select-service hotel chain with about 850 locations, 95 percent of which are in the United States. The stock has boomed more than 6 percent in the past month, and the company reported a strong quarter on Thursday morning.
It delivered a 3 cent earnings beat from a 5 cent basis and higher-than-expected revenues. Could the stock rally higher on lower gasoline prices? To find out, Cramer sat down with La Quinta CEO Wayne Goldberg.
"We have an amazing brand, and we are poised to continue to do very well. I am very pleased," Goldberg said.
"We view lower oil and lower gas prices as a net positive to our business. We have segments of our business that are significantly larger than oil and gas," Goldberg said.
Another stock that has been roaring thanks to lower gas prices is HomeAway (NASDAQ: AWAY). This is the online company that serves as the world's largest marketplace for vacation rentals.
HomeAway had a tough year in 2014, but it has had a huge rebound in the past month. It reported on Tuesday night, delivering a 21.5 percent revenue jump, year-over-year.
Cramer checked in with Brian Sharples, the co-founder and CEO of HomeAway, to find out if the stock will keep flying high this year.
"These markets move very quickly, and so we are coming out with a vengeance. We've got a new marketing campaign and a lot of new changes to the site. So far the customer reaction has been great, and so the business is doing very well," Sharples said.
In the Lightning Round, Cramer gave his take on a few caller favorite stocks:
Sierra Wireless (Toronto Stock Exchange: SW-CA): "Sierra is OK, but I'm a Skyworks (NASDAQ: SWKS) guy, we know that. Then I'm an Avago (NASDAQ: AVGO) guy, but it's up too much. SWKS, that's our name in that space."
Opko Health Inc (NYSE: OPK): "I don't want you to buy more; we have had quite a run in OPK. Many people criticized me for liking this stock the whole way up. So, I am not going to double down at $15. But I do want you to hold on to the stock."
