Cramer's 'Mad Money' Recap: Bull Market, Better Economy
Cramer said it's no coincidence that as the markets are hitting new five-year highs, unemployment in our country is hitting five-year lows.
Things are indeed getting better, said Cramer, and when things get better, investors are willing to pay up for corporate earnings. The logic is simple: More demand equals higher prices, which in turn means better gross margins and ultimately more earnings on the bottom line.
That's why investors are willing to pay up for Bristol Myers-Squibb (BMY) and Johnson & Johnson (JNJ) , said Cramer, and why they're willing to pay up for oil stocks like Schlumberger (SLB) and pretty much anything and everything that goes into a home, car or plane.
Cramer said the only confusing sector in this multiple expansion period is tech. What are investors willing to pay for Apple's (AAPL) slowing growth? Not as much as before, said Cramer, who owns Apple for his charitable trust, Action Alerts PLUS. Cramer said the markets are now valuing Apple alongside Intel (INTC) and Microsoft (MSFT) .
But as Apple declines, investors are taking those profits and rolling into other tech names, stocks like Amazon.com (AMZN) , Facebook (FB) , Google (GOOG) and Netflix (NFLX) . Are these the new "four horsemen" of tech? Cramer said they might be.
When it comes to the market, Cramer said the current prices of stocks are just wrong. As things get better, stocks are worth more, he said, which is why the market continues to rally higher.
In the "Executive Decision" segment, Cramer checked in with Jim Griffith, president and CEO of Timkin (TKR) , the steel maker that delivered an earnings beat of 16 cents a share earnings Thursday. Shares of Timkin are up 34% since Cramer last featured them on location in Ohio on Oct. 18.
Griffith said Timkin is a very different company than it was just a few years ago. He characterized the company not merely as a steel maker but as a technology company bringing knowledge and know-how to its customers.
Griffith said that 30% of the products his company makes didn't exist just a few years ago. With that level of innovation and execution, Timkin can deliver earnings power even at only 50% factory utilization.
Griffith was also bullish on Asia, particularly in China, where he said government stimulus is starting to translate into orders for Timkin. He said things are also picking up in India, another big market for the company. Here at home, Griffith noted that low U.S. energy prices are driving profitability for his company as well as for its customers.