Cramer's 'Mad Money' Recap: Forgiving Market (Final)
Cramer said that in 2011 all bad news was punished, but in 2012, all is forgiven. And that simple change, he said, makes all the difference.
Cramer said the reactions to news of individual stocks is what defines a market. He said it would seem obvious that if a company reports good news, its shares should go higher, but in 2011 that was simply not the case. Back then, good news didn't matter and stocks sank lower no matter how good the news. In today's market however, all of that has changed.
Cramer cited Gap Stores (GPS) , which reported a big turn in same-tore sales. THat news sent the stock up big, even though it had already run up in anticipation of the release. Even a company like Liz Claiborne (LIZ) , which reported a miss on both earnings and revenues, still saw its shares rise.
The trend doesn't stop at retail, noted Cramer. He said that Finisar (FNSR) rebounded after offering investors a bleak outlook to finish in the bull camp by the end of the day. Investors used the momentary weakness in Wynn Resorts (WYNN) as a buying opportunity, sending those shares up 3% by the close.
While some skeptics cite multiple expansion as evidence of a bubble in the markets, Cramer said that multiple expansion based on positive news and rising earnings is not a bubble, it's the fuel for a sustainable rally. He said times like these make investing actually enjoyable again, as investors can predict good news and be instantly rewarded for doing so.
Global Appetite for Coal
In the "Executive Decision" segment, Cramer once again welcomed Mike Sutherlin, president and CEO of mining equipment maker Joy Global (JOY) , a stock that's returned an impressive 400% gain since Cramer first recommended it in March 2009. Shares of Joy Global came under fire after analysts largely perceived the company's earnings as a disappointment.
Sutherlin explained that Joy Global's legacy's businesses actually delivered fantastic results this quarter, with revenues up 20% on record operating margins. He said the company did have some issues surrounding its two recent acquisitions however, but he remains positive on both of them. "That's a near-term issue only," said Sutherlin.
Turning to the larger issue of the U.S. abandoning coal-based power plants, Sutherlin admitted that there is indeed a structural shift away from coal towards cleaner, cheaper natural gas-fired plants. However he said that the transition is limited to the number of new gas-fired plants that can be built to replace the aging coal plant system. "That transition is a long-term trend," he concluded, one that will not affect Joy Global's mining equipment business anytime soon.