Three weeks ago, Smith & Wesson, the world's No. 1 gun maker raised its quarterly guidance dramatically. The stock shot up 11 percent the next day but has since fallen dramatically.
This move seemed confusing to Cramer, so he decided to take a closer look at this company to guide investors on what to do with the stock.
"The truth is, when the company boosted its guidance and the stock soared, that was your signal to ring the register," Cramer said.
Cramer found that every time the U.S. has a horrific mass shooting, firearm sales skyrocket as many people worry about the impact of potential gun-control legislation. Sales tend to fall off a cliff once people remember how difficult it is to pass gun-control legislation.
With this in mind, Cramer thinks investors may be able to buy Smith & Wesson at lower prices soon when more investors understand that a spike in gun sales is only temporary.
Another stock on Cramer's radar on Tuesday was the action in Terex, the heavy machinery maker that is almost like a low-rent version of Caterpillar. The stock roared 36 percent because it received an unsolicited takeover offer from a Chinese company.
The strength of Terex spilled over into the stock of Caterpillar, which also rallied from the lift in oil prices. But that does not mean Cramer thinks investors should be buying Caterpillar.
"I'm thinking CAT … might still be a sucker's bet here ahead of its quarterly report on Thursday," Cramer said.
In the case of Caterpillar, Cramer added that the stock actually gets more expensive relative to earnings, not less. Additionally it becomes more risky, especially in relation to its dividend yield. Thus, Cramer recommended for those who still own the stock to take advantage of the strength on Tuesday and do some selling.
In the Lightning Round, Cramer gave his take on a few caller-favorite stocks:
Synchrony Financial: "They blew away the numbers! The stock's low and I'm a buyer."
Mattress Firm Holding Corp: "It's worrisome to me. I thought it was good, but I think they are over-stored."
Read MoreLightning Round: This stock is worrisome to me