When Jim Cramer saw the volatile action of Disney's stock on Wednesday, he knew that in order to determine what happened, he had to be clinical and unemotional. After all, he doesn't consider this just any ordinary stock. It's the one that he has always told investors to buy for their kids and then put away.
"You have to ask yourself, has that much changed with one quarterly report? To figure that out, you have to analyze not just Disney's fundamentals, but the stock itself," the "Mad Money" host said.
When he looked at the stock, Cramer found that it all came down to just three words used by Disney's CEO Bob Iger.
But it was the disappointing cable numbers that were the cause of Wednesday's decline. Iger used three words on the company's earnings conference call that Cramer thinks wrecked the stock: he said Disney experienced "some subscriber loss."
When Cramer hears the word subscriber, he thinks of bundle. Meaning, the cable bundles that include all of those ESPN stations that are lucrative for Disney. And when Cramer hears the word loss, he concludes that either customers are not buying the product like they used to, or they are cutting the cord.
This is bad news for Disney, and all of cable, which is why almost every entertainment stock was down on Wednesday. Clearly, Disney is not perfect. But was all of the selling warranted?
Cramer thinks that the selling made sense at $122, but not down at $111. Those three damning words from Iger do not merit selling Disney at the levels it hit on Wednesday.
Cramer also saw a strong correlation on Wednesday between a change in consumer behavior, and the stocks the soared. Sometimes the change is due to the different habits of millennials, and sometimes it can be linked to a government mandate. Either way, they both played a role in how the market closed.
"I love behavior-change investing. It can be incredibly lucrative, and when you have a behavior-change theme you can use selloffs to pick stocks based on those changes, as long as you don't think they are merely fads," the "Mad Money" host said. (Tweet This)
The first obvious change on Wednesday was entertainment, meaning, how and what people consume and where they do it.
Traditional entertainment companies like Disney, Time Warner, 21st Century Fox, CBS and Discovery were totally shredded to pieces. The earnings from Disney raised enough eyebrows for investors to question how people are consuming television, and it freaked everyone out.
People now want to watch what they want, when they want it, on the device of their choice, and they want to pay less for it than they currently do. That means they are spending more time watching Netflix, the television station for the world.
"Sometimes it is enough to know the zeitgeist and get the big gains. That is why the bottom line is to stay focused on themes, like how people consume entertainment, how they are still frugal post the great recession, yet want to invest in homes and stay fit and trim and healthy," Cramer said.
Investors additionally learned on Tuesday that RR Donnelley & Sons, generally considered the world's top commercial printing company, will be breaking itself up into three parts.
Cramer has been a fan of this company for a long time, and thought that the split made a lot of sense as it makes the business easier to understand. It will now be a financial communications and data services company, a multichannel communications management business and a printing business for magazines and catalogs.
Meaning, instead of being one complicated company that's hard to understand, it will be three relatively straightforward companies by the end of 2016.
Has the new transformation unlocked further value? To find out more, Cramer spoke with RR Donnelley CEO Tom Quinlan.
"Customer dynamics are changing, and the industry is changing and we've got the scale. So, we have a position of strength with the acquisitions that we have done over the years and we wanted to be an integrated communications services provider. The acquisitions that we have done have gotten us there," Quinlan said.
And, just as expected, the buyers came rolling in on Wednesday to scoop up many of the companies that represent high growth or tend to buy commodities by the bushel.
Earlier in the week, the "Mad Money" host warned this would happen, and it sure did. Meanwhile sellers continued to take down anything that smelled even remotely related to minerals, mining, oil or gas on Wednesday.
On Monday, there was a marketwide selloff directly correlated to the sudden decline in the price of oil. At the time Cramer made the point that there are two sides to every coin as the declining price oil meant that he expected the users of commodities to go up, not down.
It was also a day for high-growth stocks, because they increase in value when inflation is subdued. Cramer reminded investors that something like gold, or even oil, will retain its value if inflation takes off. Paper assets like stocks only retain their full value when inflation is suppressed, like it is now.
"That means the stocks of big commodity buyers begin to shine. Why not? Their earnings will increase. So will the earnings of companies that benefit from a more flush consumer who feels better because gasoline is going lower," Cramer said. (Tweet This)
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Cramer was shocked when Avnet, which has had a tough year in 2015, reported on Wednesday morning and delivered a strong quarter. He considers Avnet to be the largest supermarket of technology on Earth.
Avnet is both the top distributor of electronic components, including semiconductors, and one of the largest suppliers of information technology hardware, software and services. These groups have been hit hard lately, especially for Avnet since it only gets 40 percent of its sales from the U.S.
Will Avnet continue to grow by making further acquisitions? Cramer spoke with Avnet CEO Rich Hamada to hear more.
"We've got great cash flow to support our aspirations for profitable growth, Jim…we remain open for business for acquisitions, but we are going to be very disciplined about our approach…We are very actively interested in deploying this capital to create future EBIDTA and cash flow wherever we can," Hamada said.
In the Lightning Round, Cramer gave his take on a few caller favorite stocks:
Nordic American Tankers: "That is actually making that dividend. NAT is doing well, Herbjorn Hansson [CEO] says a lot of oil is being shipped all over the world, even though it seems like oil is slowing down. I think you're fine."
ConocoPhillips: "I've been saying that oil has to test $43. It's at $45. It's got to hold $43 or there will be another step function down...We've been very disciplined, buying a little bit, but see what happens at $43 because that is where it bottomed before. If it doesn't hold it, then that Conoco is going to go down even more and people will stop thinking that the dividend is safe even though I think it is right now."