Jim Cramer says it is time for investors to acknowledge a new dynamic in the market: in most industries, companies that make the best use of the internet will win.
Cramer can pound the table on better earnings and stronger revenues, but he knows it all comes down to survival in the end.
"Their survival might very well depend on how well they are able to integrate technology in general, and the web in particular, because that is how you beat the competition," the "Mad Money" host said.
Apple knows the importance of digital, too. When CEO Tim Cook said the company's service revenue stream will be as big as a Fortune 100 company by next year, Cramer interpreted that as meaning Apple could generate $30 billion in service revenue at a minimum, which could prompt investors to pay more for the stock. Right now, Apple's earnings streams are viewed as episodic, he said.
"If the iPhone 7 is good, the stock can roar higher, but if the new iPhone fails to impress, the stock goes back down to the purgatory of the low $90s where this miraculous run started," Cramer said.
Cramer took one look at the stock action for Square and Herbalife on Thursday and knew it was short sellers covering their positions.
"Here is my new rule: try not to buy a stock that is in the middle of a short squeeze, because even if you really like the underlying company, you will almost always be able to get a better price as long as you are patient," he said.
Shares of Herbalife spiked at the open on Thursday following a better-than-expected earnings report. However, with 31 percent of the stock affected by short sellers, Cramer expected fireworks anyways. Management raised its full year earnings per share guidance for 2016 to a range of $4.50 to $4.80, which was an increase from the initial expectation of $4.40 to $4.75.
But the real reason why short sellers will be covering their positions has nothing to do with guidance.
Cramer suspects that it will be because Herbalife didn't fall apart, despite the company's settlement with the Federal Trade Commission last month that required it to change many of its practices. Noted activist and short-seller Bill Ackman, head of Pershing Square Capital, recently insinuated that the action taken by the FTC had a larger impact than even Herbalife realizes, when he stated on an investor call that "Herbalife actually has been shut down by the FTC, they just haven't realized it."
One executive that faced a much different challenge was Phil Knight. Early on, Nike's billionaire co-founder Knight had people telling him he wouldn't make it.
Yet, despite the haters, he still steered Nike to become the world's No. 1 athletic-shoe company, with a brand so powerful it can be recognized by a check mark.
Knight recently chronicled his journey of turning Nike into a $91 billion company in his memoir, "Shoe Dog." In an interview with Cramer on Thursday, Knight said that many doubted his ability to succeed.
"I've had a lot of people tell me, 'We ... think he's not going to make it,'" Knight said.
Given the market's strong run last month, Cramer knows it is hard to find a large-cap stock that is still cheap on an earnings basis. There was one company with big potential that stood out to him that is trading at absurdly low levels right now — Johnson Controls.
Johnson Controls has three divisions. One that makes heating ventilation and air conditioners, a power solutions business that supplies lead acid batteries, and an auto parts business.
In January, Johnson Controls announced it would buy the rump of Tyco, a provider of security equipment, fire protection gear and various safety products in a $16.5 billion deal. It was a tax inversion transaction, as Tyco is based in Ireland. The deal is expected to close in a little less than a month.
"With the Tyco merger rapidly approaching, I think this is a good time to buy some Johnson Controls," Cramer said.
DexCom is the company that makes glucose monitoring systems for people with type-1 diabetes. Its technology transformed the way blood sugar levels were checked when it introduced a sensor that can stick on the skin, rather than pricking a finger.
And while it does have competition from companies like Medtronic, DexCom's management has been adamant that it is not losing market share. On Tuesday, the company reported a wider than expected quarterly loss, even as its revenue was higher than expected, and the stock fell.
Two weeks ago, an FDA panel voted in favor of approving DexCom's monitoring system for non-adjunctive use, which means Medicare and Medicaid could start covering its product. Cramer spoke with DexCom's President and CEO Kevin Sayer, who outlined the significance of the panel decision.
"It could be very big. This is really the first medical device ever approved for making insulin dosing decisions," Sayer said.
In the Lightning Round, Cramer gave his take on a few caller favorite stocks:
LendingClub Corp: "Way too much risk. Come on my friend, I know they're doing that reorganization and stuff, but I said I'm not going to touch that one. Put together a couple of good quarters and maybe I'll even think about it."
W.P. Carey: "On real estate investment trusts, we're recommending Ventas and Federal Realty. That it, we're not going further."