Cramer Remix: A stock up 27 pct this year has more room to run

Cramer Remix: A stock up 27% this year, with more room to run

Typically when a stock has an epic run, Jim Cramer advises to run the register on part of the position. However, he found one winner that has what it takes to keep on winning.

Zimmer Biomet is the orthopedics company that makes knee and hip replacements, along with products for sports medicine and spinal injuries.

After it ended down nearly 10 percent in 2015, the stock had a big run so far in 2016, up 27 percent for the year.

"The truth is that Zimmer has been making a remarkable comeback, and if you look at the timeline of its transformative merger with Biomet, it's easy to understand why the stock could still have a lot more upside," Cramer said.

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When the Federal Reserve speaks, investors listen. Cramer noticed a change in the leadership groups within the stock market and prepared investors for a big shift.

"If the Fed has decided that the economy is healthy enough to handle a rate hike or two, then the big money dusts off the playbook and goes to work buying the stocks that have historically worked at this point in the cycle — regardless of the near-term fundamentals," Cramer said.

A large rotation also came in retail, with investors gravitating to the down-and-out retail stocks like Nordstrom, L Brands orUrban Outfitters. They are also selling out of the dollar stores.

"Where is all the money coming from to buy these stocks, given that there really isn't any money coming in to speak of? A lot of it is coming right out of health care," Cramer said.

The earnings from Dollar General were so horrible last week, Cramer refuses to hold his nose and buy the dollar store stocks on weakness right now.

"The wholesale wrongness of the dollar store stocks going into this quarter is one of the greatest mispricings I have seen in ages. I know I had stopped flogging them going into last week. They had just run too much," he said.

The drastic drop in dollar store stocks last Thursday came so fast, many unsuspecting analysts were left confused. It made Cramer wonder if everyone who follows Dollar General simply did not understand the changed landscape.

The combination of an improving economy, an aggressive Wal-Mart, diminished food-stamp eligibility and poor communication from Dollar Store's management told him to pass.

"Let these dollar stores go down to 90-cents on the dollar, then maybe we can think about taking a swing," Cramer said.

Harvesting winter wheat in Kirkland, Illinois.
Daniel Acker | Bloomberg | Getty Images

It is a rare occasion when it occurs, but sometimes Cramer is downright stunned by a company. That happened less than two weeks ago when Deere reported results and sent shock waves through the stock market.

"Even more surprising than Deere's strength was the fact that nobody seemed to see it coming. Nearly everyone assumed the end markets were so bad that there was nothing the company could do to compensate," Cramer said.

Until it reported, agricultural equipment maker Deere had subpar performance, basically flat for 2016. That narrative abruptly changed on Aug. 19 when it reported a quarter that sent the stock soaring 13 percent in a single session.

"It gave us the mother of all head-fakes," Cramer said.

Thor Industries is the maker of recreational vehicles and motor homes that Cramer recommended a little over two months ago. Since the beginning of the year it has rallied more than 45 percent, with the stock hitting a new high on Monday.

Cramer speculated that some of the strength stemmed from the fact that Thor plays on the high-end of consumer discretionary spending. RVs aren't cheap, so as the economy recovers, more people are willing to spend the money to buy one.

In July, Thor also announced it was buying Jayco, the No. 3 maker of RVs, for $576 million. However, with such a large move in a short period of time, Cramer questioned the upside. He spoke with Thor's CEO Bob Martin on how its decentralized business model helps to strengthen the company.

"For Thor we are very decentralized, less than 50 people in our corporate office … but it's the way that we manage these companies. We buy strong companies that have strong fundamentals, strong management, and we let them run and be very unique. We embrace the fact that they are unique," Martin said.

In the Lightning Round, Cramer gave his take on a few caller favorite stocks:

Opko Health: "A lot of people are saying on Twitter that Pfizer is going to buy them. Come on! We own the stock. If you own the stock it's because of Phil Frost [CEO] and the things he has done in the past. I remain committed, $9 is good."

Cigna: "If the deal doesn't go through, I actually think the stock goes higher to tell you the truth. They need to walk away from that deal already! Not unlike Walgreens and Rite Aid. Enough, enough!"