For shareholders, there is nothing worse than competition, and less of it breeds opportunity. Jim Cramer believes the reduction of competition defined the winners of the tape on Wednesday.
"There is just enough competition among companies to keep their stock in check, but when the competition lessens, companies are instantly rewarded with stocks that rally, making it worthwhile to stick around to see what group will be the next one to soar," the "Mad Money" host said.
Companies that make basic data storage devices that allow information to be kept in personal computers, specifically DRAM and flash semiconductors, may also have less competition. Western Digital announced it would have sharply better-than-expected earnings.
Cramer attributed that to better gross margins at Sandisk, the recently acquired maker of flash memory chips. Supply in the flash industry is thus constrained because many companies have given up making the chips because of competition, and prices could go higher.
On the flipside, Sprouts Farmers Market demonstrated what can happen with too much competition. Sprouts is a natural and organic supermarket that was at one time expected to take market share from Whole Foods. Yet, on Wednesday, the company confirmed it would have flat same-store sales.
"A tremendous growth story with flat same-store sales is actually a no-growth story, with shareholders fleeing as if Sprouts sells nothing but Spam and Velveeta," Cramer said.