Semis: The Market's Sleeper Stocks

While people were glued to the Super Bowl, the Mad Money host was searching for a broader theme that could overwhelm the prevailing nonsense that ruled last week's markets, troubles that once again wreaked havoc today, as the Dow shed 103 points and the S&P 500 gave up 1 percent.

Cramer thinks he found one in the Philadelphia Semiconductor Index, which is the repository of many companies that are having a renaissance right now. Although there was a lackluster response to these companies' earnings reports, Cramer wants to point out why investors should care about them.

"This is one of the few groups that can do well,” Cramer said, “regardless of any big-picture economic problems.”

Cramer said investors need to comprehend two concepts, cyclical and secular growth. Cyclical refers to a company that may not have control of its destiny and bends according to the economies around the world, which is a sign of weakness. Secular means a company has something else going for it besides the economy, a trend that’s bigger than anything the business cycle can throw at it. And, Cramer said investors will pay a premium for this type of stock.

Now, almost every single semiconductor company – Intel, Xilinx , Marvell Technology Group, Cypress Semiconductor , Broadcom , Avnet, Altera , Texas Instruments and many others – has reported blow-away numbers. But the analysts have chosen to view the gains as a cyclical phenomenon, based on worldwide economic recovery. Cramer said that is wrong.

He thinks they should be recognized as products of a secular trend because we use more semiconductors in gadgets, and these gadgets are being embraced by emerging middle classes everywhere from China to India to Latin America. Plus, the Mad Money host thinks that SOX is twice blessed, not only for their products being used in tremendous growth, mostly related to the smartphone revolution, but also to the potential new customer base, which could amount to roughly a billion people, spotting you 700 million emerging members of the middle classes just in China and India alone.

Analysts, however, have been skeptical for good reason. Semiconductor use has, for a full decade, been trapped in a business cycle, but Cramer thinks this is no longer the case. The Mad Money host told viewers he didn’t have the true bull SOX case until he sat down and went through Cisco Systems’ conference call notes.

Now, Cisco Systems is not a semiconductor company, but it is the backbone of the Internet, the connector among service providers, the customers and the phone companies. The CEO of Cisco said there were shortages throughout the food chain, meaning semiconductors were needed to make his product. The reason investors need to know this is that almost all of these semiconductor stocks are down since they reported, and it’s important to remember, Cramer said, that SOX stocks are now secular growth stories such as these that have nothing to do with the larger economic issues.

The bottom line: The Sox are back, and for this reason, Cramer thinks investors should buy one of the semiconductor stocks.

Cramer's charitable trust owns Cisco Systems and Intel.

Call Cramer: 1-800-743-CNBC

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