Cramer Remix: This is hurting Whole Foods
If there is one thing that Jim Cramer has learned over the course of his long career on Wall Street, it is what really drives the direction of a stock.
"Once I learned more about what drives stocks, I realized that great expectations, or poor expectations for that matter, often determine where a stock or even an entire market can go," the "Mad Money" host said.
A few textbook examples of low expectations working in a stock's favor on Wednesday were Panera Bread (NASDAQ: PNRA) and Buffalo Wild Wings (NASDAQ: BWLD). Often people like to buy what they know, and Cramer can't blame them for doing that as long as they do their homework.
But the way that an ordinary investor buys shares of a company is very different from the way the big institutions do it, as they will purchase hundreds of thousands or even millions of shares to establish a meaningful position.
That means these big money institutions aren't deciding to buy a stock because they like the chicken salad at Panera. They often meet with management, check with the big boys are saying about the company and read all of the research out there. Most importantly-they assess expectations.
Another example Cramer gave of a company that had the expectations get the better of it was Whole Foods, as Wall Street had huge expectations for the company.
"It's all about expectations, and as long as you know what the expectations are, you can understand what would otherwise be stupendously counterintuitive moves," Cramer said.
Cramer thinks both Yelp (NYSE: YELP) and Twitter (NYSE: TWTR) are in big trouble. The conference calls for both companies were just absolutely horrendous, with Yelp in total denial of what's going wrong and Twitter throwing itself into the fire and begging investors to light the match.
Granted, these two companies are two different animals and the "Mad Money" host hates to lump them together. He does so because they were both big companies at one time with huge prospects, and totally blew it. They could have been the next Salesforce (NYSE: CRM), Netflix (NASDAQ: NFLX) or Google (NASDAQ: GOOGL).
What the heck happened?
"Yelp feels like it is in total secular decline where the competition is getting downright deadly," Cramer said. (Tweet This)
Twitter still has some life left in it because there are so many big tweeters who want to keep it alive to build their brands. So while it's not hopeless, it's not exactly something that anyone would want to pay $23.55 billion for.
"I think both Yelp and Twitter blew it. They were big companies that became small. They were companies that could have grown into their monster market capitalizations...had they just kept innovating and thinking about their value proposition. Neither did and it's their own darned fault," Cramer said. (Tweet This)
Twitter is now officially a 2016 "show me" story to Cramer. As for Yelp, perhaps it should change its ticker symbol to HELP?
Read More Cramer: Twitter & Yelp blew it! It's their fault
While some investors may have written off Waste Management's stock, Jim Cramer thinks one man's trash is his treasure.
Waste Management (NYSE: WM) is the largest trash collection and recycling company in the U.S. with approximately 252 landfills and 310 transfer stations. The stock had an amazing multi-year run and then hit a wall in April when the company reported a surprisingly weak quarter.
But when Waste Management reported again last Thursday, it posted some great results and it seems the stock is back in action.
Has the stock really gotten its mojo back? To find out, Cramer spoke with the company's CEO David Steiner.
"What led this downturn was the new housing starts and new business starts, and that really has an oversized effect on our business. So it took some time for the housing market and for small businesses to come back...but now we are seeing the light at the end of the tunnel," Steiner said.
Most investors know that the industrials have taken a major beating, especially those with international exposure, thanks to the meltdown in China and the strong dollar eating away at earnings.
One of those companies is Eaton (NYSE: ETN), a classic industrial with huge international exposure that manufactures electrical control products, power management systems, hydraulics, truck transmissions and aerospace systems.
The company reported a not-so-good quarter on Wednesday, and the stock is down 15 percent in the past six weeks. So while the company did deliver a 3 cent earnings beat from a $1.13 basis, its revenues came in lower than expected. However, the expectations were low enough on the stock that it still managed to close up at the end of the day.
Can the company turn things around? To find out, Cramer spoke with Eaton's CEO Sandy Cutler.
"it is hard to point to a specific country that is strengthening significantly on a total basis...And that is why we felt the most important thing we can be doing for investors right now, and running our company really prudently, is we have to get another layer of cost out. And that's why we are committed to our $145 million restructuring program," Cutler said.
Cramer spends a lot of time educating investors about the ways to make money in stocks of publicly traded companies. However, sometimes the only way to truly understand a trend controlling stocks is to take a look at smaller privately-held companies off the tape.
Cohealo is one of those private companies that is a fast-growing software company, and has taken the health care industry by storm. Its software allows different hospitals within the same health care system to share expensive surgical equipment, and ultimately save enormous amounts of money.
The company's software tracks fleets of medical equipment, and provides real-time updates to let hospitals know where the machinery is, its availability and how much it is being used. It's a combination of analytics and logistics for hospitals to share non-emergency surgical equipment.
It's basically the AirBnB for hospital equipment.
To learn more about how Cohealo is disrupting the health care space, Cramer spoke with its CEO Mark Slaughter.
"We think we have found a perfect storm of inefficiency. Health systems and hospitals either own too much of something or not enough of the other, but they don't have exactly what they need. We are hoping by linking it together...we can find the perfect balance," Slaughter said.
Read More Cramer: Airbnb-style company changing health care
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