Jim Cramer witnessed the most violent contrast in earnings he has seen in ages on Tuesday when Domino's Pizza (NYSE: DPZ) crushed estimates, while Target (NYSE: TGT) gave a forecast that was far worse than expected.
These two stocks are a perfect metaphor for the current environment of the stock market, thanks to what Cramer calls the "stay-at-home economy."
This refers to thriving stocks — such as Amazon (NASDAQ: AMZN), Netflix (NASDAQ: NFLX) and Domino's — that allow people to stay at home and save money.
Domino's delivers pizza and can be accessed from almost every device to order from home. Target requires people to leave the house and go to the store. Its prices aren't anything special, certainly not what they can get from Amazon, which delivers right to its customer's door for free if they are an Amazon Prime member.
"We have to question the entire relevance of Target, particularly if prices go up 20 to 25 percent … Three-year plan? How about a survival plan. There is no long-game anymore," the "Mad Money" host said.
While CEO Brian Cornell may have made some mistakes, Cramer didn't blame Target's struggles on him. The bricks-and-mortar locations are simply losers in this world unless they deliver to the stay-at-home consumer or sells goods that make their house better.
This explains why Home Depot (NYSE: HD) and TJX (NYSE: TJX) have rallied since they last reported.
The range of things to do at home has never been broader, too. Netflix has transformed home entertainment. Videogames by Activision Blizzard (NASDAQ: ATVI), Electronic Arts (NASDAQ: EA) and Take Two Interactive (NASDAQ: TTWO), combined with the high-speed chips made by Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) can create a more immersive home experience than ever imagined just a few years ago.
Consumer packaged goods companies like PepsiCo (NYSE: PEP), which has Frito Lay and other good for you snacks, are what people eat when they aren't gobbling up Domino's. They can tell Alexa to order wings from Wingstop (NASDAQ: WING). The couch is now the home.
When consumers do leave the house, they want an experience that is worth showing their friends on Facebook (NASDAQ: FB), Instagram or Snapchat. They go to Ulta Beauty (NASDAQ: ULTA) or Sephora to look their best so they can take pictures, Cramer said, and go to theme parks like Six Flags (NYSE: SIX) or cruises from Carnival (NYSE: CCL). They book their trips on Priceline (NASDAQ: PCLN).
Of course, they use their iPhone to take the pictures that they post.
The stay-at-home economy has now upended every aspect of people's lives, and Cramer says it is still just in the early stages and isn't going away any time soon.
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