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Cramer's 'Mad Money' Recap: Dec. 1

12/01/08 - 08:02 PM EST

MLM , VMC , CAT , AECOM , HLF

Scott Rutt

Click here for an archive of Jim Cramer's Mad Money recaps.

Jim Cramer told viewers of his "Mad Money" TV show that Monday's market plunge is "a formal declaration of recession," but noted at the same time that the decline was not the same as all the rest.

"This time, the federal government is starting to get things right," said Cramer, citing several recent developments that are working to stabilize the markets.

Cramer said the mortgage markets are finally stabilizing after the federal government moved to buy the debt of Fannie Mae (FNM Quote) and Freddie Mac (FRE Quote) and the Federal Reserve started buying mortgages from struggling firms.

Cramer also cited the government's efforts to provide loan guarantees and its "investment" in Citigroup (C Quote) as two factors helping to stabilize the banking system.

With the TARP program now in full swing and over $4 trillion in loan guarantees already in place, Cramer said the government is a positive force in the markets.

After wiping out the preferred shares of Freddie and Fannie and liquidating Lehman Brothers, which instilled fear in the markets, the government's investment in Citigroup is having the opposite reaction.

"Profit taking is to be expected," said Cramer, noting that after the monster moves last week, today's selloff should come as no surprise.

But this time, he said, the selloff is an opportunity to buy the recession-resistant stocks and the accidental high yielders at great prices.

What Cramer's Buying Now

Winning Infrastructure Plays

"Not all infrastructure stocks are created equal," Cramer told viewers. On the heels of President-elect Barack Obama's infrastructure stimulus package, Cramer said there are some clear winners and losers.

Obama's plan calls for major investment in the country's roads and bridges, said Cramer, and that's why stocks like Chicago Bridge & Iron (CBI Quote) sound like the natural choice. That is, until investors realize that 55% of CBI's revenues come from the liquified natural gas industry and not from roads.

Cramer said investors need to steer clear of all infrastructure stocks with an energy focus, as these stocks need not only higher energy prices to succeed, but also tons of credit to finance their projects.

Stocks like Shaw Group (SGR Quote), which derives 56% of its revenues from fossil fuels and nuclear energy, and even Cramer favorite Foster Wheeler (FWLT Quote), a stock which he owns for his charitable trust Action Alerts PLUS, should not be bought solely on the Obama news.

Cramer said the winners on the Obama plan include asphalt and concrete makers like Martin Marinetta Materials and Vulcan Materials , along with Caterpillar (CAT Quote) and AECOM (ACM Quote).

However, he said all of these names have had huge runs and need to come down before they can be bought.

Cramer advised using patience, waiting for all of the good names to pull back before buying in. "Let them go lower," he said.

No Reason to Worry

Cramer welcomed Raymond Milchovich, chairman and CEO of Foster Wheeler (FWLT Quote), to the show to discuss why the company's stock price has been cut in half since his last appearance on Sept. 12.

When asked about the postponement of his retirement, Milchovich said the time was not right for him to retire now. As a result, he's agreed to stay on board with Foster Wheeler for another three years.

Milchovich said while Foster's power business, which accounts for 30% of its sales, is softening, its oil, gas and chemical business is still very strong. The company is pursuing eight mega projects, with one already booked, one about to be booked and the six remaining ones still in play. "2009 is shaping up just as we expected," he said.

Milchovich said Foster is seeing some refining projects around the world getting delayed due to $50 a barrel oil, but noted that "we always see delays." He said that Foster's clients look through the short term and plan three to four years ahead.

Both Cramer and Milchovich agreed that Foster Wheeler's current multiple is "absurd." The company has purchased $300 million worth of its own shares and is still buying. Milchovich said his stock was a buy at $32 a share and is an even bigger buy at its current levels.

Outrage of the Day

In this segment, Cramer sounded off against Treasury Secretary Hank Paulson and Federal Reserve chairman Ben Bernanke, both of whom told the American public all year long that "the fundamentals are sound" when in reality the a severe recession was clearly taking hold.

"I haven't seen this level of arrogance and ignorance in a long time," said Cramer. He called for Bernanke's resignation on Jan. 20, when Obama takes office.