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Cramer's 'Mad Money' Recap: Get In the GameStop

TheStreet.com Staff

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

The best way to make money off the new Madden NFL 2007 video game that was released today is GameStop (GME Quote), Jim Cramer told viewers of his "Mad Money" TV show Tuesday.

Although Electronic Arts (ERTS Quote) makes the Madden game, Cramer does not believe it is the best stock to buy here; it is being sued for options backdating and is suffering from competition from well-funded companies.

GameStop, the largest video-game retailer, is going to be moving a lot of new merchandise, he said. For one, the game lineup for the Xbox 360 is a lot stronger than it was last year. In addition, according to Game Informer, Take-Two Interactive's(TTWO Quote) Rockstar Games is coming out with a new controversial game called Bully, which means big sales, Cramer said.

Also, the company's bad numbers from last year should make this year's good numbers look even better, he said.

Cramer predicts a "blow-away fourth quarter," and suggested maybe hanging on to it through the first quarter of 2007 because new games such as Halo 3 and Grand Theft Auto are scheduled to come out then, too.

"Forget the software guys and consoles," Cramer said. The stock to buy in the video-game boom is GameStop, he said.

Secular Healing

The current economic cycle tells market players that they should be in secular growth stocks right now, Cramer said.

These stocks "have been rocking" for the last three months and will continue to do so for the next three months, Cramer said. While he said these stocks can still make people money, he understands that some might want to swap out of the big-cap stocks and find something better in this area.

Cramer provided three "hidden" secular growth stocks for this point in the cycle: Sigma-Aldrich (SIAL Quote), TXU (TXU Quote) and Sonoco Products (SON Quote).

"These could be the next ones to move," he said.

Sigma-Aldrich, which makes biochemicals and organic chemicals, saw a 12.5% increase in its second-quarter profits. Although the company's last quarter was a little disappointing, Cramer said it has growth and momentum.

The company, which Cramer said he considers "an arms merchant to the drug companies," has not been receiving much attention until now, he said.

TXU burns a lot of coal and is "cheap and somewhat neglected," Cramer said.

The company, which is trading at less than one times its growth rate, doesn't get the respect or attention it deserves, Cramer said, adding that since 2004, TXU has turned itself around by decreasing its debt.

The last ignored stock is Sonoco, a packaging company that is "making a killing," Cramer said. The food companies "are beating each other up" by competing over packaged foods, and Sonoco is the arms merchant here, he said.

The company reported a "great quarter and has a lot of potential," Cramer said.

The Tao of Dow

Cramer said that he has a stock with insider buying that can make you some money.

First, he clarified that a stock that has insider buying doesn't necessarily make people money. For example, Cramer said insiders are buying Vonage (VG Quote), but Cramer said that is a stock that's not going to make anybody money.

"The insiders are buying it because they want to provide investors with a false sense of confidence," he said. In fact, this is the "worst-performing IPO of the year."

On the other hand, when insiders started buying stock at Dow Chemical (DOW Quote), shareholders there caught a quick gain.

Similarly, Cramer said the next stock with insider trading that might make market players money is Dynegy (DYN Quote).

Cramer, who has been a consistent backer of this stock, said it's "still not out of steam."

Not only does the stock have "massive insider buying," but upon doing further homework, Cramer believes it is due for a takeover bid because first, its financials are improving, and second, its industry is consolidating.

"Right now, Dynegy is going through a complicated restructuring," he said. "It's been selling off its midstream operations and paying off its debt aggressively."

The company has cleaned up its balance sheet, and its fundamentals are improving, Cramer said. In addition, even though it decreased earnings guidance, it raised cash-flow guidance, he said.

At Its Core

Cramer asked his guest, Core Laboratories' (CLB Quote) Chairman and CEO David Demshur to explain to the viewers what his company actually does.

"Core Labs does two things," Demshur responded. First, it helps oil companies produce more oil and gas every day, and more importantly, it helps companies produce more oil and gas over the life of a field, he said.

"There are about 4,000 oil fields today, and we work on 800 fields," Demshur said. "We take the core and we bring it back to our labs, analyze it and understand how the fluid runs through the rock so we can extract more from it and leave water behind."

Cramer called this the "ultimate play" to get into while oil is up this high.

To view Cramer's interview with David Demshur, please click here.

Lightning Round

Cramer was bullish on McDonald's (MCD Quote), BJ Services (BJS Quote), Merck (MRK Quote), Pfizer (PFE Quote), Varian (VAR Quote), L3 Communications (LLL Quote), Valero (VLO Quote), Capital One Financial (COF Quote), Advanced Micro Devices (AMD Quote), Clorox (CLX Quote), Double Hull Tankers (DHT Quote), Garmin (GRMN Quote), Amgen (AMGN Quote) and Ford (F Quote).

Cramer was bearish on BJ's Restaurants (BJRI Quote), Barr Pharmaceuticals (BRL Quote), American Science & Engineering (ASEI Quote), North Fork (NFB Quote), Atheros Communications (ATHR Quote), Diana Shipping (DSX Quote), Navteq (NVT Quote), Genentech (DNA Quote) and Gold Kist (GKIS Quote).

In the "Sudden Death" round, Cramer was bullish on Citrix Systems (CTXS Quote).

He was bearish on Plum Creek Timber (PCL Quote).

Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by clicking here.

For more of Cramer's insights during the Lightning Round, click here.

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