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Cramer's 'Mad Money' Recap: Denny's Does Right

TheStreet.com Staff

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

There's been a major turnaround going on at Denny's (DENN Quote - Cramer on DENN - Stock Picks), and it should continue, Jim Cramer told viewers of his "Mad Money" TV show Thursday.

However, the market does not see what is happening with Denny's because, as Cramer says in his new book Jim Cramer's Mad Money: Watch TV, Get Rich, most Wall Street investors are "snobs."

"They don't understand what's going on at these restaurants," he said. For a long time, Denny's has been "saddled" with credit card debt, but it has been selling off its restaurants and turning to a franchise-based business model to get rid of its debt, Cramer said.

When Denny's CEO Nelson Marchioli appeared on the show last month, he said the company was in the midst of refinancing the balance of its debt and also stated that they would be successful in this quarter.

Further, Marchioli said that Denny's would do this without selling 21 of its stores, Cramer said.

"Denny's has become a strong enough company that it doesn't need to sell off 21 stores to get out of its debt," he said. "The business has improved," and Denny's has an "amazing" opportunity to refinance at low rates, which is a "big deal."

Cramer advised his viewers to buy Denny's, but to use limit orders when doing so. If not, "you will get ripped off," as it is a small-cap stock," he said.

This morning AG Edwards downgraded McGraw-Hill (MHP Quote - Cramer on MHP - Stock Picks), and now there is an "incredible" opportunity to own this print media company, Cramer told viewers.

"People want to buy New York Times (NYT Quote - Cramer on NYT - Stock Picks) and the stock of Dow Jones (DJ Quote - Cramer on DJ - Stock Picks) because they don't understand that the decline of newspapers is a long-term secular decline," he explained.

"In 50 years, I doubt anyone will even read newspapers."

At this point, McGraw Hill might be the only print media company worth owning as it has growth -- "something unusual in print media," Cramer said.

While The New York Times and The Wall Street Journal are institutions and are the Yale and Harvard of newspapers, he believes that market players would be better off buying these universities than these papers.

"Traditional print media has declining circulation and declining ads," Cramer said. And moreover, contrary to what people may think, investor Maurice "Hank" Greenberg is not going to buy New York Times because it's not possible for him to do so, he said.

While the Times and Dow Jones are publicly traded companies, they aren't really because they have two classes of stock, Cramer explained. The families and management that own these classes of stock won't allow these companies to be bought, he said.

"There are no reasons for the New York Times to go up."

Even though McGraw Hill is the publisher of BusinessWeek, "it is the only media play that isn't really a media play," Cramer said.

Instead, "it's more like a private-equity play" because every time there is a private-equity deal, it is financed with bonds that all need to be rated by Standard & Poor's, which is owned by McGraw Hill.

"It is a real company, with real growth, real profits and real dividends," he said. "The AG Edwards downgrade was wrong."

Sell Block

Cramer dedicated his "Sell Block" segment to Wal-Mart (WMT Quote - Cramer on WMT - Stock Picks), urging investors to sell this stock "six ways from Sunday."

The reason behind the discount retailer's bad numbers is the "shutdown of the immigrant buyer," Cramer said. He added that a new six-point ID verification program adopted by the state of New Jersey makes it extremely difficult for this population especially to renew their licenses and, therefore, go shopping.

"This is the death of the underground economy and, ultimately, the death of Wal-Mart," Cramer said, acknowledging that he was broaching a sensitive subject.

"If a liberal state like New Jersey is cracking down like this, you can only imagine what other states are doing."

This means basically that illegal immigrants will no longer be able to drive or get their drivers licenses, he said. And the stores' remote locations are too far for consumers to walk to.

"No car, no Wal-Mart," Cramer said. Because immigrants are a large part of Wal-Mart's consumer base, he believes that Wal-Mart is in trouble.

It is not coming back, not just because it is a bad retail store, but because of the six-point ID verification program, Cramer said.

Pizza Party

Cramer welcomed Rick Rosenfield, the co-founder, co-CEO and co-chairman of California Pizza Kitchen (CPKI Quote - Cramer on CPKI - Stock Picks) to the show and asked him to alleviate some worry related to his company's stock.

"We did have some slippage, but I haven't seen much of a downgrade," Rosenfield responded. "Our investors and analysts have stood by us. The fundamentals of our business are great, and most important, the new restaurants that we're opening are achieving the highest profitability and highest volumes of any restaurants we've opened."

"We feel great about the long run," he went on to say.

When Cramer asked Rosenfield to explain to the viewers what slippage is, the CEO said it's not about training the staff.

"It's bureaucracy ... it often ties to a new mall opening, or a new life center opening," Rosenfield explained. "The bureaucracy comes out, and we don't get our permits. Or the malls don't get permits, and we're sitting dead in the water. It adds up ... and it's out of our control," he said.

When it is in the company's control, Rosenfield said that California Pizza does a very good job of opening their restaurants on time and getting the job done.

When Cramer asked about the worry that Pizza isn't as popular anymore, Rosenfield said "We're casual dining, we're not really in the pizza category. Pizza's our middle name, but we sell salads, pastas and appetizers."

Cramer said he would use the slippage in California Pizza Kitchen to buy the stock because he believes the chain and food to be good.

To view Cramer's interview with Rick Rosenfield, please click here.

In the "Sudden Death" round, Cramer was bullish on Digene (DIGE Quote - Cramer on DIGE - Stock Picks) and Nike (NKE Quote - Cramer on NKE - Stock Picks).

Lightning Round

Cramer was bullish on AMR (AMR Quote - Cramer on AMR - Stock Picks), Continental (CAL Quote - Cramer on CAL - Stock Picks), BEA Systems (BEAS Quote - Cramer on BEAS - Stock Picks), Under Armour (UARM Quote - Cramer on UARM - Stock Picks), VeriFone (PAY Quote - Cramer on PAY - Stock Picks), MasterCard (MA Quote - Cramer on MA - Stock Picks), Akamai Technologies (AKAM Quote - Cramer on AKAM - Stock Picks), Level 3 Communications (LVLT Quote - Cramer on LVLT - Stock Picks), Cisco (CSCO Quote - Cramer on CSCO - Stock Picks), Disney (DIS Quote - Cramer on DIS - Stock Picks), Sirius Satellite Radio (SIRI Quote - Cramer on SIRI - Stock Picks), Safeway (SWY Quote - Cramer on SWY - Stock Picks), Sysco (SYY Quote - Cramer on SYY - Stock Picks), WellPoint (WLP Quote - Cramer on WLP - Stock Picks), Humana (HUM Quote - Cramer on HUM - Stock Picks) and America Movil (AMX Quote - Cramer on AMX - Stock Picks).

Cramer was bearish on Sirenza Microdevices (SMDI Quote - Cramer on SMDI - Stock Picks), Koninklijke Ahold (AHO Quote - Cramer on AHO - Stock Picks), Tsakos Energy (TNP Quote - Cramer on TNP - Stock Picks) and Odyssey Healthcare (ODSY Quote - Cramer on ODSY - Stock Picks).

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

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