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Cramer's 'Mad Money' Recap: While Nike Sleeps

TheStreet.com Staff

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

"Under Armour (UARM Quote) is waging a guerrilla war against Nike (NKE Quote), against the unprotected Reebok and against the unpopular Adidas," Jim Cramer told viewers of his "Mad Money" TV show Monday.

Under Armour is the sports-gear company that Cramer has vacillated about in the past, but no more, because he's just realized the greatness of Under Armour's management.

"It is a buy to the ninth power," he said.

However, Nike is "trying to keep Under Armour down," Cramer said. But either way, Under Armour has been coming into the niche markets and taking them over because of the power of its brand, Cramer went on to say.

First the retailer conquered the football-cleats market earlier this year, then it was raking in money with the hunting-apparel market, and now it has entered the ski market by selling thermal underwear, he said.

"Nike can do nothing but lose market share because the Under Armour brand is too powerful," Cramer said, adding that the company also knows not to take on too many niche markets at a time so that it can focus on them one-by-one.

The company "understands the game it's playing."

He considers Under Armour's strategy "smart": It looks for holes in a market and fills them in. By penetrating these niche markets, Cramer said the company has been ensuring that its competitors are not worried.

Though sooner or later, Under Armour is likely going to run out of niche markets to capitalize on. This isn't happening anytime soon, he continued.

When Under Armour runs out of niche markets, it'll have to make a sneaker, and hopefully it will be able to slip into the market when Nike is snoozing, Cramer said.

Morgan Stanley recently came out with research report that stated retail stocks are in a bubble and that Under Armour is a "sell." But Cramer believes that even though the stock may be overvalued, "the bottom line is it should get a lot more overvalued" before it dips.

Selloff Security

Although today was a "great day" for the market, last week was "brutal," Cramer told his viewers. He said he would love to say the selloff is over, but that's not the reality.

Instead, Cramer said he wants market players in secure dividend-boosting stocks, and in particular, he said he wants people to take a look at Emerson Electric (EMR Quote), a stock that has boosted its dividend but has largely been forgotten about because of the selloff.

Although it might not be the most interesting stock, Cramer believes that it could make people money. The company, which should have 15% growth next year, is only trading at 15 times next year's earnings, which makes it "a steal," he said.

Emerson has already reported numbers that are "great," and although the stock should not be allowed to go lower than where it was after a dividend boost, that's what's happening here, he said.

There is "pure opportunity" to buy this stock, which has a 2.5% dividend yield, Cramer continued, adding that its dividend boost shows that Emerson has confidence in its future.

Another reason to buy Emerson now is that because short-term bond rates are higher, an "influx of investors who would have otherwise bought bonds," is likely to come to the market and buy dividend-boosting stocks like Emerson, he said.

The bottom line: "When you have a potential for a selloff, you need a stock that is going to be secure," like Emerson, Cramer said.

Pirate Capital, Aarrr!

Pirate Capital is making a lot of noise, which might tempt people get into it, but Cramer does not believe this is a good idea.

The hedge fund employs a strategy of "activision," which means it takes a 5% stake in a company it feels is undervalued then it pushes for changes, claiming it's in the interest of the shareholders, he explained.

Cramer believes that as soon as people see Pirate Capital investing in a stock, they should "jump off the ship," as "historically speaking, pirates aren't great investors."

Blindly following hedge funds and mimicking their actions is not something he recommends. Instead, Cramer wants people to think for themselves and make their own investment decisions.

If market players had followed Pirate Capital's lead with Pep Boys (PBY Quote) and James River Coal (JRCC Quote), they would be down, he said.

While some hedge funds may be good, Pirate Capital is not one of them. Cramer is waving a "giant sell flag."

Garmin Guidance

Cramer welcomed Garmin (GRMN Quote) CFO Kevin Rauckman to the show and asked him to talk about his company's downward guidance.

"What we had is a very strong market," Rauckman responded. "The only disappointment we've seen this year is in the aviation segment, which is flat. But going into the holiday season, we actually raised guidance to $1.68 billion of revenue, given the strength of the automotive segment."

When Cramer asked if this is going to be a Garmin Christmas, Rauckman said the company is seeing continued acceptance of the personal-navigation device technology, so by definition, the company expects "a very strong fourth-quarter, holiday-selling season."

When asked about the company's "big discounting," Rauckman said he believes the fact that volumes are increasing based on lower pricing is "a win-win scenario" for the entire industry.

Cramer gave Garmin one thumb up, and said he couldn't give it two thumbs up before he sees its numbers.

To view Cramer's interview with Kevin Rauckman, please click here.

During his "Sudden Death" round, Cramer was bullish on Genentech (DNA Quote), Amgen (AMGN Quote) and Celgene (CELG Quote).

Lightning Round

Cramer was bullish on Starbucks (SBUX Quote), Schering-Plough (SGP Quote), Merck (MRK Quote), New York Stock Exchange (NYX Quote), EMC (EMC Quote), Goldman Sachs (GS Quote) and DirecTV (DTV Quote).

Cramer was bearish on Coach (COH Quote), Pfizer (PFE Quote), CDC (CHINA Quote), Baidu.com (BIDU Quote), Tractor Supply (TSCO Quote) and Eastman Kodak (EK Quote).

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.