Mad Money Recap

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Cramer's 'Mad Money' Recap: Time Warner's Time to Shine

TheStreet.com Staff

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

As most people don't know what they're doing when they buy stocks, Jim Cramer went back to the basics on his "Mad Money" TV show Wednesday.

Cramer took a look at two types of non-speculative companies -- growth and value -- and provided four "common names in business": Verizon (VZ), AT&T (T), Time Warner (TWX) and Comcast (CMCSA).

He picked household names because he wants people to understand what value and growth are and be able to refer to these names.

Verizon and AT&T, which "preserve capital" and pay big dividends, are two examples of value stocks, Cramer said. Although both stocks have paid dividends for a long time, they have not been able to grow.

If market players are looking for capital appreciation, Cramer said they should go buy a bond, as even value stocks "aren't a sure thing," but they have an upside because of their dividends.

Both Verizon and AT&T are trying to grow, and he said he believes they should do "decently." The two stocks have enough yield to prevent them from having too much of a downside, and the yield also acts as a "bodyguard" when it comes to the stock's share price, Cramer said.

"They are not defined by their growth."

But at the same time, Cramer said he can't recommend both because if people own both, they will not be diversified. He believes the winner out of the two is AT&T because it has more money and excess cash to give its shareholders.

Plus, once AT&T closes its deal with BellSouth (BLS), it will have more market share, Cramer said.

While Verizon recently sold off its directory business to pay off its debt, AT&T is safer, and has less competition and more access to cash, he continued. This makes it a better telco value play than its competitors.

Moreover, even though AT&T has a lower yield (3.8%) than Verizon (4.5%) right now, Cramer said AT&T is more likely to raise its dividend in the future.

Time for Time Warner

Meanwhile, Time Warner and Comcast "are all about growth," Cramer went on to say.

"When we look at a growth stock, we use different metrics than when we look at a value stock," he said. "When you look at a company's growth, you have to see if it's accelerating."

Cramer said he picked Comcast and Time Warner as examples of growth stocks because both are cable companies, which he believes will have accelerated revenue growth next year. However, people should also take the company's profits into consideration, Cramer said.

While Comcast is the better company, is a pure play on the business and has good management, as far as profits go, Cramer said he had to stick with Time Warner.

Although Time Warner is "still pretty hated," he believes CEO Dick Parsons should turn it around. "He is making a lot of changes and making it better," Cramer said.

The company's AOL division is "turning big," and Cramer said he wouldn't be surprised if it turns out to be worth something.

If market players are out for capital appreciation, they should go with Time Warner because even though Comcast is the better company, "it has already had a big run," and "it's Time Warner's time to shine now."

Am I Diversified?

In Cramer's "Am I Diversified" game, his first caller owned the following five stocks: Time Warner (TWX), Yahoo! (YHOO), Oracle (ORCL), Sirius Satellite Radio (SIRI) and Genentech (DNA).

Cramer told the caller he likes Time Warner more than Yahoo!, even though he owns the latter for his charitable trust, Action Alerts PLUS. Therefore, he recommended selling Yahoo!, as both are media stocks.

His second caller named the following five stocks: International Gaming Technology (IGT), Sealed Air (SEE), Playboy Enterprises (PLA), Cheesecake Factory (CAKE) and Duke Energy (DUK).

Cramer said the caller's portfolio was diversified, but said instead of Sealed Air, Playboy and Cheesecake, he likes Crown Holdings (CCK), McGraw-Hill (MHP) and Darden Restaurants (DRI), respectively.

A Pal in HAL

Cramer welcomed Halliburton (HAL) CEO David Lesar to the show and asked him what might be the root cause of his stock's underperformance vs. the underperformance of the oil group.

"I think, first of all, people have overreacted to gas prices in North America," Lesar responded. "We clearly have a wonderful position in North America, and I encourage people to embrace that position, not discount it.

"The U.S. gas business is a mature business, and currently, declines are in excess of new production," he went on to say. "This will be self-correcting, and our gas prices will respond because of that."

Lesar also said people need to understand that that the price of gas is going to continue to go up, drilling has not stopped and the oil business continues to be good.

"People still don't believe in the U.S. gas market," he said.

With KBR (KBR) proceeds, Lesar said Halliburton is in the process of buying shares back, and it will continue to look at acquisitions "to put a statement out there that we are long-term believers of where the market is."

Cramer said he is sticking with Halliburton, which he owns for his charitable trust, Action Alerts PLUS.

It is the cheapest stock in its group, he said.

"I'm not going away, I'm going toward it," Cramer said.

To view Cramer's interview with Dave Lesar, please click here.

Lightning Round

Cramer was bullish on Openwave Systems (OPWV), Genentech (DNA), CBOT Holdings (BOT), Teppco Partners (TPP), Coldwater Creek (CWTR), Bank of America (BAC) and The Knot (KNOT).

Cramer was bearish on Home Solutions of America (HSOA), Halozyme Therapeutics (HTI), Nokia (NOK), Cheesecake Factory (CAKE) and Smith & Wesson (SWHC).

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.