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Cramer's 'Mad Money' Recap: Stocks When They Sizzle

TheStreet.com Staff

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

There are too many people who own too many stocks just because they're "sizzling" or "too hot," but have no clue about what the companies do to make their money, Jim Cramer told viewers of his "Mad Money" TV show Tuesday.

This week, Cramer said he's attempting to demystify "hot new stocks" and named InnerWorkings (INWK) as such a stock.

The company, which outsources printing services, is up 87% from its initial public offering in August, he said. As the company doesn't have its own printing equipment, Cramer called it "an incarnation of the cyber-middleman."

The stock has "a long way to run" and is only covered by four analysts, which means it has not yet attracted the attention of Wall Street, he continued.

InnerWorkings' stock lockup expires Feb. 11, but this doesn't mean market players shouldn't buy the stock now, Cramer said. If people do buy the stock now, they should consider swapping out of it before the lockup expires "so they don't get stampeded by sellers."

In addition, InnerWorkings has had positive operating profit since 2002 and positive net income since 2003. Although it has a lot of competition, it has "a reason to exist" as it adds value and saves its customers money, Cramer said.

With the stock near $17, Cramer told his viewers that he would pull the trigger and buy InnerWorkings. He urged people not to buy it right away but to take 48 hours to look over the stock and do their homework on it.

Cramer advised people either to buy half their position in InnerWorkings now and buy half after the share lockup expiration, or to buy their position now and swap out of it the week before the share lockup expires.

Brick by Brick

After spiking on Friday, Adobe Systems (ADBE), "through no fault of its own, got pummeled Monday in a vicious Nasdaq selloff," Cramer told viewers.

As a result, Cramer sees a "golden opportunity" to buy the stock. Not only does Adobe have an "indispensable" product, but also the stock has wrongly been put on sale by the market, Cramer said.

He advised people to get into Adobe ahead of its Creative Suite 3 product launch and ride it to the launch. Although it is up 50% and people are scared the product launch might be disappointing; this is "palpable," Cramer said.

It is negative speculation designed to keep the stock down, probably by short-sellers, he said.

The actual reason the stock was down before Friday was fear that the company would report negative guidance, Cramer explained. So, when Adobe didn't report lower guidance, the stock spiked, he said.

It is "too cheap for the wrong reasons," and it "should be going higher," Cramer said. "It has high growth and gets its products out on time.

"You have a chance to get in below where you should," he continued. "Get in Adobe and get ready for a four-month magic carpet ride" up until its Creative Suite 3 product debuts.

VeriFone Home

Although Christmas stocks, which have already been exploited, can no longer earn people money, investors should still be able to make money off the holiday season with an ancillary play like VeriFone (PAY), Cramer said.

The company makes point-of-sale electronic payment devices -- the credit- and debit-card-swiping machines found at checkout counters -- that people use to make purchases, Cramer explained. It is "by far the market leader in this game," with a hold on 34% of worldwide POS sales, Cramer added.

In addition, the company has a big upgrade cycle coming in the U.S., and the terminals will need to be replaced. As VeriFone's customers make most of their money during the holidays, Cramer believes they should be willing to shell out money to upgrade their machines now.

Plus, VeriFone has "tremendous opportunities" to expand in the developing world, which means more business for the company, Cramer said.

The bottom line is that the stock is cheap and should be bought, he said.

"It is one part ancillary Christmas play and 10 parts great stock."

NightHawk Vision

Cramer welcomed his guest, Dr. Paul Berger, chairman and CEO of NightHawk Radiology (NHWK), to the show and asked him about the company's hospital growth.

"The hospital growth has been terrific," Berger responded. "At the end of the third quarter this year, we have approximately 981 hospitals which send us images every night, or approximately 18% of the hospitals in the U.S. And that's been a growth of 121 hospitals over the first nine months of 2006."

Although there are people who believe that NightHawk's business is easy to do, Berger said the company has recruited "world-class" U.S. radiologists who trained at schools like Harvard and Stanford.

Also, "it's very difficult to scale these sort things," he went on to say. "A key ingredient is efficiency. We have our own work-flow technology that enables our physicians to be extraordinarily efficient."

Cramer said he likes NightHawk's story but is not against ringing the register, just because he is "tired of having to defend a stock that has been such a big win" and that investors aren't so hot on.

To view Cramer's interview with Dr. Berger, please click here.

Lightning Round

Cramer was bullish on Cemex (CX), BEA Systems (BEAS), Cisco (CSCO), Allegheny Technologies (ATI), Occidental Petroleum (OXY) , Exxon Mobil (XOM), Chevron (CVX) and Devon Energy (DVN).

Cramer was bearish on Smith & Wesson (SWHC), JDSU (JDSU), Ciena (CIEN) and Allied Waste (AW).

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

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