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Cramer's 'Mad Money' Recap: Saks Serendipity

TheStreet.com Staff

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

Jim Cramer celebrated retail turnarounds on his "Mad Money" TV show Wednesday, recommending Saks (SKS).

He said finding a retail revival is like finding a diamond in the rough.

Analysts have been wasting their time recommending Wal-Mart (WMT) when they should have been looking at Saks, Cramer said.

"I've done the impossible: I dug up two legitimate retail turnaround stories," he said.

Saks, the first turnaround Cramer mentioned, is a stock that has the "ultimate aspirational brand," he said. "It's a store with an aura that gets people to spend."

He believes that Saks is a turnaround because of two reasons. The first is because it has good earnings; second, it's an "asset takeout story."

While Wal-Mart just looks like a big warehouse, Saks has the secret ingredient: merchandising. "Merchandising is about perception -- not about statistics. The analysts don't get it," Cramer said.

Saks, on the other hand, has margin expansion and growth. Although its turnaround is still at its infancy, this is the prefect time to buy Saks, said Cramer.

Last year Saks made its shareholders money with its special dividends. Cramer believes that this year the company will make people money with a turnaround.

PetSmart's Paw Up

The second turnaround company Cramer named was PetSmart (PETM), the largest pet store in America.

People have affection for their pets in America, said Cramer, but this isn't the only reason he wants investors to buy the stock. PetSmart has "great fundamentals," with a 17.5% long-term growth rate.

Its turnaround is similar to Saks in that it has expanding margins and a merchandising edge. Additionally, Cramer believes the stock is undervalued.

Also, because Petco, its main competitor, was recently bought out by a private-equity firm, PetSmart is "primed to expand" without competition from Petco.

Am I Diversified?

In his "Am I Diversified?" segment, Cramer's first caller owned the following five stocks: Altria (MO), which Cramer owns for his charitable trust, Action Alerts PLUS, Boeing (BA), Google (GOOG), Time Warner (TWX) and Tupperware (TUP).

Cramer told the caller his portfolio was beautifully diversified.

His second caller named the following five stocks: FedEx (FDX), Walgreen (WAG), IBM (IBM), United Technologies (UTX) and Praxair (PX ).

Cramer called the caller's portfolio "perfect."

His final caller owned the following five stocks: AK Steel (AKS), Sonic (SONC), Sears Holdings (SHLD), which Cramer owns for his charitable trust, Yamana Gold (AUY) and Allis Chalmers (ALY).

Cramer blessed this portfolio as diversified as well.

Mad Mail

In his "Mad Mail" segment, Cramer recommended that a viewer buy AT&T (T) and gave the stock two thumbs up.

Responding to another mailer, Cramer called Halliburton (HAL), which he owns for his charitable trust, Action Alerts PLUS, his most "painful" stock. He said that he doesn't expect Halliburton to do anything good this quarter but that next year this time it will be higher or will be taken over.

In his "Sudden Death" round, Cramer was bullish on Monsanto (MON) and Lowe's (LOW).

He was bearish on H&R Block (HRB) and Home Depot (HD).

Lightning Round

Cramer was bullish on eBay (EBAY), Boeing (BA), Boston Scientific (BSX), Google (GOOG), Blockbuster (BBI), Rite Aid (RAD), Crown Castle (CCI), Advanced Micro Devices(AMD), Allegheny Technologies (ATI), Cisco (CSCO), Lundin Mining (LMC), Allergan (AGN) and Hewlett-Packard (HPQ).

Cramer was bearish on Sirenza Microdevices (SMDI), Brocade (BRC), Citigroup (C) and Anadigics (ANAD).

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 popular book by clicking here.