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Cramer's 'Mad Money' Recap: High on Clearwire

TheStreet.com Staff

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

Craig McCaw, the "greatest moneymaker" in the telecom sector, is coming out with an initial public offering next week that market players should try to get a piece of, Jim Cramer told viewers of his "Mad Money" TV show Thursday.

He likes Clearwire, which is set to come public on the Nasdaq under the symbol CLWR, not only because it has a great technology but also because he is convinced by the "great man" behind the company.

McCaw has an "incredible track record," and history shows that putting money into his ventures has made people mad money, Cramer said.

McCaw can recognize a good new technology early on, he said. And with Clearwire -- his "next big show" -- McCaw sees a promising future for WiMax, the company's technology.

Although some of his ventures have been disappointing, Cramer said that even one of his biggest failures could have made people a fortune if they had been careful about profit-taking.

Clearwire's WiMax will enable the delivery of wireless broadband as an alternative to cable and DSL, he explained, saying it's like Wi-Fi but quicker and more efficient. "On 'Mad Money,' we know that broadband is the place to be," Cramer said.

The IPO should price between $23 and $25; Cramer said he would be willing to pay $28 to $35 for it because he "subscribes to the 'great man theory.'" As Cramer expects the stock to dip after the "initial IPO buying frenzy," he advised viewers to buy a quarter or half of their positions after Clearwire goes public and to wait for a dip to put the rest of their positions on.

"It is not a trade off the pop caused by the IPO," he said. "It's a stock I like long term. Be patient and build a position."

Sell Block

In his "Sell Block" segment, Cramer said that while dividends are supposed to make people feel safe about a stock, he believes that two companies' dividends are lies and are giving people false impressions of good health.

When a dividend gets too high, it is a sign the stock is going lower, Cramer said. According to Cramer, BP Prudhoe Bay Royalty (BPT Quote) and Frontline (FRO Quote) have dividends that are too good to be true. That's why they're up on the Sell Block.

With their big dividends, "these companies will either fail to deliver and have to lower their dividends, or they will fall so hard that the dividend wont be worth it," he said.

Cramer believes that BP Prudhoe's stock and dividend both should go lower and that Frontline is part of the same club.

In order to make earnings, Frontline is selling off assets -- "a losing strategy," he said.

Am I Diversified?

In his "Am I Diversified?" segment, Cramer's first caller said he owned the following five stocks for his portfolio: AT&T (T Quote), Reliant Energy (RRI Quote), Deutsche Telkom (DT Quote), International Game Technology (IGT Quote) and Altria (MO Quote), which Cramer owns for his charitable trust, Action Alerts PLUS.

Cramer spotted a pair with AT&T and Deutsche Telekom. He suggested selling DT and picking up a defense or finance stock instead.

Cramer's next caller named the following five stocks: Under Armour (UA Quote), Google (GOOG Quote), Sears (SHLD Quote), Goldman Sachs (GS Quote) and Halliburton (HAL Quote).

Cramer said he wouldn't do a thing to the portfolio "other than applaud it." He owns Sears, Halliburton and Goldman Sachs for his charitable trust, Action Alerts PLUS.

His last caller held these five stocks in his portfolio: Live Nation (LYV Quote), Toyota Motor (TM Quote), Quest Diagnostics (DGX Quote), Altria and Transocean (RIG Quote). Cramer owns the last four for his charitable trust.

The problem here is with Live Nation, Cramer said. He said the caller was diversified, but advised him to sell Live Nation.

The Chance of a Life Time

Cramer welcomed Life Time Fitness (LTM Quote) CEO Bahram Akradi to the show and asked him why his stock was down today, despite reporting a great quarter.

"I don't really know why the stock was down $1.77 today," Akradi responded. "We can't be more excited about last year's results, the outlook for this year and the potential of the additional variation of our facilities."

When Cramer asked why Credit Suisse would consider it bad that the fitness-center operator has a new three-story urban-residential model, as opposed to its previous two-story suburban, Akradi said people have "completely taken it in the wrong direction" and are wrongly relating the clubs to two-story retail stores, where people don't like to shop.

However, Akradi said he is not worried about the stock, and he knows the results will show up in the near future.

Cramer agreed and called it a gift that the stock is down. "The numbers are good," he said. "Don't believe the Street."

To view Cramer's interview with Bahram Akradi, please click here.

During his "Sudden Death" round, Cramer was bullish on International Paper (IP Quote) and Prudential (PRU Quote). He was bearish on Allstate (ALL Quote).

Lightning Round

Cramer was bullish on Blockbuster (BBI Quote), MRV Communications (MRVC Quote), Yahoo! (YHOO Quote), Movado (MOV Quote), BHP Billiton (BHP Quote), Companhia Vale do Rio Doce (RIO Quote), Polaris Industries (PII Quote), Crown Holdings (CCK Quote), Nokia (NOK Quote) and Procter & Gamble (PG Quote).

Cramer was bearish on Wal-Mart (WMT Quote), Arena Pharmaceuticals (ARNA Quote), BMC Software (BMC Quote) and Citigroup (C 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 popular book by clicking here.