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Cramer's 'Mad Money' Recap: The Best Bottom-Fishing Bets

TheStreet.com Staff

02/28/07 - 07:31 PM EST

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

"Yesterday we got the plunge, and today we got the bounce," Jim Cramer told viewers of his "Mad Money" TV show Wednesday.

After a massive selloff, market-players should always go bottom-fishing, he said. Fishing for bottoms, according to Cramer, "is more of a science than an art." First, investors have to cast the line "gingerly and steadily," then be ready with a game plan and finally be aware that everything doesn't bottom at once, he said.

Bottoms happen by sectors and piece by piece, Cramer said. There was a bottom in one-third of the market today, but there are still other sectors out there "for the taking," he said.

Today there was a bottom in the supermarket and medicine-cabinet stocks "because the slowdown camp is now in charge on Wall Street," Cramer said. "In the last two weeks, the conventional wisdom on the Street has shifted from the belief that the economy is booming to a belief that it is sluggish."

The "big money" is moving into the defensive stocks, and regardless of whether or not that is smart, people should go with the flow, he said.

Cramer believes the trend will lead to interest rate cuts because it should give Federal Reserve Chairman Ben Bernanke the "ammunition" he needs to bring the rates down.

While Cramer believes Procter & Gamble (PG - Cramer's Take - Stockpickr) is probably already too high to get into now, he said Colgate (CL - Cramer's Take - Stockpickr), Clorox (CLX - Cramer's Take - Stockpickr), General Mills (GIS - Cramer's Take - Stockpickr) and Heinz (HZ - Cramer's Take - Stockpickr) all can be bought here.

However, none of those excites Cramer as much as Altria (MO - Cramer's Take - Stockpickr), which he owns for his Action Alerts PLUS charitable trust. Not only does Altria have a "sweet 4% yield," but the conglomerate is going to be breaking itself up, he said.

Regarding the medicine-cabinet stocks, Cramer said people shouldn't buy a Pfizer (PFE - Cramer's Take - Stockpickr) or Eli Lilly (LLY - Cramer's Take - Stockpickr), because such stocks are too risky and don't have much room to run.

Instead of Big Pharma, go with the biotech stocks, and in particular Celgene (CELG - Cramer's Take - Stockpickr) or Gilead (GILD - Cramer's Take - Stockpickr), he advised.

Bank on a Financials Bottom

The next bottom is coming in a fortnight, and it's going to be in the financial stocks, but not all the financials, Cramer told viewers.

While the subprime lenders are a problem area, the financials that should work here are the banks and the brokers, he said.

Because a lot of the housing speculators have gotten "blown out of the water," the substandard lenders won't be able to pay out their dividends as they promised, Cramer explained. Therefore, people who belong to the working class won't be able to get the loans they need because the "subprime lenders are busted," he said.

This, in turn, should give the Fed "the biggest excuse to cut interest rates," because the Fed "unlike the Tin Man, has a heart," Cramer said. The two that will win in this environment are the banks and the brokers. And "as the "big money decides to join the smart money, the financials will fly," he said.

Goldman Sachs (GS - Cramer's Take - Stockpickr) and Capital One Financial (COF - Cramer's Take - Stockpickr), both of which Cramer owns for Action Alerts PLUS, do "fabulously" when short-interest rates fall below the long-interest rates, he said.

Cramer also recommended Bank of America (BAC - Cramer's Take - Stockpickr), T. Rowe Price (TROW - Cramer's Take - Stockpickr) and even Citigroup (C - Cramer's Take - Stockpickr).

He believes people should start taking positions in these stocks as they are the ones that should benefit when the next piece of the market bottoms.

Am I Diversified?

In the show's "Am I Diversified?" segment, Cramer's first caller said he owned the following five stocks:

Cramer blessed the portfolio as diversified and said he doesn't consider AT&T and Level 3 a pair because Level Three is a speculative stock, a category of its own.

The next caller named the following five stocks:

Cramer called out a pair of retailers with J.C. Penney and Sears. He advised the caller to flip Penney's and get into a financial.

Mad Mail and Sudden Death

In his "Mad Mail" segment, Cramer told a viewer that although NYSE (NYX - Cramer's Take - Stockpickr) failed to distinguish itself yesterday, it is a company he is buying for his charitable trust for the "long haul," and he believes others should, as well.

During the show's "Sudden Death" round, Cramer was bullish on Continental (CAL - Cramer's Take - Stockpickr), World Wrestling Entertainment (WWE - Cramer's Take - Stockpickr) and GlaxoSmithKline (GSK - Cramer's Take - Stockpickr).

He was bearish on ExpressJet (XJT - Cramer's Take - Stockpickr).

Lightning Round

Cramer was bullish on Comcast (CMCSA - Cramer's Take - Stockpickr), Fuel Tech (FTEK - Cramer's Take - Stockpickr), American Tower (AMT - Cramer's Take - Stockpickr), Intuitive Surgical (ISRG - Cramer's Take - Stockpickr), Hologic (HOLX - Cramer's Take - Stockpickr) and Akamai Technologies (AKAM - Cramer's Take - Stockpickr).

Cramer was bearish on Jefferies (JEF - Cramer's Take - Stockpickr), Harley-Davidson (HOG - Cramer's Take - Stockpickr) and Fastenal (FAST - Cramer's Take - Stockpickr).

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.