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Cramer's 'Mad Money' Recap: Two Picks From the New-High List

TheStreet.com Staff

03/07/07 - 08:07 PM EST

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

The move to make now is to pick out the plays that emerged from the recent market downturn without a scratch because, come the next selloff, "these will be the stocks people can bank on," Jim Cramer told viewers of his "Mad Money" TV show Wednesday.

Every day the market generates a list not only of the survivors, but of the "thrivers," called the New High List, Cramer said. "These stocks are proven winners with real money behind them."

In particular, there are two sectors on the New High List that Cramer considers hot: pharmacy benefit managers and tire companies. He believes "these sectors will perform even after a truly horrific onslaught."

Taking it a step further, the two best-of-breed stocks from these two sectors are Medco Health Solutions (MHS) and Goodyear Tire (GT), Cramer said.

Medco, he said, "has been a good performer for ages." Plus, it has a "monster amount of cash flow" on its balance sheet.

While on the topic of pharmacy benefit managers, Cramer said he owns Express Scripts (ESRX) for his Action Alerts PLUS charitable trust. This stock, he said, should go up regardless of whether or not it acquires Caremark (CMX) as planned.

If Express Scripts gets Caremark, the acquisition will mean oligopoly, and if it doesn't, Cramer believes Express Scripts should do a "gigundo" buyback.

Moving on to Goodyear, the second member of the New High List, Cramer said the company has "slashed worker benefits and cut pension requirements," two huge savings for its shareholders. Plus, Goodyear's raw costs are coming down, he said.

Both Goodyear and Medco are going higher, Cramer said. "I would buy [some of these two] now and hope for a pullback to buy more."

Powered Solar Play

As part of a four-part special series, Cramer said he's pulling from the rubble the stocks that don't deserve to be down and that viewers should consider buying.

On Tuesday's show, Cramer suggested people buy General Cable (BGC); today, he's pulling out First Solar (FSLR).

The company, Cramer said, can generate more energy for less money than its competitors. But the reason to buy First Solar now is because it recently reported a "blowout, better-than-expected" quarter, he said. It is "immunized" from the downside and its upside it not reflected in its price, Cramer said.

"On Feb. 13, First Solar gave the Street some serious BTE," or better-than-expected numbers, he said. And while the company made some people money after it reported, it was hit hard for no reason during the recent market selloff, Cramer said.

Although the stock has rebounded, he believes it's still worth more than it's selling at now. Not only does First Solar have the highest margins of its competitors at 40%, but it also has low raw costs and estimates that are too low, Cramer added.

Am I Diversified?

In the show's "Am I Diversified?" segment, in which viewers present their portfolios to Cramer for his inspection, the first caller offered a portfolio made up of the following five stocks:

Cramer called a pair with USG and Flowserve. He suggested selling Flowserve and buying a financial like Bank of America (BAC) or Goldman Sachs (GS), which he owns for Action Alerts PLUS, instead.

The second caller named the following five stocks:

Cramer called the portfolio the "epitome of diversification."

The segment's third and final caller said he owned the following five:

Cramer blessed the portfolio as diversified.

VeriFone Rings True

VeriFone's (PAY) CEO Douglas Bergeron joined Cramer on the show and gave a summary of his company's last quarter.

"We hit records on every line item in the financial statements," Bergeron said. "We grew 61%, and 60% of our revenue came from international [sales], confirming that we, like MasterCard (MA) are the true, blossoming, middle-class international play."

When asked about the company's recent taxi cab deal, Bergeron pointed out that VeriFone won the Philadelphia deal, which encompasses "equipping cab drivers throughout Philadelphia with wireless payment technology and full-screen navigation software."

The company is eyeing a similar deal by the end of the year in New York City, as well, the CEO added.

Cramer urged people to pull the trigger on the stock and get in some PAY.

To view Cramer's interview with Douglas Bergeron, please click here.

During the show's "Sudden Death" round, Cramer was bullish on Cognizant Technology (CTSH) and Dean Foods (DF).

Lightning Round

Cramer was bullish on MGM Mirage (MGM), Blockbuster (BBI), Infosys Technologies (INFY), IAC/InterActive Corp (IACI), Tyco International (TYC), Texas Roadhouse (TXRH), Sonic (SONC), Great Plains Energy (GXP), Apple (AAPL), Google (GOOG), Yahoo! (YHOO), eBay (EBAY) and Bank of America (BAC).

Cramer was bearish on Netflix (NFLX), Shutterfly (SFLY), Steak n Shake (SNS), First Marblehead (FMD) and Melco PBL Entertainment (MPEL).

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.

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