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Cramer's 'Mad Money' Recap: Break Up to Make Up

TheStreet.com Staff

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

Nelson Peltz has been the "catalyst shareholder" at both Heinz (HNZ Quote) and Cadbury Schweppes (CSG Quote), Jim Cramer told viewers of his "Mad Money" TV show Wednesday.

Peltz has given tips to both companies, and they have listened, Cramer said. On March 15, Cadbury announced that it was splitting in two. Cramer offered up the next two companies he believes should follow in its footsteps.

Breaking up is not hard to do -- just look at American Standard (ASD Quote), where CEO Frederic Poses "created instant value," he said.

There are two companies here that Cramer likes: Clorox (CLX Quote) and ConAgra Foods (CAG Quote). With private-equity firms everywhere, "even in tired, old brands," Cramer believes that any breakup could put a company in play.

Plus, the combination of Clorox's products is "something that makes no sense whatsoever," Cramer said. It makes charcoal and salad dressing -- two businesses that have nothing in common.

ConAgra is another company that has "ailing brands," he said. "It is currently conceived as making a sandwich out of too many ingredients" and needs to be split up.

Both companies, Cramer said, "are in the sweet spot of value creation." They could wake up tomorrow and break into two, three or four companies, or sell their underperforming divisions to "hungry" private-equity firms, he said.

"Seriously, these executives can't possibly support all their brands," Cramer said.

And in the case they don't split up, Cramer said he doesn't see much downside for Clorox or ConAgra anyway because they are "among the cheapest" of the packaged-goods companies, and we are in the midst of an economic slowdown, where both of these are good to own.

CEO Benefit of the Doubt

In part three of his new "Benefit of the Doubt" series, Cramer put Jim Sinegal, the CEO of Costco (COST Quote), on his BOD board.

A couple of weeks ago, people worried that the chief executive had lost his touch when the stock went down after Costco announced a stricter return policy. But now Cramer believes that the bad news is in the past, though the stock is still going down.

Cramer said he would give Sinegal the benefit of the doubt this time around.

Cramer also added Lawrence Montgomery, CEO of Kohl's (KSS Quote), to his BOD list and said that despite what people may think, the retailer has not "run out of gas."

Instead, Cramer believes that the company offers good merchandise in a clean environment, where it doesn't rip people off. Kohl's keeps getting hit because market players don't believe in Montgomery. But that is "ludicrous," Cramer said.

Investors don't have to buy it here at $75.75, he said. But once it comes in, they should get in.

Am I Diversified?

In his "Am I Diversified?" segment, a viewer named the following five stocks: IBM (IBM Quote), Apple (AAPL Quote), Boeing (BA Quote), Microsoft (MSFT Quote) and Sirius Satellite Radio (SIRI Quote).

Cramer said the portfolio was not diversified at all, as the caller had three-of-a-tech kind with IBM, Apple and Microsoft. He advised the caller to get out of IBM and Microsoft and pick up a health care stock and a retailer.

The next caller said his portfolio consisted of the following five stocks: Apple, Google (GOOG Quote), NYSE Group (NYX Quote), Goldman Sachs (GS Quote) and Sears (SHLD Quote), the last three of which Cramer owns for his charitable trust, Action Alerts PLUS.

Cramer called Apple a tech stock and Google a media play, and blessed the portfolio as diversified.

His last caller owned Cheniere Energy (LNG Quote), International Game Technology (IGT Quote), McCormick (MKC Quote), Toyota Motor (TM Quote), Altria (MO Quote), the last two of which Cramer owns for his charitable trust.

Although Cramer said the portfolio was diversified, he prefers Devon Energy (DVN Quote) to Cheniere.

Mad Mail

In his "Mad Mail" segment, Cramer told a caller that if Sirius merges with XM Satellite Radio (XMSR Quote), he predicts it will go to $5. But if it doesn't, it could go to $2 or $3 and XM would be "wiped out." Sirius closed at $3.26 Wednesday.

Responding to anther mailer, Cramer said that although he liked Take-Two Interactive (TTWO Quote) at first, a deeper look showed that the numbers for the stock were nonexistent.

He advised the caller not to buy TTWO and said that without a deal, it will go much lower.

During his "Sudden Death" round, Cramer was bullish on Altria (MO Quote), a stock he owns for his charitable trust, Action Alerts PLUS.

He was bearish on Kraft (KFT Quote) and Dendreon (DNDN Quote).

Lightning Round

Cramer was bullish on JPMorgan Chase (JPM Quote), Bank of America (BAC Quote), Jones Soda (JSDA Quote), Accuray (ARAY Quote), Harsco (HSC Quote), Cummins (CMI Quote), Parker-Hannifin (PH Quote), Caterpillar (CAT Quote), Terex (TEX Quote), Lamson & Sessions (LMS Quote), VeriFone (PAY Quote), Charter Communications (CHTR Quote), Comcast (CMCSA Quote), Time Warner (TWX Quote), Allegheny Technologies (ATI Quote) and Disney (DIS Quote).

Cramer was bearish on Valero Energy (VLO 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.