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Cramer's 'Mad Money' Recap: Ramblin' ROSE

TheStreet.com Staff

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

A rose by any other name would not smell as sweet, Jim Cramer told viewers of his "Mad Money" TV show Monday, referring to Rosetta Resources (ROSE Quote).

Until now, people have probably never heard of Rosetta, he said, but it's likely they do remember the bankrupt Calpine Power.

Rosetta, one of the best and cheapest oil companies around, was formed to buy Calpine's oil and natural gas assets for "way less than they were worth," before the big lift in energy prices, Cramer explained.

Now under a different outfit and different name, Rosetta has been able to develop its assets and increase production because it can afford to drill, he said. This year the company expects to increase production by 36%. It is an "oil and gas accelerated growth play," Cramer said.

"Rosetta isn't just undervalued; some would say it's criminally mispriced," he went on to say. If more market players were paying attention to it, Rosetta wouldn't be this cheap, Cramer said. And now they will be.

"ROSE is a little oil company with stellar growth and very little coverage," he said.

Further, although it's true that Calpine's creditors can try to go after the assets it tried to sell to Rosetta before Calpine went bankrupt, Cramer believes that the creditors are doing too well to try to go after Rosetta and would probably fail if they did.

"The Calpine worry is overdone," he said. Though it's definitely time to stop and buy Rosetta, "take your time and use limit orders," Cramer urged.

Biopower

On March 16, Cramer recommended Nastech Pharmaceutical (NSTK Quote), and since then the stock has moved up significantly, he told his viewers.

"I nailed Nastech because I know how biotech stocks work," Cramer said. "I believe I've got another Nastech, and the stock is Incyte (INCY Quote)."

Incyte, like Rosetta, is probably another stock investors have never heard of, Cramer said. But it's very similar to Nastech. With these stocks, people chase "the stuff dreams are made of," Cramer said.

These companies don't trade on nonexistent earnings; "they trade on hope," with the "sensible expectation" that someday they might develop a "promising" drug, he said.

When looking at stocks "that go on dreams," people should want two things, Cramer said. First, they should want a company that is developing drugs for several different markets, and second, the stocks must have "big end markets," he said.

Incyte doesn't have any drugs in phase III, but "it has potentially positive catalysts coming out soon," Cramer continued. He advised people to get into the stock before it releases its phase I and phase II data later on in the year.

One piece of news should take Incyte higher, and there's not much downside, Cramer said, suggesting that investors wait until Thursday when it might come down a bit to pull the trigger.

Lose or Win

Google (GOOG Quote) and Microsoft (MSFT Quote) are in the midst of a bidding war for DoubleClick, and the winner of the war will be either ValueClick (VCLK Quote) or aQuantive (AQNT Quote), Cramer told his viewers.

"I believe one of these two companies will be bought by one of the losers of the auction," he said. But to understand this methodology, first people need to understand the dynamics of a bidding war, Cramer said.

In the bidding war only one -- Google or Microsoft -- will win, and one will lose, he explained. It doesn't matter which one wins and which one loses, because in either case, the loser will still want an acquisition in the space, Cramer said. "There will be a consolation prize."

Time Warner (TWX Quote) is also interested in buying ValueClick or aQuantive, and it seems that Yahoo! (YHOO Quote), which Cramer owns for his charitable trust, Action Alerts PLUS, is, too, Cramer said. There are so many potential buyers and only two targets, he said.

Furthermore, the fundamentals in both ValueClick's and aQuantive's cases are good here, Cramer said. "The stocks can hold their own if they don't get acquired." Cramer believes that they're both buys on their earnings alone.

Decompressing DivX?

Next, DivX's (DIVX Quote) CEO Jordan Greenhall joined Cramer on his show and said DivX's better-than-expected quarter "wasn't that surprising."

There was a "strong performance" across the board, Greenhall said.

When Cramer asked the chief executive to explain video compression, a process that reduces data quantity (and technology for which DivX is known), Greenhall said the idea behind it is "to take Internet at the center and move it out to any device you can think of."

Further, Greenhall said he had no comment on whether or not DivX was planning to give a secondary offering to investors. As a public company, he said, DivX looks at the best way to deal with finances, but as of now, there are no plans for a seconfary offering.

Cramer thanked him for being honest and said he believes that the stock is going higher.

To view Cramer's interview with Jordan Greenhall, please click here.

Lightning Round

Cramer was bullish on Sears (SHLD Quote), Monsanto (MON Quote), Agrium (AGU Quote), Deere (DE Quote), Spartan Motors (SPAR Quote), Virgin Media (VMED Quote), Time Warner (TWX Quote), Comcast (CMCSA Quote), Research In Motion (RIMM Quote), Toyota Motor (TM Quote), Hexcel (HXL Quote), Allegheny Technologies (ATI Quote), Foster Wheeler (FWLT Quote), Lockheed Martin (LMT Quote), L-3 Communications (LLL Quote) and General Dynamics (GD Quote).

Cramer was bearish on Hudson City Bancorp (HCBK Quote), Force Protection (FRPT Quote), Veraz Networks (VRAZ Quote), XM Satellite Radio (XMSR Quote), Crystallex (KRY Quote), CDW (CDWC Quote), Washington Group (WNG Quote) and SAIC (SAI 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.