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Cramer's 'Mad Money' Recap: Charter Course

TheStreet.com Staff

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

"I need you to stick with Charter Communications (CHTR Quote)," Jim Cramer told viewers of his "Mad Money" TV show Tuesday.

Charter is a stock Cramer said he's liked since February, but it has been such an underperformer that he was beginning to question his own sanity. Then two things happened.

First, Comcast (CMCSA Quote) and a little Midwestern cable company called Insight Communications "unwound a joint venture," giving Comcast control of Insight's assets in Illinois and Indiana, he said.

Right now, Charter is valued at 12% less than what Comcast valued Insight's customers at, said Cramer, and customer valuation is the "key metric" that should be used for cable companies. Moreover, if Comcast is interested in Insight, it might be interested in Charter as well, he pointed out.

But Comcast's second move is what really got Cramer believing in Charter again. Right after its deal with Insight, Comcast bought New Jersey-based Patriot Media, paying almost 50% of where Charter is valued, he said.

If Comcast is paying more for customers, it means customers are becoming worth more and more money, Cramer said. Charter is a buy, he said. "It could trade higher or become a takeover target."

Market-players could buy Comcast, but Cramer believes "Charter has much more upside." But "don't buy it tonight," he said, advising people to wait a couple of days and do their homework first.

Cheapskate Baby Boomer Play

This hotel company, which owns the Ramada Hotel chain and time shares, "is a great play on cheapskate baby boomers" trying to contain costs while on vacation, he said.

Time shares are perceived as great places to go on the cheap, Cramer said. While the market for time shares is not as "robust" as it once was, these vacation properties are selling better than what people think, he said.

Further, Cramer reassured those who are worried about the debt on Wyndham's balance sheet that the company is a bank that lends money "at rather high rates."

Wyndham is the one company that hasn't moved significantly since Cendant broke up, Cramer said. Two of Cendant's companies have been taken private, and he believes Wyndham deserves a takeover premium as well. "It is way too cheap."

Harsco a Go-Go

Reinvention is how companies "stay afloat over the long haul," Cramer told viewers.

Harsco (HSC Quote) is one company that has reinvented itself -- in not one but two ways, he said.

Cramer said he made the mistake of referring to Harsco as a manufacturer. As it turns out, Harsco is a well-diversified company, he said. "It is a miniconglomerate and is taking the lead in industrial outsourcing."

While other companies sat on the sidelines, Harsco found a way to beat Chinese competitors by turning its focus to being more service-oriented, Cramer said. The company, he said, went into mill services and access services.

Plus, Harsco has "beautiful global exposure," Cramer went on to say. Now it is "beating the Chinese and everyone else as well." He said he likes outsourcing companies and companies with international exposure -- Harsco is both. It has reinvented itself and is a buy, Cramer said.

Annaly Acumen

Michael Farrell, the chairman and CEO of Annaly Capital Management (NLY Quote), joined Cramer on his show and explained how his company wasn't burned by the subprime lending crisis.

"Thirty years of being a mortgage trader tells you a lot of things about cash flows from consumers, and that's what you look at when you look at our stock," Farrell said. "I don't pretend to have a crystal ball, and I think there's always bull markets and bear markets starting at all times ... but the bottom line is that it was unsustainable."

The subprime crisis has to "play out," and it isn't even in the third inning yet, the chief executive said.

Further, Farrell said he believes it's "too early to collect all the pieces that are broken."

"The flight to quality that's going to happen with triple-A assets is still there," he said. "The mortgage market is going to provide a place of safety or place of danger, depending on which asset class you pick."

Cramer called both Annaly and Farrell "winners."

To view Cramer's interview with Michael Farrell, please click here.

Lightning Round

Cramer was bullish on Celgene (CELG Quote), Nastech Pharmaceutical (NSTK Quote), Incyte (INCY Quote), Corning (GLW Quote), W.R. Grace (GRA Quote), Level 3 Communications (LVLT Quote), Rite Aid (RAD Quote), Manulife Financial (MFC Quote), MetLife (MET Quote), Prudential Financial (PRU Quote), Companhia Vale do Rio Doce (RIO Quote), Halliburton (HAL Quote) and Six Flags (SIX Quote).

Cramer was bearish on ViroPharma (VPHM Quote), Opnext (OPXT Quote), Quiksilver (ZQK Quote), Best Buy (BBY Quote) and Taiwan Semiconductor (TSM Quote).

There Goes Swifty

Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by clicking here.

For more of Cramer's insights during the Lightning Round, click here.