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Cramer's 'Mad Money' Recap: Hold These Horses

TheStreet.com Staff

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

The hardest thing for any investor to do is to stay in the game, "even on an ugly day like today," Jim Cramer told viewers of his "Mad Money" TV show Wednesday.

But it's necessary to make money, he said, especially with all the private-equity money coming into the market.

To stay interested, market-players need to speculate up to one-fifth of their portfolios, Cramer said. He came up with a horse race consisting of three stocks trading around $10 each that may have some "quick upside."

Cramer calls the three "horse racing stocks" because speculating is like gambling, only more responsible when done right. The following three, he said, could go from $10 to $12 "in a heartbeat": Dynegy (DYN), Brocade Communications (BRCD) and Qwest (Q).

These are three companies that share some history, Cramer said. They're all bullish stocks that have been "trashed."

Dynegy fell because of its former CEO Chuck Watson, but then was "rescued" by its current CEO Bruce Williamson, Cramer said, adding that he believes that Dynegy could go from $10 to $12 after finally making money this year. Or, Cramer said it could be bought out.

Cramer likes Brocade more than Dynegy. The company, he said, took out its main competitor recently and should easily start beating its numbers by consolidating costs and increasing prices. "Brocade has momentum but is scary -- which is exciting," Cramer said.

But his favorite of the three is Qwest, he said. The stock is under $9 now, but it could be the first one to get to $12, Cramer said. It has pulled back enough that now it should be ready to run.

Once people buy, they shouldn't forget to sell any of these three when they "finish the race," that is, reach $12, Cramer said. Qwest, Brocade and Dynegy -- in that order, he advised.

The Aristocrats

Cramer said he calls stocks that have increased their dividend consistently for the last five years "Aristocratic Stocks." He said he got this name from Stockpickr.com's Dividend Aristocrats porrtfolio.

"Like hips, dividends don't lie," said Cramer, borrowing from Shakira's song. "Owning dividend-improved stocks pay you more and more money for no reason."

Even though dividends may not be as interesting as speculation, it is "money in your pocket" and an insulation against a weak economy, he said.

Cramer picked his top three Aristocrats from Stockpickr.com's portfolio: Walgreen (WAG), Grainger (GWW) and Automatic Data Processing (ADP).

Of thethree, Cramer said his favorite was ADP. A transaction-processing company, ADP recently spun off its brokerage services division, which enabled the stock to achieve accelerated revenue growth, he said.

In addition to the "smart" spinoff, Cramer said ADP has "good numbers" and a "gigantic" buyback. He urged people to check out ADP and Stockpickr.com's Dividend Aristocrats portfolio.

Am I Diversified?

During Cramer's "Am I Diversified?" segment, his first viewer called in with the following five stocks: Jones Soda (JSDA), Syntax-Brillian (BRLC), Freeport-McMoran (FCX), Compuware (CPWR) and AU Optronics (AUO).

Cramer pointed out a three-way pair with AU Optronics, Compuware and Syntax-Brillian. He advised keeping Freeport-McMoran and Jones Soda, throwing back the rest and getting some defense, finance and health action.

A second caller asked Cramer if he was diversified with these five stocks: UnionBanCal (UB), ConocoPhillips (COP), Pinnacle West (PNW), Piedmont Natural Gas (PNY) and TXU (TXU).

Cramer said the portfolio was "way too undiversified," and suggested ringing the register on TXU, Piedmont and Pinnacle West. Further, he advised the viewer to pick up a health care play, defense stock and "plain vanilla" manufacturer.

Cramer's last caller named the following five plays: Kraft (KFT), FedEx (FDX), BP (BP), Interactive Intelligence (ININ) and Altria (MO), which Cramer owns for his charitable trust, Action Alerts PLUS.

Cramer told the caller that once he gets rid of Kraft, and gets into another sector instead, his portfolio will be diversified.

In his "Mad Mail" segment, Cramer told a viewer that Lundin Mining (LMC) is following the same path as Yamana Gold (AUY).

Further, he said that LMC is down because it recently completed an acquisition and that he would buy it on any pullbacks.

Responding to another mailer, Cramer said he believes that Dean Foods (DF) "is going back to where it was before it paid its dividend."

He called it one of the "best managed" and "proshareholder" companies he knows.

During the "Sudden Death" round, Cramer was bullish on Disney (DIS) and Coeur d'Alene Mines (CDE). He was bearish on Hovnanian Enterprises (HOV).

Lightning Round

Cramer was bullish on Airgas (ARG), Akamai Technologies (AKAM), DivX (DIVX), Vertex Pharmaceuticals (VRTX), HealthExtras (HLEX), MedcoHealth (MHS), Express Scripts (ESRX), Terra Nitrogen (TNH), Mosaic (MOS), Sociedad Quimica (SQM), M&F Worldwide (MFW), American Ecology (ECOL), Harris (HRS), NYSE Euronext (NYX), Wheeling-Pittsburgh (WPSC), Reliance Steel (RS) and Nucor (NUE).

Cramer was bearish on Sonic Solutions (SNIC) and CMGI (CMGI).

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.