Cramer's 'Mad Money' Recap: Look Who's Toxic

TheStreet.com Staff

Some companies would benefit from the departure of their CEO, Jim Cramer said on his "Mad Money" TV show Wednesday.

The latest addition to Cramer's "Wall of Shame" is Terry Semel, CEO of Yahoo!, which Cramer has in his charitable trust, Action Alerts PLUS.

Cramer believes that Semel proved himself to be a "master of the art of overpromise and underdeliver" when his company turned in earnings Tuesday that fell short of Wall Street expectations.

"You can't raise the bar really high and then implode," Cramer says. "And you certainly shouldn't be allowed to do it repeatedly."

Sam Palmisano of IBM and Charles Prince of Citigroup also make Cramer's list of toxic CEOs. But Cramer believes that Semel deserves the top spot.

On a more positive note, Cramer says Downey Financial is the best risk/reward stock he's talked about on the show in a long time.

On Monday, Wachovia reported a good quarter, surprising critics who didn't like the company's acquisition of California-based savings and loan Golden West. The bears believed the deal gave the bank too much exposure to the mortgage meltdown.

Cramer believes that Downey can be "the next Golden West" and that the stock price could double if it becomes a takeover target.

Additionally, the stock could also go up if the Fed raises interest rates or if shorts get busted for betting against it. Right now, 40% of Downey's float is held by shorts who believe that the company will be hurt by mortgage defaults.

On the subject of mortgages, Cramer says "what was negative four weeks ago is now positive for banks." He reiterated his buy calls for Lehman Brothers, Bear Stearns and Goldman Sachs, which he owns for his charitable trust, Action Alerts PLUS.

As for Impac Mortgage, Cramer says it's "the kind of stock that could double on any good news."

'Green Day' III

Cramer continued his weeklong segment about the April 2 Supreme Court decision to allow the Environmental Protection Agency to cap greenhouse emissions, a judgment likely to benefit companies that are environmentally friendly.

His latest "Green Day" pick is auto-supplier BorgWarner, because the company is "all about controlling emissions and enhancing fuel economy, exactly what we are after in a post-Green Day world."

BorgWarner's backlog of orders is growing because of demand for products such as its fuel-efficient turbochargers, said Cramer.

Even though the company can help save the planet, some investors still might be worried about investing in an auto-parts company, he said.

But Cramer believes that BorgWarner won't be hurt by the struggling U.S. auto industry because it does most of its business with foreign automakers that are in better financial shape.

A caller remarking on all the hoopla surrounding "green" stocks, wanted to know if traditional energy sectors were peaking.

Cramer said that oil companies are "still in a multiyear expansion," but that he prefers oil service stocks such as Halliburton and Transocean, both of which he owns for the charitable trust.

Am I Diversified?

During Cramer's "Am I Diversified?" segment, the first caller owned the following five stocks: OptionsXpress(OXPS), Annaly Mortgage(NLY), Andrew(ANDW), RF Micro Devices(RFMD) and eBay(EBAY).

Cramer recommended that the caller unload Andrew and RF Micro because "they are both telecommunications and they are both bad stocks." Although, Annaly and OptionsXpress are both financials, Cramer said they could both stay because one was levered to mortgages and the other to brokerages.

The next viewer called with these stocks: Aluminum Corp. of China(ACH), Jones Soda(JSDA), Transocea, RTI International Metals(RTI) and DirecTV(DTV).

Cramer said he believed that the portfolio had "total diversification." Although he is not a fan of aluminum companies or Chinese companies, Cramer likes that ACH pays a big dividend.

The last caller wanted to know if she was diversified owning Bed Bath and Beyond(BBBY), Lowe's(LOW), Qualcomm(QCOM), Starbucks(SBUX) and Stryker(SYK).

Cramer pointed out that BBBY and Lowe's are both retailers with exposure to housing. He recommended getting rid of Bed Bath and Beyond and picking up a financial, such as Bank of America(BAC) or Goldman Sachs.

Mad Mail

During his "Mad Mail" segment, Cramer told a viewer he was not put off by Superior Offshore's plan to pay a special cash dividend to existing stockholders before making its initial public offering. He says many companies such as Burger King have been doing this without getting hurt.

Another viewer wanted to know if Southern Copper would "drop like a rock" in late April and early May, as it has done in the past. Cramer blamed the pattern on China, but said he would continue to buy PCU.

Cramer responded to another viewer's email by agreeing FuelCell Energy would benefit from the "Green Day" Supreme Court decision.

During the "Sudden Death" round, Cramer was bullish on Kroger, Exxon Mobil and MGM Mirage.

He was bearish on Hovanian.

Lightning Round

Cramer was bullish on Yamana Gold(AUY), Lundin Mining(LMC), Genco Shipping(GNK), MetLife(MET), Prudential(PRU). Manulife(MFC) eBay(EBAY), Toyota Motor(TM), Energy Metals(EMU), Mosaic(MOS), Brocade(BRCD), EMC(EMC), Ameren(AEE) and Washington Mutual(WM).

Cramer was bearish on Northgate Minerals(NXG), Northern Orion(NTO) and Uranerz Energy(URZ).

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

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