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Cramer's 'Mad Money' Recap: Nvidia on Spec

TheStreet.com Staff

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"This, alas, is Speculation Friday, where we in Cramerica extol the dangers of risk and recklessness," Jim Cramer told viewers of his "Mad Money" TV show.

"It's vital that you hold some high-risk stocks as part of a diversified portfolio," he said, and he offered CV Therapeutics (CVTX Quote) and Nvidia(NVDA Quote) as examples.

Cramer added CVTX to his biotech speculative buy list, calling it a little $11 stock and a "battleground." It makes small molecule drugs for cardiovascular diseases, and as of May 10, 36% of the float had been sold short.

However, "the bear case doesn't hold up under any scrutiny," he assured people.

There are two ways market players can win here: Either the earnings explode, bringing CVTX's price to the mid-$20s, or it gets taken over, Cramer said.

First, he believes that CVTX is a "win" on its Ranexa drug, of which it owns 100% of the rights. Cramer said he feels sales for Ranexa could skyrocket.

And that's not the only thing driving earnings. CVTX's Regadenoson drug is in the last stage of its development and should be approved in 2008. If the drug does get approved, CVTX will get 20% of the royalties, Cramer said.

The combination of these two drugs should send stock higher.

Also, CVTX's pipeline could attract a buyout offer from a big pharma that would rather buy a smaller company than develop its own drugs.

"You could get a double here, or you could get cut in half," he said. But the former possibility is more likely, Cramer said. He stressed that the stock is risky and that he wouldn't buy it after hours.

Tech on Spec

Cramer told viewers that he frowns upon buying tech stocks this early in the year. However, Cramer said he does have a speculative tech name people might want to consider getting into: Nvidia

The stock, Cramer said, hit its 52-week high today of $39.85, but it should still go higher. NVDA is "one of the few winners in the PC supply chain" and "one of a handful of tech stocks that have momentum right now," he said.

Cramer believes that NVDA is surpassing its competition with its new processors and that, as a maker of graphic chips, it could profit from supporting the growing gaming industry.

Moreover, he said that NVDA is also benefiting from the fact that it is levered toward Intel (INTC Quote) laptops.

The lack of support from analysts, he said, surprises him. But Cramer believes that more analysts should upgrade their stance on NVDA and send the stock much higher

Further, even though the PC market has been a "treacherous" place over the last year, NVDA has managed to beat its estimates for the last four quarters, Cramer said. Plus, it has a billion-dollar buyback, which is pretty impressive for a company of its size.

Mad Mail

In his "Mad Mail" segment, Cramer told a mailer he is feeling very "hoggish" with Crocs (CROX Quote) and endorsed selling some of the stock. Also, he said he is worried that Crocs didn't participate in the rally during the last couple of days.

Responding to another viewer, Cramer said he believes that Level 3 Communications' (LVLT Quote) bandwidth-shortage story is still on. "I would pull the trigger right here," he said.

Moreover, Cramer called Sears (SHLD Quote), which he owns for his charitable trust, Action Alerts PLUS, a "must own," and he said he would stick with Costco (COST Quote).

Game Plan

In April, Cramer said, he did a series about likely private-equity buyouts. Today, one of the stocks he had mentioned as a potential buyout candidate in that series, Penn National Gaming (PENN Quote), announced that it is being acquired by Fortress Investment Group (FIG Quote) and Centerbridge Partners.

This, Cramer said, encourages him to advise people to go out and buy Cheesecake Factory (CAKE Quote), TJX (TJX Quote) or Ross Stores (ROST Quote) next week as other potential buyouts.

Cramer suggested people take a little Taser (TASR Quote) off the table.

During his "Game Plan" segment, Cramer said he believes that next week the Paris Air Show -- a "glorified fashion show" -- should bring some attention to the aerospace sector. Here he said he likes Boeing (BA Quote) and BE Aerospace (BEAV Quote).

Moreover, Cramer also said he likes defense stocks Raytheon (RTN Quote), Alliant Techsystems (ATK Quote) and Lockheed Martin (LMT Quote). The Democrats, he said, have to prove they are tough on terrorism, so Cramer doesn't believe that they will stop spending money in the sector.

Moving on, Cramer recommended getting out of Tyco (TYC Quote) on Tuesday, because he doesn't see much upside left there. He said he is sick of Qualcomm's (QCOM Quote) underpromising.

Concerning next week's earnings, Cramer said he likes Darden (DRI Quote) and Morgan Stanley (MS Quote) but said he's not interested in Circuit City (CC Quote) or FedEx (FDX Quote).

Lightning Round

Cramer was bullish on Halliburton (HAL Quote), Kraft Foods (KFT Quote), Switch & Data Facilities (SDXC Quote), Office Depot (ODP Quote), Sony (SNE Quote), Canon (CAJ Quote), GOL Linhas Areas Inteligentes (GOL Quote) Colgate-Palmolive (CL Quote) and Prudential (PRU Quote).

Cramer was bearish on Superior Energy Services (SPN Quote), Build-A-Bear Workshop (BBW Quote), Investools (SWIM Quote), Southwest Airlines (LUV Quote), JetBlue Airways (JBLU Quote) and Procter & Gamble (PG 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.