Mad Money Recap

Return to Article

Cramer's 'Mad Money' Recap: Play It Safe

TheStreet.com Staff

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

Traders need to stack up on the indestructible stocks as they ride the market down, Jim Cramer told viewers of his "Mad Money" TV show Monday.

In this brutal market, he said, investors shouldn't expect any help from the Federal Reserve, which is not cutting rates fast enough to be of any help.

"We are not at a bottom," Cramer continued, which is why people should want to be in the stocks that should go higher: namely, the indestructibles. Play it safe or risk losing a lot of money, he warned viewers.

In 1990, when the market was plagued with credit problems relating to commercial construction, the indestructibles were what worked and they should work now, Cramer said.

Right now, he said, anything having to do with mortgages or is reliant on strong consumer spending or a strong U.S. economy, and any company that has to borrow to make money are all untouchables.

He said market players should use any strength in these groups to unload these stocks. He noted the financial sector also looks risky.

Preparation and diversification are the keys that will help people make money and survive this "difficult and brutal" market, he said.

According to Cramer, this is not the time to be afraid or panic and blow out of the market. He said people should stay in the game but play cautiously because it will be harder than usual to make money.

The priorities now, he emphasized, are about downsizing risk and staying defensive. "In this market you have to protect the money you use to invest," he advised, adding it's important to maintain a cash position of at least 10%.

A Piece of Apache

A stock that could work in the current environment is the oil play Apache (APA Quote), Cramer said.

Although Cramer's been calling it the "king of the oils," Bernstein today downgraded it. Some analysts believe Apache's multiple expansion is over some, but Cramer said he believes market demand is still strong enough to sustain Apache's high multiple.

In next two months, he said there will be a lot of buyers for energy stocks again, and Apache should draw attention because of its strong growth. Oil, according to Cramer, is an industry that will be in bull-market mode for many years.

After its significant losses today, people should be thinking about owning Apache, Cramer said. People need to be careful, however. To figure out if this is the level market players should be buying the stock, Cramer welcomed Apache CEO Steve Farris to the show.

"One day does not make a market," said Farris. The company's third quarter, he said, was one of the best quarters Apache has ever seen and he expects the fourth quarter will be very good, as well.

"It's too early to write off our growth story," Farris said. Further, he said he's been building Apache for years, and this is the 22nd consecutive year of reserve growth for the company, he said.

With Apache, people have a growth stock at a time when many oils are not growing, Cramer said. He's been behind the stock since it was at $80 and advises investors to get it in as it comes down.

Wyeth CEO Speaks

Wyeth (WYE Quote) was downgraded Monday by Merrill Lynch and upgraded by Bear Stearns. Cramer believes Merrill is right, but is missing the big picture.

Merrill liked Wyeth for its valuation, vaccines and Alzheimer's drug, he said. However, Cramer noted, the pharma's Alzheimer's drug is a few steps behind its competitors.

Meanwhile, Bear Stearns is worried about Wyeth's generic risk, but Cramer believes the bear case has already been priced into the stock.

Neither report discusses the weakening economy, Cramer said. If we are headed for a recession, Wyeth's earnings should be consistent even in a bad economy, Cramer said.

Just look at Johnson & Johnson (JNJ Quote), he said. It's one of the worst in the bunch, yet it was up big, he said, adding that if Johnson & Johnson can work, Wyeth should work as well.

Moreover, Cramer said, Wyeth recently raised its dividend and has the largest big pharma buyback. It is a defensive and inexpensive stock with a great pipeline. People should consider buying, he said.

Sudden Death

During the "Sudden Death" round, Cramer was bullish on Sirius Satellite Radio (SIRI Quote), Nordstrom (JWN Quote) and Aecom (ACM Quote).

He was bearish on Acadia Pharmaceuticals (ACAD Quote).

Mad Mail

In his "Mad Mail" segment, Cramer told an emailer that while Foster Wheeler (FWLT Quote) may be expensive, its estimates are way too low for next year.

That said, right now it's good to take profits in Foster Wheeler because it's a momentum stock and all the momentum stocks are being sold right now, he said.

Responding to another viewer, Cramer agreed that if oil calms down for a bit, then it would be a good trade to buy the refiners and tanker stocks as the crack spread narrows, tanker demand increases and crude goes down.

He said he prefers the refiners, noting Marathon (MRO Quote) is his favorite.

Lightning Round

Cramer was bullish on RPM International (RPM Quote), Intel (INTC Quote), Microsoft (MSFT Quote), Cisco (CSCO Quote), Baidu.com (BIDU Quote), Google (GOOG Quote), AT&T (T Quote), Aecom (ACM Quote), Foster Wheeler (FWLT Quote) and First Solar (FSLR Quote). Jakks Pacific (JAKK Quote).

Cramer was bearish on Diageo (DEO Quote), AirMedia Group (AMCN Quote), Citrix Systems (CTXS Quote), Amazon.com (AMZN Quote), BE Aerospace (BEAV Quote), Mattel (MAT Quote), Riverbed Technology (RVBD Quote) and MEMC Electronic Materials (WFR Quote).

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.