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Cramer's 'Mad Money' Recap: Solid St. Jude

TheStreet.com Staff

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It's important that investors learn from mistakes, and Jim Cramer told viewers of his "Mad Money" show Friday that he made one on St. Jude Medical (STJ Quote).

Cramer had called St. Jude Medical a sell during the show's "Lightning Round" segment on Thursday. "I was dead wrong to say anything but that it is a screaming buy," he said. "I had a misapprehension about this great company."

St. Jude makes defibrillator leads, small electrical wires that connect implantable cardiac defibrillators to patients' hearts, Cramer explained. Recently, Medtronic (MDT Quote), which also manufacturers leads, recalled its leads because cracks were detected on some of them.

This should have been good for St. Jude, but instead Cramer said he and the rest of the market thought the stock was a sell based on this news. He wrongly thought all thin leads for defibrillators had a problem.

St. Jude's lead business is not growing that fast, but the stock should rise, because Medtronic seems to be out of the game for now, Cramer said. Plus, he said, St. Jude is not sensitive to the economy, which is what people should be looking for right now.

St. Jude lost seven points when its competitor had to recall its leads, but it should have gone up seven, Cramer said.

All Aboard CSX

There are companies like YRC Worldwide (YRCW Quote) and FedEx (FDX Quote) that are down significantly, yet no one's asking questions, Cramer said.

Then the railroads, specifically CSX (CSX Quote), a stock that is up 17% for the year, are being badgered.

The Children's Investment Fund, a London-based asset management firm, has been writing angry letters, urging CSX to revamp its governance. But as far as Cramer can tell, CSX CEO Michael Ward has done nothing but make his shareholders richer.

So why are hedge funds letting companies like YRC Worldwide and FedEx get by and picking on CSX? Ward joined Cramer on the show to shed some light.

"We're very proud to stand by our record," Ward said, noting CSX has tripled its dividend during his tenure and has a strong buyback program, "I don't get it either."

When Cramer asked if TCI is motivated by CSX spending too much on the company rather than giving back to shareholders, Ward said the capital CSX spends is "very much in line with the rest of the industry."

The board did a thorough analysis of all the various claims that TCI had lodged and went through the various suggestions they proposed, Ward said. However, none of their ideas made sense, and some hurt the industry, he said.

"We've really been working hard for our shareholders for the last three years" and Ward said they will continue to do so.

There are so many CEOs Cramer said he can't stand, and he doesn't understand why TCI is picking on one that's making market players money. "I say buy CSX," he said.

Game Plan

Right now, in an up-and-down market, Cramer told viewers he doesn't feel confident enough to suggest an individual stock to invest in.

However, after listening to CEO John Stumpf's speech at Wells Fargo (WFC Quote) about sinking housing prices and how the U.S. housing market hasn't been this bad since the Great Depression, Cramer said he had a vision.

"I couldn't stop thinking that if Wells Fargo is the best [in its group] and things are so bad for them, what about the other financials," he said. Cramer stressed that although he doesn't believe in the bear case, people must be prepared for the worst.

For now he advised investors to stay away from Countrywide Financial (CFC Quote), Washington Mutual (WM Quote), Downey Financial (DSL Quote), E Trade (ETFC Quote), Centex (CTX Quote), Beazer Homes (BZH Quote), Pulte Homes (PHM Quote), Standard Pacific (SPF Quote), Ambac (ABK Quote), MBIA (MBI Quote), PMI Group (PMI Quote) and MGIC (MTG Quote).

Instead, Cramer recommended viewers stay defensive with companies like Avon (AVP Quote), Colgate (CL Quote), Altria (MO Quote), which he owns for his charitable trust, Action Alerts PLUS, Clorox (CLX Quote), Coca-Cola (KO Quote) and MedcoHealth (MHS Quote).

Cramer said he can't imagine that the Federal Reserve will let the current credit situation overwhelm the economy. If there's a financial crisis and any one of the previously mentioned financials, homebuilders or mortgage insurers goes bankrupt, the Fed should cut rates, he said.

Lundin Calling

While mining stocks like CVRD (RIO Quote) and BHP Billiton (BHP Quote) have been working, Lundin Mining (LMC Quote) has not been, Cramer said.

The stock is "down badly" after reporting a quarter the Street didn't like, he said. Should people back up the truck or get rid of it? To answer the question Cramer called on CEO Karl-Axel Waplan.

Lundin Mining's long-term growth story still in tact, Waplan said. "We are headed in the right way." The CEO said Lundin Mining is making the money it should, and as its production continues to grow, he expects the company will make even more money in the future.

"You have to hold on to it," Cramer said of Lundin Mining. It has been a tough ride, but people can't just walk away. At the same time, he said investors also shouldn't pull trigger to buy more of the stock until they see another quarter.

Lightning Round

Cramer was bullish on Verizon (VZ Quote), AT&T (T Quote), Textron (TXT Quote), Costco (COST Quote), GameStop (GME Quote), Google (GOOG Quote), Olin (OLN Quote) and Cisco (CSCO Quote).

Cramer was bearish on MasterCard (MA Quote), Blockbuster (BBI Quote), CMGI (CMGID Quote), MetroPCS Communications (PCS Quote), Macy's (M Quote) and Art Technology Group (ARTG 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.

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