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Cramer's 'Mad Money' Recap: Gone Bottom-Fishin'

TheStreet.com Staff

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The current situation looks a lot like 1990 did at the bottom of one of the worst recessions the market has ever seen, Jim Cramer told viewers of his "Mad Money" TV show Wednesday.

Cramer urged investors to take a page out of the playbook he used then, and look for stocks to buy.

In 1990, Prince Alwaleed of Saudi Arabia bought a major stake in Citigroup (C - Cramer's Take - Stockpickr), a stock Cramer owns for his charitable trust, Action Alerts PLUS, to make it solvent, he said. This time Abu Dhabi is buying a small stake in the bank.

In a similar vein, the Fed finds itself in the same situation it was in then, when it realized it had to get involved and ease rates. Moreover, as the financials collapsed over a six-month period in 1990, the Dow declined 11% and bottomed, Cramer said. Right now the index is down by more than 10%.

During 1990, colossal banks merged, Cramer said. Today, market players learned Bank of America (BAC - Cramer's Take - Stockpickr) is talking about getting together with Citigroup.

All of these signs mean the financials are beginning to bottom now, Cramer said.

"We've been operating on the 1990s playbook for months in Cramerica and we cannot ignore it now," he said. Not everything bottomed in 1990 and not everything will bottom now, but people must get more positive and look for things to buy, Cramer said.

In 1990, Citigroup worked, but right now Goldman Sachs (GS - Cramer's Take - Stockpickr), which he also owns for his charitable trust, is the best of the financials and should be bought, Cramer said. People should also consider getting into Apple (AAPL - Cramer's Take - Stockpickr), Research In Motion (RIMM - Cramer's Take - Stockpickr) and Google (GOOG - Cramer's Take - Stockpickr).

For the short term, Intuitive Surgical (ISRG - Cramer's Take - Stockpickr) and Amazon (AMZN - Cramer's Take - Stockpickr) work, he added.

Cramer also said he sees a hidden trend in natural gas. There his favorite plays are Halliburton (HAL - Cramer's Take - Stockpickr) and XTO Energy (XTO - Cramer's Take - Stockpickr), which he owns for Action Alerts PLUS, Cramer said.

Furthermore, in the video-game arena, he said he likes Electronic Arts (ERTS - Cramer's Take - Stockpickr) and Activision (ATVI - Cramer's Take - Stockpickr).

"The 1990 playbook hasn't steered us wrong yet," Cramer said. It's time to spend less time worrying about losing money and spend more time looking for opportunities.

Gen-Probe an Exciting Story

If market players want "protection combined with a really long-term trend," the best place to look is diagnostics, Cramer said. "These stocks are the holy grail of defense [and] are the ultimate health care-cost containment names out there."

Gen-Probe (GPRO - Cramer's Take - Stockpickr), which has a fast technology for detecting infectious microorganisms, is a diagnostics company Cramer likes.

Recently, the company's trial of a new HPV test was pushed back a quarter, and its food-testing deal with partner 3M (MMM - Cramer's Take - Stockpickr) fell apart, Cramer said. Consequently, the stock went from $72 to $65.

Cramer brought on Henry Nordhoff, the CEO of Gen-Probe, to explain what happened with 3M.

"3M is a fantastic company, [but] we just had a difference of opinion," Nordhoff said.

After doing some research, 3M believed that when its and Gen-Probe's profits were added to the cost of making the food-testing product, the price point would be too high, the chief said. However, half the food processors in the business hold inventory while they're waiting for test results, and Nordhoff believes these companies would be willing to pay more to offset the cost of food going bad because of delays.

Further, the HPV test has become a problem only because the Food and Drug Administration keeps changing its rules and trying to come up with a gold standard for HPV testing, Nordhoff said.

These two negatives are why the stock has come down, Cramer said, and they already are priced into Gen-Probe. However, the positives of two tests the company has for prostate cancer are not priced in, he said. Therefore, the stock should go up.

Cramer called Gen-Probe "a very exciting" story that is also safe.

Am I Diversified?

During the "Am I Diversified?" game, Cramer's first caller named the following five stocks: Intuitive Surgical, ValueClick (VCLK - Cramer's Take - Stockpickr), AT&T (T - Cramer's Take - Stockpickr), Saks (SKS - Cramer's Take - Stockpickr) and Hologic (HOLX - Cramer's Take - Stockpickr), a stock Cramer owns for his charitable trust.

Cramer suggested the caller get out of Intuitive Surgical or Hologic and pick up a defensive stock instead.

The second caller asked if he was diversified with these five plays: ING (ING - Cramer's Take - Stockpickr), Google (GOOG - Cramer's Take - Stockpickr), Anheuser-Busch (BUD - Cramer's Take - Stockpickr), Bank of America (BAC - Cramer's Take - Stockpickr) and Sirius Satellite Radio (SIRI - Cramer's Take - Stockpickr).

Cramer said the caller shouldn't have two banks in his portfolio. He advised the caller to sell ING and pick up a defensive play.

The last caller said she owned these five: Kraft Foods (KFT - Cramer's Take - Stockpickr), Tyco (TYC - Cramer's Take - Stockpickr), Lexmark (LXK - Cramer's Take - Stockpickr), Garmin (GRMN - Cramer's Take - Stockpickr) and Pfizer (PFE - Cramer's Take - Stockpickr).

Cramer blessed the portfolio as diversified.

Sudden Death

During the "Sudden Death" round, Cramer was bullish on First Solar (FSLR - Cramer's Take - Stockpickr), Monsanto (MON - Cramer's Take - Stockpickr), and CVS (CVS - Cramer's Take - Stockpickr), which he owns for his charitable trust, and AT&T.

He was bearish on Evergreen Solar (ESLR - Cramer's Take - Stockpickr), American Oriental Bioengineering (AOB - Cramer's Take - Stockpickr), China Nepstar Chain Drugstore (NPD - Cramer's Take - Stockpickr) and Virgin Mobile (VM - Cramer's Take - Stockpickr).

Mad Mail

During the "Mad Mail" segment, when an Office Depot (ODP - Cramer's Take - Stockpickr) employee asked if he should keep buying ODP stock as it gets cheaper. Cramer recommended against it and told him to diversify his holdings.

Lightning Round

Cramer was bullish on First Solar (FSLR - Cramer's Take - Stockpickr), Costco (COST - Cramer's Take - Stockpickr), Blue Coat Systems (BCSI - Cramer's Take - Stockpickr), Boeing (BA - Cramer's Take - Stockpickr), XTO Energy (XTO - Cramer's Take - Stockpickr), ConocoPhillips (COP - Cramer's Take - Stockpickr), Nike (NKE - Cramer's Take - Stockpickr), Garmin (GRMN - Cramer's Take - Stockpickr), Yum! Brands (YUM - Cramer's Take - Stockpickr), Chipotle Mexican Grill (CMG - Cramer's Take - Stockpickr) and Layne Christensen (LAYN - Cramer's Take - Stockpickr).

Cramer was bearish on LDK Solar (LDK - Cramer's Take - Stockpickr), TXCO Resources (TXCO - Cramer's Take - Stockpickr), Smithfield Foods (SFD - Cramer's Take - Stockpickr) and American Railcar (ARII - Cramer's Take - Stockpickr).

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.