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Cramer's 'Mad Money' Recap: Retreat to Defensive Stocks

TheStreet.com Staff

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The Federal Reserve refused to acknowledge the gravity of problems in the financial system when it cut rates by a "dinky" quarter-point, Jim Cramer told viewers of his "Mad Money" TV show Tuesday.

Cramer said he was disappointed, saddened and angered by the action. The market needed to see that the Fed understands what's going on, but it's clear, Cramer said, that the Fed is not going to lead investors out of the woods here.

The Fed, he said, is not made up of bold people. They "dreadfully misunderstand" the seriousness of the current crisis, Cramer said. What people needed was a morale boost, but instead now they know that the Fed appears to be out of touch with reality.

Cramer said even his favorite stocks -- Apple (AAPL) and Research In Motion (RIMM) -- can languish in the hands of a clueless Fed.

Because of the Fed's recklessness, it's time to return to the 1990 playbook, he said. Cramer said the Fed didn't do what investors wanted, so now they have to go back to buying defensive stocks like Coca-Cola (KO), PepsiCo (PEP), Merck (MRK) and Altria (MO), the last of which he owns for his charitable trust, Action Alerts PLUS.

"Don't panic, but take cover in recession stocks," Cramer said.

The Fourth Horseman in China

Now that the Fed has shown how clueless it is, Cramer told viewers he's resuming his title as an "international pimp." He said he has a great foreign growth story which, even though will be down like everything else in the market tomorrow, is something people should consider buying.

The stock, he said, is Focus Media (FMCN), one of his four horsemen of China. The other three horsemen, he said, are Baidu (BIDU), PetroChina (PTR) and China Mobile (CHL).

Focus Media owns the Chinese advertising market, Cramer said. Yesterday, the company announced an agreement to buy CGEN Digital, its biggest competitor in in-store digital advertising. The deal is monopolistic, a quality he said he likes and one which Focus Media should gain from.

In addition, Cramer said Focus Media has become the largest Internet advertiser in China after it bought Allyes AdNetwork, an Internet advertising company, earlier this year. Going forward, Cramer said he wouldn't be surprised if Google (GOOG) tried to buy a stake in Focus Media to get into the advertising market in China.

Cramer said the stock has come down because of concerns that its margins could be hurt because of its recent acquisitions. However, he believes the company's margins should improve dramatically next year when the acquisitions are integrated.

The market is nervous about Focus Media's acquisitions, but Cramer said he's not.

That said, the stock has the potential to come down because of the integration risk, but if people see an opportunity to get in, they should take it, he said. He said the stock, which closed at $54.86 on Tuesday, could move to $75 next year.

Investing in Helium

Right now the money is in helium, and that means it's time to look at pulling the trigger on Air Products & Chemicals (APD).

Last week, there was a story in The Wall Street Journal about a global helium shortage, Cramer said. Helium is found only in a few places, and one of the largest supplies is expected to run out in eight years, Cramer said.

One of Air Products' smaller competitors recently raised its prices, and now Air Products has the opportunity to do the same, Cramer said. The stock is a couple of points from its high, and right now is a good opportunity to get in it because of a recent downgrade from JPMorgan.

APD has already gone from $80 to $100 and now it's time to take it to $120 and beyond, Cramer said.

Stick With Celgene

After the 49th Annual American Society of Hematology conference over the weekend, Celgene (CELG) recently dropped 11 points over two trading days. To make sense of this and talk about Revlimid and its rival drug Velcade, Cramer welcomed the company's COO Bob Hugin to the show.

Celgene's multiple myeloma drug Revlimid, Hugin said, has "unprecedented survival rates" and the longest duration of response. He said the future of the drug is "very bright."

Hugin also called Millennium's (MLNM) multiple myeloma drug Velcade a good drug. However, he said the data for Revlimid is "compelling" and "will speak for itself over time."

There's room for many drugs treating cancer, but Revlimid, Hugin said, is already successful across the world.

Cramer told viewers he's staying with Celgene.

Lightning Round

Cramer was bullish on Greif (GEF), Focus Media (FMCN), Allos Therapeutics (ALTH), Hewlett-Packard (HPQ), Eastman Kodak (EK), America Movil (AMX), Dynegy (DYN), Yamana Gold (AUY), Barrick Gold (ABX), Sirius Satellite Radio (SIRI), Dominion Resources (D) and Bankrate (RATE).

Cramer was bearish on Countrywide Financial (CFC), Xerox (XRX), First Marblehead (FMD), CIT (CIT), Speedway Motorsports (TRK), Big Lots (BIG), Coeur d'Alene Mines (CDE), XM Satellite Radio (XMSR) and Intuit (INTU).

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.