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Cramer's 'Mad Money' Recap: Verizon's Horizon Sunny

TheStreet.com Staff

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"We want stocks that have no exposure to the pain in the economy and the credit market," Jim Cramer told viewers of his "Mad Money" TV show Tuesday. "We want something that looks like Verizon (VZ Quote)."

Nothing that's going on right now should affect this company, he said. Not only are they blowing away competition, but they're also changing the game in wireless.

Fiber-optic service is a huge growth story for Verizon, the kind of story that can sustain the company's "big, fat" yield, Cramer said. But, the real backbone behind the success of the company is Verizon's CEO Ivan Seidenberg.

Cramer called on Seidenberg and asked him to explain why FiOS is so popular.

People love the quality of the pictures and the triple-play aspect of it, Seidenberg said.

Further ore, when people go back far enough, they'll see that Verizon has always tended to underestimate the consumer demand power of new technology, he said. For example, he said Verizon handled 25 billion text messages across its network in the last month alone.

When Cramer asked about video on cell phones, Seidenberg said he believes that will be a big deal. He believes consumers will enjoy watching sports and news clips and downloading videos on their cell phones.

He said it's important for Verizon to raise the dividend next year. He said he expects the company will have the ability to expand margins in 2008 and 2009 and give great returns to shareholders.

Cramer called Verizon the stock for the year, saying he likes it more than AT&T (T Quote).

Piggybacking Verizon

A company that should benefit from Verizon's pin action is ADC Telecom (ADCT Quote), Cramer told viewers.

He said the company makes broadband network equipment that handles Internet, voice, data and video connections for telecom and cable industries. The upside now is that it is generating a lot of revenue from wireless sales and fiber-connectivity.

Cramer said he was previously reluctant to get behind ADC Telecom because the spending cycle for its products was erratic, but that's not true any more. In fact, now that there is a TV war ensuing between cable and telecom companies, ADC Telecom stands to gain because it is supplying both sides with equipment.

ADC Telecom recently reported a huge quarter because of high fiber-connectivity sales, he added. Plus, with its 10% long-term growth rate and a balance sheet that's "pretty good," Cramer believes it has more room to grow.

A Nose for Good Loans

Right now, banks are busy unloading mortgage-backed paper off their balance sheets, Cramer said. While some of this paper is toxic, not all of it is bad, he noted. Because not all the banks have the time to go through all the paper, some are throwing out the babies with the bath water.

One stock that has the luxury to pick among the rubble and buy good paper and whose sole existence is to capitalize off this situation is Chimera Investment (CIM Quote), Cramer said.

CIM, which went public on Nov. 16, was designed to feast off good paper because the banks have no choice but to unload it all, he said. It is one of the select few companies that have the money and knowledge to take advantage of the current situation, he added.

Since CIM became public, neither the company nor the stock has done anything, Cramer said. What they're waiting for is a bottom, and he said he wants investors in it before they start taking action.

Cramer said he expects CIM to buy only the good stuff that the banks cannot hold on to and profit from.

CIM, he said, is externally managed by a subsidiary of Annaly Capital Management (NLY Quote) and thus, Cramer believes Annaly CEO Michael Farrell, the so-called "king of mortgages," has what it takes to lead the stock higher.

However, as CIM is a small-cap stock, he recommended people buy it in increments and use limit orders. Also, don't buy it right away, Cramer warned.

Mad Mail

In his "Mad Mail" segment, Cramer explained to viewers that in the 1980s and the 1990s, the great growth stocks never thought about paying dividends. But when their growth slowed down, they started to paid dividends to attract more buyers.

Transocean (RIG Quote), which he owns for his charitable trust, Action Alerts PLUS, he said, doesn't want to pay a dividend, but is a growth stock and growth is what the Street loves.

Responding to another question, Cramer said he considers both Medco Health Solutions (MHS Quote) and Express Scripts (ESRX Quote) great stocks.

He said he wouldn't switch out of ESRX to get into MHS because he once owned ESRX for his charitable trust and made a lot of money with it. But that said, Cramer said he likes MHS a little bit more.

Lightning Round

Cramer was bullish on GameStop (GME Quote), Disney (DIS Quote), Caterpillar (CAT Quote), BioMarin Pharmaceutical (BMRN Quote), Deere (DE Quote), Agrium (AGU Quote), Hain Celestial (HAIN Quote), CVRD (RIO Quote), Freeport-McMoRan (FCX Quote) and Petroleo Brasileiro (PBR Quote).

Cramer was bearish on US Bancorp (USB Quote), Amgen (AMGN Quote), DryShips (DRYS Quote), E*Trade (ETFC Quote), Asta Funding (ASFI Quote) and United Natural Foods (UNFI Quote).

Want more Cramer? Check out Jim's rules and commandments for investing by clicking here.

For more of Cramer's insights during the Lightning Round, click here.