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Cramer's 'Mad Money' Recap: Cramer's Picks for 2008

TheStreet.com Staff

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Altria(MO Quote), one of Jim Cramer's top nine stock picks in 2007, should do very well in 2008 as the company splits into separate international and domestic companies, he told viewers on his "Mad Money" TV show on Wednesday.

On the other hand, if people decide to stick with Goldman Sachs(GS Quote), which Cramer owns for his charitable trust, Action Alerts PLUS, they shouldn't expect much from it, he said. Goldman is a good stock in a crummy neighborhood. Although 2008 should be the year the Fed pulls the financials out of this mess, progress will be slow, he said.

Halliburton(HAL Quote), he continued, should work again. However, it is more of a natural gas play, and Cramer said he'd rather viewers get into another natural gas stock -- one he will mention on Thursday's show.

Cisco(CSCO Quote), he expects, will be only "a marginal performer." Cramer said he prefers his four horsemen of tech -- Amazon (AMZN Quote), Research In Motion (RIMM Quote), Apple (AAPL Quote) and Google (GOOG Quote) --although he feels Amazon is a sell here.

As for NYSE Euronext(NYX Quote), Cramer said he believes it's going to have a great year. "Maybe people will recognize it's more of a play on Europe this year," he said. It did everything it was supposed to do, but still got beat up, Cramer said. However, under the leadership of Duncan Niederauer, the NYSE should have a good 2008.

BioMarin(BMRN Quote), he added, should still work as it has a good pipeline.

Before Cramer can bless Rite Aid(RAD Quote), he said he needs to see a couple of good quarters from it. On Level 3 Communications(LVLT Quote), Cramer said he likes it because video on the Web is growing. Plus, the company's CEO, James Crowe, is back after recovering from an illness.

What Worked in 2007

Even though the market was down on the first trading day of 2008, "there's always a bull market kicking around somewhere," Cramer told viewers.

The oil, infrastructure and ethanol markets, he said, are looking good, and gold is skyrocketing. Cramer said he likes Yamana (AUY Quote) and Barrick (ABX Quote) out of the gold stocks.

Last year, his 2007 stocks of the year, on average, beat the S&P, but Cramer said he learned a few lessons from these picks.

For value, Cramer said he liked Halliburton, Goldman Sachs and Altria. All of these stocks were up big.

For growth, he liked Cisco, NYSE and Apple. Here, while Apple had a stellar performance, Cisco and NYSE were down, he said.

Finally,Savient Pharmaceuticals (SVNT Quote), BioMarin, Rite Aid and Level 3 Communications were his speculative picks for the year, Cramer said.

The first lesson he learned from these is the importance of sticking with the winners. "As long as Apple keeps growing at 30, I'm on board," he said.

The second takeaway, Cramer said, is that the worst stocks in a strong sector can be buys. Lesson No. 3 is that slow and steady stocks can win the race. Although there was nothing exciting about Altria, this stock "beat the averages handily."

Cramer said he also wants viewers to note that high-risk stocks like biotech plays could yield a huge return.

Painful Lessons

Two of the big losers from his 2007 picks of the year were Rite Aid and Level 3, Cramer told viewers.

However, he noted that these stocks went down after rising significantly. The lesson to be drawn from this is that "when you have a gain in speculative stocks, you have to sell them," Cramer said.

Another lesson viewers can learn from his picks are that even the best stocks in difficult neighborhoods have trouble fighting the undertow. The best example here is Goldman Sachs, Cramer said. No one wanted to own the financials, even a good one like Goldman.

From NYSE, he said he learned that investors can't make money by being contrarians. Although NYSE was undervalued, Cramer said he didn't take into account how loathed it was on the Street.

The next lesson, he said, is to beware of speculative stocks with bad balance sheets like Rite Aid and Level 3.

Also, cheap tech stocks don't necessarily pay up, Cramer noted. Even though Cisco had a lower multiple compared to Apple, Apple was worth paying up for.

The market is too fickle, and predictions right now require too many people to make too many right decisions. Therefore, Cramer said he's not going to be making any broad, sweeping predictions this year. But he will continue to let people know what he's feeling could happen six to 18 months into the future.

"Learn from my mistakes in 2007 and you'll do even better in 2008," Cramer said.

Sudden Death

During the "Sudden Death" round, Cramer was bullish on Consol Energy (CNX Quote), Freeport McMoRan (FCX Quote), which he owns for his charitable trust, Yamana Gold and Barrick Gold.

Mad Mail

In his "Mad Mail" segment, Cramer told an emailer that when he mentions buying a stock on a pullback, his general preferred range is 8% to 10% of a pullback.

Lightning Round

Cramer was bullish on Raytheon (RTN Quote), Citigroup (C Quote), St. Jude Medical (STJ Quote), CR Bard (BCR Quote), Becton Dickinson (BDX Quote), Banco Santander (STD Quote), Onyx (ONXX Quote) and ITT (ITT Quote).

Cramer was bearish on Allegheny Technologies (ATI Quote), Thomson (TOC Quote), SanDisk (SNDK Quote), ev3 (EVVV Quote), Pitney Bowes (PBI Quote) and Wells Fargo (WFC 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.