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Cramer's 'Mad Money' Recap: Riding Out the Bottom

TheStreet.com Staff

Click here for an archive of Cramer's "Mad Money" recaps.

"At the bottom, things can go right," Jim Cramer told viewers of his "Mad Money" TV show Thursday.

To bring that point home, he revisited his "Mortgage Madness Index," an index of financial and homebuilding stocks that he created on Aug. 3. The index has been more than cut in half since then, but Cramer now feels "the bottom is in" for some of the most hated names on the list.

First up, Countrywide Financial (CFC). Cramer said he likes all the chatter about a possible acquisition of Countrywide by Bank of America (BAC). He hopes investors picked up some of the preferred shares of Countrywide on his earlier recommendations.

Next up, Washington Mutual (WM). Cramer feels the company could be a takeover target and is now turning positive on WaMu.

As for Citigroup (C), Cramer says it will make a lot of money if the Federal Reserve continues to cut rates. Citigroup is a stock that he owns for his Action Alerts PLUS portfolio.

Cramer is also warming up to Bear Stearns (BSC), but still prefers Merrill Lynch (MER).

In the homebuilding space, Cramer now likes KB Homes (KBH) and Centex Homes (CTX), but feels Beazer (BZH) is "still too troubled."

In the mortgage insurance space, Cramer says he's no longer a seller of MGIC Investment (MTG) and MBIA (MBI) but would not necessarily be a buyer at these levels, either.

That's also the case for Blackstone (BX). Cramer recommends holding shares already owned, but would not buy more.

And finally, Cramer said he would be a buyer of Thornburg Mortgage (TMA), but only the preferred shares, which he believes would see a greater return if the company were to get a takeover bid.

Making Money From Bankruptcies

If you believe the Federal Reserve won't cut rates fast enough and a recession is likely, Cramer recommends EPIQ Systems (EPIQ) as "the ultimate hedge against prosperity."

EPIQ, Cramer says, makes its money from bankruptcies and foreclosures. The company has 38% sales growth, but trades at less than twice its growth rate, which Cramer says makes it a cheap stock.

The company also recently completed a secondary offering to provide itself with adequate liquidity to take advantage of increasing bankruptcies, which according to Cramer, makes EPIQ the best play if a recession does come.

It's All in the Brands

Cramer welcomed Eric Wiseman, the new president of VF Corp. (VFC) to the studio to discuss the current retail environment. While many retailers are struggling, VF Corp. appears to be firing on all cylinders.

Wiseman said the retailer's strength lies in the diversity of its brands, channels, and products. He also notes international sales, which currently account for 30% of its sales, are still growing strong.

He attributed the company's lack of markdowns to its marketing and technology, which allows it to better give customers what they want. He also said the company's lifestyle brands, such as Wrangler, Northface, Nautica and Vans are some of the company's strongest segments.

Cramer said he's normally leery of new CEOs, but feels Wiseman is the exception.

Lightning Round

In the Lightning Round, Cramer was bullish on TransCanada (TRP), Flextronics (FLEX), Sears Holdings (SHLD), Symantec (SYMC), Starbucks (SBUX), Intel (INTC), PetroChina (PTR), Focus Media (FMCN), Baidu.com (BIDU) and China Mobile (CHL)

Cramer was bearish on Jabil Circuit (JBL), VeriSign (VRSN), Green Mountain Coffee Roasters (GMCR), Zions Bancorp (ZION), Cree (CREE) and Waste Management (WMI)

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.