Mad Money Recap

Return to Article

Cramer's 'Mad Money' Recap: Playbook for a Bottom

TheStreet.com Staff

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

"What do you call a 600-point swing to the upside after retesting a low?" Jim Cramer asked viewers of his "Mad Money" TV show Wednesday. "A bottom!" he replied.

Cramer reminded viewers that no one ever made a dime panicking, and now is the time in the cycle when the laggards become winners again. Cramer said the financials and retailers will lead the charge higher from here.

In the financial sector, Cramer recommends investors stick with stocks that haven't cut their dividends. He also noted that Citigroup (C Quote - Cramer on C - Stock Picks), which he also owns for his Action Alerts PLUS portfolio, may have bottomed.

All of these stocks have been cut by more than half, Cramer says, and that's the metric he's been waiting for.

In the retail sector, Cramer likes TJ Maxx (TJX Quote - Cramer on TJX - Stock Picks), along with Costco (COST Quote - Cramer on COST - Stock Picks), Guess (GES Quote - Cramer on GES - Stock Picks), J. Crew (JCG Quote - Cramer on JCG - Stock Picks) and CVS Caremark (CVS Quote - Cramer on CVS - Stock Picks), which he also owns for his Action Alerts PLUS portfolio.

Cramer still expects the markets to pull back in the next few days, but says investors should use any weakness to start buying. "The times are changing," he said, "and this time you should be ready."

Investing Off a Playbook

In times of high volatility, Cramer suggests investors have a list of stocks to buy, one that they can execute at the appropriate time.

With this playbook, investors avoid the common mistake amateurs make when they sell low and buy high during wild market swings, he says.

Cramer also says it pays to look for companies with proven track records that don't represent earnings risks.

Two stocks on the buy list, Cramer says, should be IBM (IBM Quote - Cramer on IBM - Stock Picks) and DuPont (DD Quote - Cramer on DD - Stock Picks). Cramer said these two stocks are the safest industrials to buy.

IBM, Cramer notes, reported a stellar quarter last Friday, beating estimates by 12 cents a share. In a better market, he says, the stock would be at $120 a share.

Cramer said he likes IBM for several reasons, including the company's strong international growth, its $118 billion backlog, and its strategy of making small, strategic acquisitions when the market timing is optimal.

Cramer likes DuPont because it also beat estimates by 8 cents a share and reaffirmed its guidance for fiscal 2008. He notes that there is a lot of room for analysts to upgrade DuPont in the near future.

Cramer also likes DuPont's 3.8% dividend yield and its stock buyback. DuPont, he says, works because of its overseas growth. He recommends buying the stock on any signs of weakness.

Am I Diversified?

In this segment, the first caller listed Boeing (BA Quote - Cramer on BA - Stock Picks), Transocean (RIG Quote - Cramer on RIG - Stock Picks), Potash (POT Quote - Cramer on POT - Stock Picks), Shaw Group (SGR Quote - Cramer on SGR - Stock Picks) and Apple (AAPL Quote - Cramer on AAPL - Stock Picks) as his top holdings.

Cramer liked all of those companies and said this portfolio was diversified.

The second caller's portfolio included CVS Caremark, Corning (GLW Quote - Cramer on GLW - Stock Picks), Tidewater (TW Quote - Cramer on TW - Stock Picks), Clorox (CLX Quote - Cramer on CLX - Stock Picks) and Freeport-McMoran (FCX Quote - Cramer on FCX - Stock Picks).

Cramer called this portfolio "absolutely perfect!"

Hudson City Bancorp CEO Bullish on Rate Cut

Cramer once again welcomed Ronald Hermance, CEO of Hudson City Bancorp (HCBK Quote - Cramer on HCBK - Stock Picks) to the show.

Hermance said the recent Federal Reserve rate cut helps Hudson City in two ways.

First, by lowering its mortgage rates Hudson is now able to issue more mortgage loans.

Second, the company is enjoying higher margins on its deposits because of the cut in the fed funds rate. Those margins reflect what the bank pays in interest to borrow money and the interest it receives off the loans it makes.

Hermance also told viewers that Hudson is indeed refinancing mortgages and that it wrote off only $105,000 worth of bad loans last year.

Cramer said Hudson City is still a buy at under $20 a share.

Lightning Round

Cramer was bearish on Potash (POT Quote - Cramer on POT - Stock Picks), Dolby Labs (DLB Quote - Cramer on DLB - Stock Picks) and Huaneng Power (HNP Quote - Cramer on HNP - Stock Picks)

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.