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Cramer's 'Mad Money' Recap: Shopping for Stocks

TheStreet.com Staff

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If the market offers a good price on a high-quality stock next week, take it, Jim Cramer told viewers of his "Mad Money" TV show Friday.

Cramer says investors need to prepare for next week by noting all the companies they like on a shopping list and the price they would like to buy them at. Amid all of the volatility, he emphasizes, there are opportunities in this volatile market if home gamers are ready to take advantage of them.

Cramer cites ConocoPhillips (COP), a stock that he owns for his charitable trust, Action Alerts PLUS, as one such opportunity.

Earlier this week, he says, Conoco traded at $69 a share before going to $76 two days later. Because Conoco was on Cramer's list, he knew that $69 was the price he wanted and was able to take advantage of the move.

Cramer also notes Procter & Gamble (PG), the company with the best record of dividend increases on the Dow Jones Industrial Average, which recently was trading as low as $63 a share.

He also likes Altria (MO), another Action Alerts PLUS stock, which yields 4.25% at its current price of $70 a share.

The list also includes AT&T (T), Wells Fargo (WFC), Bear Stearns (BSC) and Toll Brothers (TOL). All of these are quality stocks trading at very low levels, he noted.

Cramer also likes Schering-Plough (SGP), which has recently been cut in half. It went down again on Friday after the FDA announced plans to review a study of its controversial cholesterol-lowering drug Vytorin that the agency had approved.

Cramer says at just $18 a share, Schering is priced as if it will never sell another prescription for Vytorin again, and this is just not the case.

The situation reminds Cramer of Bauch & Lomb, and how a tainted contact lens solution pulled the stock down to just $43 a share before it received a takeover bid at $65 a share.

Cramer said regardless of what actions the Federal Reserve takes next week, investors should pull the trigger if the stocks they want to own hit the prices they want.

Fighting Diabetes

Cramer says Allergan (AGN) is no longer known for just breast implants and Botox, and he's a buyer.

Citing an article in The New York Times, Cramer notes that gastric banding surgeries are helping patients with Type 2 diabetes lose weight and live longer. As a result, Allergan's own proprietary gastric banding system, LAP-Band, should flourish.

Cramer also likes Allegran for its recession-proof nature, saying it can deliver solid earnings in just about any economic environment. The company also recently announced a new skin-care line it is developing with Clinique, a move that should bolster earnings.

Noting that the stock is down 9% from it's recent highs, Cramer says he'd either wait until after the company reports its earnings next week to establish a position, or would buy half a position now and the other half after earnings.

Over the long term, Cramer says Allergan is a strong investment.

Why the Sirius Merger Makes Sense

For speculation Friday, Cramer recommended Sirius Satellite Radio (SIRI) on the premise that the proposed merger with XM Satellite Radio (XMSR) will be approved sometime within the next two months.

He says there's no reason why the FCC should be dragging its feet or blocking the deal. Cramer sees a 75% chance that the deal will be approved, but likes Sirius as a stand-alone company as well.

Cramer cites three reasons why Sirius merger should be approved. First, the combined company would offer more a la carte options than any other medium.

Second, the combined company is not a monopoly because there are so many other options in the market like terrestrial radio, high definition radio and portable players. Finally, the current market conditions are so horrible that it would be difficult for the FCC not to approve the deal.

According to Cramer, the cost savings of a combined Sirius/XM would be huge. Cramer expects the stock could double if the deal is approved. But even if it is not approved, Cramer still believes Sirius wins because of its better content and higher subscription growth.

Tips From a Small-Cap Fund Manager

Cramer welcomed Thomas McDowell, manager of the Rice Hall James Micro Cap Fund (RHJSX), to the show to discuss his mutual fund strategy.

McDowell says his system uses fundamental analysis to choose small, under-the-radar and unique companies for his fund's portfolio.

One company that fits that bill is T-3 Energy (TTES). McDowell says it is a little-known oil service company that supplies large drillers. T-3, he says, is just one of the 85 companies currently in his fund's portfolio.

After screening thousands of mutual funds, McDowell's fund is the only micro cap fund Cramer would recommend, Cramer says.

Lightning Round

He was bearish on Nova Chemicals (NCX), NutriSystem (NTRI) and Ceradyne (CRDN).

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.