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Cramer's 'Mad Money' Recap: Aug. 27

Scott Rutt

08/27/08 - 07:33 PM EDT

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

"It's time to buy J. Crew (JCG Quote)," Jim Cramer told viewers of his "Mad Money" TV show Wednesday.

Cramer made his recommendation despite the retailer's botched quarter and an abysmal stock performance this year. The stock is down 46% since December.

Cramer said that while J.Crew has been on a one-way ticket lower all year, he feels that now is the time to invest. He put a $35 price target on the stock one year from today.

While the overall retail environment remains bad, with slowing store traffic, Cramer said only Urban Outfitters (URBN Quote), TJ Maxx (TJX Quote) and J. Crew have the ability to buck the trend and head higher.

Cramer said he believes J. Crew's recent earnings miss was due in large part to problems with the company's Website. With the overhaul of the Website nearing completion, Cramer said the retailer should regain its footing.

Cramer put his support behind CEO Mickey Drexler, a man who Cramer says turned around Gap Stores (GPS Quote), and founded Old Navy.

While many CEOs in retail are "one-hit wonders," Cramer said Drexler is a standout. He said the time to invest with Drexler is when he's out of favor, which he is right now with the stock of J. Crew cut almost in half since December.

Cramer said J. Crew may still go lower from here, but feels the momentum will swing upward once the 12 analysts who currently rate the company as a hold begin to see the light and upgrade the stock.

Cramer: The FDIC Needs a Plan -- Now

Stick With Walgreen

For his "In The Ring" segment, Cramer pitted CVS Caremark (CVS Quote) against Walgreen (WAG Quote), which he also owns for his Action Alerts PLUS portfolio, to determine which drugstore giant is the better buy.

Stockpickr

When looking at the drugstore sector overall, Cramer gave both company's a 4 out of 5, as drugstores offer safety and consistency in uncertain markets. He reminded viewers that 50% of a stock's performance is usually linked to its sector.

Next, Cramer looked at growth. For drugstores, Cramer said the key metric is same-store sales. CVS last reported same-store sales up 3.1%, while Walgreen reported 4.1%, giving the latter a one-point lead on Cramer's scorecard.

Cramer also considered each company's growth strategy. Last year CVS acquired Caremark, a pharmacy benefits manager, and by all accounts that acquisition has not gone well.

Meanwhile, Walgreen has stuck to its core strategy of being just a great pharmacy and drugstore, he said. Cramer awarded one point to CVS for its strategy, but none for its execution, while awarding Walgreen a point for its simplicity.

In the end, Cramer said Walgreen comes out on top 7-5 on his scorecard. He said this is not a market that values complexity or poor execution and CVS unfortunately has both.

Am I Diversified?

Cramer spoke with callers to see if their portfolios have what it takes.

The first caller's portfolio included Altria (MO Quote), Bristol-Myers Squibb (BMY Quote), Nike (NKE Quote), General Electric (GE Quote) and Cisco (CSCO Quote).

Cramer called this portfolio "perfect" and said he loved it.

The second caller's top holdings included Great Lakes Dredge (GLDD Quote), Darling Int'l (DAR Quote), Frontline (FRO Quote), Tupperware (TUP Quote) and Temple Inland (TIN Quote).

Cramer said this portfolio also was perfect for this market.

The third caller had Coca-Cola (KO Quote), Terra Int'l (TRA Quote), Hewlett-Packard (HPQ Quote), John Deere (DE Quote) and Amgen (AMGN Quote) as their top five stocks.

Cramer identified two of a kind with Terra and Deere, and he recommended selling Terra for a defense stock or industrial company.

Mad Mail

In this segment, Cramer clarified an earlier "Sudden Death" call to sell Banco Santander-Chile (SAN Quote).

He said he still likes Santander but he meant to say he recommended selling the European bank Banco Santander (STD Quote).

He told a second viewer not to invest in any single home building stock, but instead to invest in a home building index if they feel home builders are on the rise.

Sudden Death

Cramer was bullish on Dawson Geophysica (DWSN Quote), Bristol-Myers Squibb (BMY Quote) and Energen (EGN Quote).

Lightning Round

Cramer was bullish on Emerson Electric (EMR Quote), Cisco Systems (CSCO Quote), GrafTech International (GTI Quote), Verizon (VZ Quote), Google (GOOG Quote) and Cummins (CMI Quote).

He was bearish on Terra Nitrogen (TNH Quote), Ambac Financial Group (ABK Quote) and ACCO Brands (ABD Quote). P/>Want more Cramer? Check out Jim's rules and commandments for investing by clicking here.

Read more of Cramer's Mad Money Lightning Round insights.

For "Mad Money" performance statistics and other links, check out Mad Money stats

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