Mad Money Recap

Return to Article

Cramer's 'Mad Money' Recap: Jan. 5

Scott Rutt

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

Jim Cramer rang in the new year on his "Mad Money" TV show Monday, saying the "worst may be behind us" after the many harrowing events of 2008.

Cramer said the markets still have a lot of work ahead, but with the possibility of another Great Depression off the table, there are some positives in the markets.

For example, he said the forced selling by hedge funds is largely over. H said the same also could be said with the financial panics caused by Bear Sterns, Lehman Brothers, AIG (AIG Quote), Fannie Mae (FNM Quote) and Freddie Mac (FRE Quote).

"There are no more crises waiting in the wings," said Cramer.

However, Cramer tempered his optimism by saying that markets still depend too much on what happens in Washington after Obama takes office. "It's hard to like a market that needs Washington," he told viewers.

Cramer said there does appear to be life in the markets but advised investors should not to chase rallies.

He said the game plan for 2009 is the same as 2008: Wait for pullbacks, buy on weakness, and scale out of stocks as they rally.

HP Stands Tall

Of the 30 stocks in the Dow, Cramer said he has only five favorites. His first is Hewlett-Packard , a stock which he owns for his charitable trust, Action Alerts PLUS.

Cramer called HP an incredibly cheap growth stock with great management. The stock currently trades at just 8.7 times its forward earnings with a 13.5% long-term growth rate. Historically, said Cramer, HP trades at 17 times earnings, making this $36 stock worth at least $42 to $46 a share.

Cramer said there are two things to love about HP. First, he said, the company is only getting stronger as competitors like Dell (DELL Quote) race to cut costs and match HP's retail dominance.

Cramer said HP is more diversified than Dell, with 40% of its sales coming from enterprise, 30% from small- to mid-size businesses and the remaining 30% from consumers.

Cramer said he's also a fan of the company's acquisition of EDS, which allows the company to further diversify into IT services, while aggressively cutting costs. With 2,300 layoffs already on the books at EDS and more on the way, Cramer said a good 2009 is almost built in for HP.

Cramer said he'd be a seller of competitor IBM (IBM Quote) and would make Hewlett his favorite technology play.

Outrage of the Day

Cramer sounded off about what he called "the outrage of the decade," the SEC's investigation of Bernie Madoff's investment group.

Madoff had been investigated no less than eight times in the last 16 years, and each time the SEC found only minor infractions. Yet Cramer said his own simple analysis of Madoff's strategy quickly showed the results to be bogus. "Anyone with Microsoft Excel could've figured this out," he said.

Cramer said analyzing the strategy Madoff allegedly used from 2000 to 2008 resulted in a net loss of 2.66%. Stripping off all of 2008, the fund only had a total return of 23%, not the double-digit annual return Madoff claimed.

Cramer said it was clear that Madoff's strategy just "stunk," but what was not clear was why the SEC looked at only four days worth of trading records rather than the nine years worth Cramer was able to analyze.

There was no way Madoff could have made this amount of money, said Cramer. "This should've been a piece of cake for the SEC," he concluded.

Mad Mail

In this segment, Cramer told a viewer that BB&T (BBT Quote) may buck the regional banking trend and be a winner.

Cramer told a second viewer that he cannot recommend US Steel (X Quote) until it gives back some of its recent gains.

Lightning Round

In the Lightning Round, Cramer was bullish on Wells Fargo (WFC Quote), Bank of America (BAC Quote), Best BUY (BBY Quote), Google (GOOG Quote), Ultra Petroleum (UPL Quote), Goldman Sachs (GS Quote), Itron (ITRI Quote) and Dicks Sporting Goods (DKS Quote).

Cramer was bearish on Clean Energy Fuels (CLNE Quote), Royal Bank of Canada (RY Quote) and Cabela's Inc (CAB Quote).

Check out the latest edition of "Cramer's Take on Top-Searched Stocks" on Stockpickr.

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