Cramer's 'Mad Money' Recap: Altria's Smokin' Split-Up

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

---

"Tomorrow we say goodbye to the Marlboro Man," Jim Cramer told viewers of his "Mad Money" TV show Thursday.

That's when Altria(MO Quote), a stock which he owns for his charitable trust, Action Alerts PLUS, will finally spin off its Philip Morris International operation, creating two separate companies.

Cramer offered his thoughts on what investors should do with these offerings.

Cramer: U.S. Steel Makes Sense

The new Altria will consist of 85% domestic tobacco sales, with the company's investment in SABmiller Brewing along with other investments making up the remainder.

Although the domestic tobacco business declined 5% last year, Altria commands 41% of the marketshare in that business, Cramer says. He also liked the company's cost cutting measures, stock buy-back program and 5.2% dividend yield.

The new Philip Morris International, which is set to trade under the ticker symbol "PM," will consist solely of international tobacco sales. "This is where the growth is," said Cramer, adding the new Philip Morris is expected to grow 10% to 12% annually, provide a 3.6% dividend yield and offer a stock buyback program.

Cramer told viewers that if they're looking for a value stock, then the old Altria, with its dividend, aggressive cost-cutting and buyback program is where they should be.

For growth investors, he recommended Philip Morris based on its double-digit growth expectations.

Hot Ammo

Cramer touted Alliant Techsystems(ATK Quote) as another great company in the aerospace and defense sector that investors should consider buying.

Since his last recommendation of ATK on July 31, the stock is up 2.5%. "Not bad for a bear market," he noted.

ATK's fundamentals are still solid. With U.S. troop levels in Iraq set to remain constant throughout 2008, Cramer expects another great year for the company.

ATK not only makes ammunition, but also missile and launch systems, along with space technologies. "This group is red hot," said Cramer.

The company currently trades at just 13.8 times its expected 2008 earnings, although it is growing at almost 20% a year. "This stock is way too cheap," he said.

ATK's recently reported earnings beat Wall Street estimates by 6 cents a share. The company also has a strong buyback program, purchasing 2.5 million of its own shares in 2007.

Bottom line: ATK deserves to go much higher, he said.

A Retail Play

In his Sell Block segment, Cramer compared two retailers, Liz Claiborne (LIZ Quote) and Urban Outfitters (URBN Quote), to see which one makes the grade.

For Cramer, Urban Outfitters is the clear winner. "Urban is doing well in all three of its divisions," he said. He also noted the company's direct-to-consumer business is growing 30% annually and that it has enjoyed an 11% increase in same-store sales.

On the flip side, there's Liz Claiborne, which Cramer said is "a disaster." The company pre-announced a huge earnings shortfall on Feb. 14, coming in 43 cents a share below consensus estimates. The retailer's same-store sales was down 3% from the previous quarter.