Cramer's 'Mad Money' Recap: Cracker Barrel Undervalued

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In a bearish market, investors should buy stocks that will insulate them from damage, Jim Cramer told viewers of his "Mad Money" TV show Tuesday.

With a downturn imminent, it's important to buy stocks that will bounce back hardest. Cramer explained that the market showed gains today because institutions are propping up stocks to make quarterly performance look better. "It's markup season," he said.

One stock to watch is CBRL Group (CBRL Quote), operator of the iconic Cracker Barrel restaurant chain, Cramer said. Although he hasn't liked Cracker Barrel in the past, the company has turned itself around.

Cramer said that although the American consumer is weak right now, making a casual-dining buy seem ill-advised, Cracker Barrel is not a casual-dining play.

Over the past year, Cracker Barrel has had the biggest buyback in percentage of shares outstanding of any company -- 54%. Usually, when a company buys back a substantial portion of its shares, it's taking itself private, Cramer said.

Just last week, Cracker Barrel announced a buyback of 1 million more shares. Cracker Barrel "is gobbling itself up," and its stock is not getting enough credit for that, Cramer said.

In addition to Cracker Barrel's massive buybacks, Cramer pointed to the company's consistency. It has paid a dividend every year since 1970. Cracker Barrel sold Logan's Roadhouse, a weak subsidiary, and revamped its menu to increase customer turnover and concentrate on higher-margin foods. That kind of strategic initiative generates actual results.