Cramer's 'Mad Money' Recap: The Oil Umbrella

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"Everyone has been saying that retail sales drove the markets up today, but that's utterly false," Jim Cramer told viewers of his "Mad Money" TV show Wednesday.

Cramer said the rally, which saw the Dow up 178.83 points and Nasdaq up 53.80 points, had nothing to do with a strong retail sales report, but rather the strength in oil prices. "Oil is the umbrella that makes everything else work."

Cramer likened the day's rally to many similar ones in 2007, when oil prices rallied despite high oil inventories. Cramer noted higher oil prices affects many different stocks and sectors.

They include stocks like First Solar (FSLR Quote), which reported a better-than-expected quarter and also surprised with upside guidance. Cramer expects strength in First Solar to also spill over into other alternative energy plays like Applied Materials (AMAT Quote) and MEMC Electronics (WFR Quote).

The oil umbrella will also carry the natural gas stocks. Cramer likes Ultra Petroleum (UPL Quote), Apache (APA Quote), Anadarko (APC Quote) and XTO Energy (XTO Quote), which he owns for his charitable trust, Action Alerts PLUS.

Cramer also says coal stocks such as Arch Coal (ACI Quote) and Peabody Energy (BTU Quote) will work well.

Cramer says the oil umbrella extends to rail stocks like CSX (CSX Quote).

And Cramer says agriculture stocks are also affected, including John Deere (DE Quote), Mosaic (MOS Quote), and infrastructure stocks such as Chicago Bridge and Iron (CBI Quote), Jacobs Engineering (JEC Quote) and Shaw Group (SGR Quote).

FMC's Hidden Asset

"Investors need to have confidence in the stocks they own," Cramer reminded viewers.

And that's why he likes FMC Corp (FMC Quote). He said the stock has enjoyed a 26% gain since he first recommended it on June 8. He once again reiterated a buy on the stock, which closed Wednesday at $53.54, up $1.16 for the day.

Cramer sees hidden value in the company's soda ash business. Soda ash is used for a variety of things, including making glass and brick and cleaning swimming pools.

He used the recent acquisition of soda ash maker General Chemicals by Tata Chemicals as a metric to value FMC's soda ash assets. Using the numbers in that deal, Cramer values FMC's soda ash business at $2.3 billion.

By adding this number to FMC's other businesses, Cramer values all of FMC at $5.7 billion, or $70 per share. "This gives investors a 30% upside in FMC," Cramer told viewers, "This one's going higher."

Providing a Healthy Return for Shareholders

Cramer welcomed David Steiner, CEO of Waste Management (WMI Quote), to the show to discuss his business.

Steiner said Waste Management's pricing program has allowed the company to raise prices despite a weak economy. The company has also returned over $7 billion to shareholders over the past five years.

Steiner said his company has consistently raised its dividend and will channel $850 million toward a share repurchase program this year.

"This is one you can own for your 401k," Cramer said. "This is a consistent, no-surprise deliverer of earnings."

Am I Diversified?

Cramer played "Am I Diversified" with callers to see if their portfolios are right for the markets. The first caller's portfolio included McDonald's (MCD Quote), Verizon (VZ Quote), PPL Corp (PPL Quote), Schering-Plough (SGP Quote) and Nokia (NOK Quote).

Cramer blessed this portfolio as diversified, saying it was about as perfect as you can get.

The second caller's portfolio had John Deere (DE Quote), Starbucks (SBUX Quote), IDEX Labs (IDXX Quote), Cisco (CSCO Quote) and McDonald's (MCD Quote) as his top holdings.

Cramer was concerned about having both Starbucks and McDonald's in the portfolio and suggested a defensive play to replace one of those two.

In the third portfolio, the caller had Yamana Gold (AUY Quote), Clean Energy (CLNE Quote), Intel (INTC Quote), Nighthawk (NHWK Quote) and Taser (TASR Quote).

Cramer said Clean Energy, Taser and Nighthawk are all speculative plays and recommended a healthcare company, oil company and a defense contractor to round out this portfolio.

Sudden Death

Cramer was bullish on Nordstrom (JWN Quote), Kohl's (KSS Quote), Apple (AAPL Quote), Google (GOOG Quote), Owens Illinois (OI Quote) and Qwest Communications (Q Quote).