Cramer's 'Mad Money' Recap: Why Starbucks Will Rebound

Cramer's change of heart in Starbucks came after Schultz called him to assure him he would do whatever it takes to turn the company around. Cramer said he believes him.

According to Cramer, the best way to scale a position in Starbucks is to buy one-quarter of the position now, another quarter a week from now, and the remaining half after the company reports at the end of January.

A Lot More to Do

Next on the list of "resignations" is Jimmy Cayne, CEO of Bear Sterns (BSC Quote), who was just replaced by Alan Schwartz. This stock has fallen from $172 to $71.

Bear is a firm that's now known for its exposure to mortgage-backed bond trading, Cramer points out, "and changing the CEO won't fix that." Bear Sterns is a stock that investors should not touch, Cramer said. The company has a lot more work to do to clean up its reputation and balance sheet.

Cramer recommended Merrill Lynch (MER Quote) as an alternative to Bear Sterns. Merrill, he points out, is a stock with solid management, an indestructible brand, and a substantial retail network. Cramer feels Merrill has already cleaned house and is laying the ground work for future success.

Broken Companies

Cramer reminded viewers that he still prefers Goldman Sachs (GS Quote) over all other brokers, but now feels Merrill is getting attractive.

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