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

01/08/08 - 07:53 PM EST

TheStreet.com Staff

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, 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 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 over all other brokers, but now feels Merrill is getting attractive.

At the time of publication, Cramer was long McDonald's, Goldman Sachs, EMC, Schering-Plough and Citigroup.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."

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