Cramer's 'Mad Money' Recap: Sweet-Smelling Avon

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"Caterpillar(CAT Quote) reported what looked like a great quarter [Friday]," Jim Cramer told "Mad Money" viewers Monday. "But the stock got crushed."

He said investors viewed Caterpillar as a cyclical stock, rather than an emerging-markets play, even though the company was "practically printing money in China."

"That's because people don't want to own cyclical stocks," he said. "Cyclicals are weak in America."

Instead, Cramer told viewers to buy Avon Products(AVP Quote) because although he "despised the stock with every vein in my body" in the past, now the stock presented an interesting example of a turnaround play.

"I think it represents one of the best turnaround stories that there are," he said.

He said 57% of Avon's revenue comes from emerging markets, and he sees China as a great opportunity for the company.

"China is hotter and it's better than it has been since the second Opium War," he said.

"Avon is now trading well below its 10-year average price-earnings ratio," he noted, but warned that wasn't enough on its own.

"You need to look for evidence of change," he said. "Avon has gone through some massive restructuring. It didn't feel good at the time, but its paying off now. He also highlighted the company's huge sales force.

"Over the next five years, Avon will be a great stock to own," he said. "All the managers that sold Caterpillar will likely rotate into Avon, but don't expect it turn around by summer's end."

Anno Domino's

"What should you do when you make a bad decision based on what a CEO says or what a 'Cramer' says?" Cramer asked viewers Monday.

"A lot of Wall Street analysts will pretend that nothing is wrong and that they got the timing wrong, which is 'right' deferred," he said. "That's not how it is done on 'Mad Money.' Let me tell you what to do."