Cramer's 'Mad Money' Recap: Cheap-Stock Stigma

"When you look at stocks, you need to unlearn anything you've ever been taught about money, otherwise you will get crushed," Jim Cramer told viewers of his "Mad Money" TV show Friday.

Cheap stocks, those that cost less than $10, $5 or even $3, are not necessarily inexpensive stocks, Cramer said, adding that he can't emphasize this point enough.

People need to understand that even $2 stocks might be priced at a premium and actually be more expensive than a $40 stock, Cramer said. There may be nothing riskier than owning a cheap stock, because it could bottom and go to $0.

For example, Charter Communications (CHTR Quote) is a $2.58 stock, and Comcast (CMCSA Quote) is a $40 stock, he said.

Charter here is "more expensive and much worse," and it's clear that price does not determine worth, Cramer said. To find the actual value of stocks, he said people should divide a stock's share price by its earnings per share.

In addition, comparing the two based on their enterprise value, Comcast is an $87 billion company, whereas Charter is a $1 billion company with $18 billion of debt, Cramer said.

"Market players continue to think that the low-dollar stock is the less-expensive stock," he said. However, "now Charter has too much debt to support the equity."