Cramer's 'Mad Money' Recap: I Like Tech

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"Today's tech rally is long overdue," Jim Cramer told viewers of his "Mad Money" TV show Monday.

Last week's selloff in technology was just not justified, Cramer said, adding, "There's nothing really wrong with most of these tech stocks." To emphasize his point, he'll be featuring tech stocks this week on "Mad Money."

Cramer remains a fan of Corning (GLW Quote) and Hewlett-Packard (HPQ Quote), the latter of which he owns for his charitable trust, Action Alerts PLUS.

He also still likes Intel (INTC Quote) and expects an upside surprise from Microsoft (MSFT Quote). Cramer also still stands behind his "horsemen of tech": Google (GOOG Quote), Apple (AAPL Quote) and Research In Motion (RIMM Quote).

However Cramer's first technology comeback stock of the week was EMC (EMC Quote).

This longtime Cramer favorite has "burned a lot of people," he noted, as it's down more than 34% since October.

But Cramer said he continues to like EMC for three reasons. First, he likes the company's international exposure and said the positive comments Monday from IBM (IBM Quote) should also bode well for EMC.

Second, Cramer expects the company's new flash-based products to do well in the third quarter. Finally, Cramer notes EMC will benefit from its huge stake in VMware (VMV Quote) in February, when it can begin selling the stock.

Cramer compared the EMC-VMware relationship to that of Cypress Semiconductor (CY Quote) when it spun off SunPower (SPWR Quote).

Cypress, Cramer noted, rose 36% after the company emerged from its lockup period and started unloading its SunPower shares. Cramer expects the same from EMC, and predicted that the stock could rise 45% from its current beaten-down levels.

Outsourcing R&D

Cramer's been a long-term fan of cutting health care and drug costs. He's featured companies like Medco Health (MHS Quote) and other health care cost-containment companies in the past. But tonight he focused on contract research organizations, or CROs.

These companies allow big pharmaceuticals to outsource their clinical trial work to cut costs. Cramer's favorite in this space is Covance (CVD Quote).

Covance, Cramer said, handles early and late stage testing and has a solid customer base.

The company also has an immaculate balance sheet, according to Cramer. Covance has $250 million in cash, no debt and $300 million in expected free cash flow over the next two years.

Cramer sees the potential for Covance to trade at 37 times this year's earnings, which translates to a target price of $115, or a 33% upside. Despite being just $1 off its 52-week high, Cramer said Covance "must be bought on any weakness."

Cramer also recommended Charles River Labs (CRL Quote) as an early stage CRO play and Parexel (PRXL Quote) as a pure-play late stage CRO.

He also still likes drugmaker Novartis (NVS Quote) and retailer CVS Caremark (CVS Quote). CVS is a stock that he also owns for his Action Alerts PLUS portfolio.

Behind Chattem's Success

Cramer welcomed Zan Guerry, CEO of Chattem (CHTT Quote) to the show for an update on the company's continued success. Chattem has risen 107% since Cramer recommended it in April 2006.

Guerry credited some of the company's success to its recent acquisition of five brands from Johnson & Johnson (JNJ Quote) earlier this month that gave it Cortizone-10, Unisom, Balmex and ACT mouthwash.

He said the the company will continue growing through both acquisitions and extensions of its many current brands.

Cramer said, "This stock's been a winner and will stay a winner."

Lightning Round

In this segment, Cramer was bullish on Quanta Services (PWR Quote), Sigma Designs (SIGM Quote), Loews (LTR Quote), Altria (MO Quote), NYSE Euronext (NYX Quote), BioMarin Pharmaceutical (BMRN Quote), Celgene (CELG Quote) and Transocean (RIG Quote).