Cramer's 'Mad Money' Recap: Stimulus-Package Stock Plays

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If the proposed economic stimulus package gets approved, consumers will be spending some of their tax rebates at retailers, Cramer told viewers of his "Mad Money" TV show on Thursday.

Retail stocks trade off of their same-store sales numbers, he explained, and with the comparisons from last year so low, retailers can't help but benefit.

In this regard, Cramer likes such retailers as Guess (GES Quote - Cramer on GES - Stock Picks), J. Crew (JCG Quote - Cramer on JCG - Stock Picks) and Lowe's (LOW Quote - Cramer on LOW - Stock Picks).

He notes that Liz Claiborne (LIZ Quote - Cramer on LIZ - Stock Picks) and Jones Apparel (JNY Quote - Cramer on JNY - Stock Picks) should also do well.

And he's still a fan of Costco (COST Quote - Cramer on COST - Stock Picks), TJ Maxx (TJX Quote - Cramer on TJX - Stock Picks) and even Urban Outfitters (URBN Quote - Cramer on URBN - Stock Picks) at these levels.

Cramer also thinks restaurant chains may benefit from the stimulus. He says Darden (DRI Quote - Cramer on DRI - Stock Picks), proprietors of the Red Lobster and Olive Garden chains, should see a boost in sales.

There are also some unlikely benefactors from stimulus that investors should consider. For instance, homebuilder Toll Brothers (TOL Quote - Cramer on TOL - Stock Picks) will benefit from the higher conforming mortgage loan limit of $729,750 that Fannie Mae, Freddie Mac and the FHA will support under the stimulus plan. And that makes the stock now a buy, Cramer says.

He's even willing to do an about-face on Thornburg Mortgage (TMA Quote - Cramer on TMA - Stock Picks), but only recommends the F class preferred shares.

Also on the about-face list is Bear Stearns (BSC Quote - Cramer on BSC - Stock Picks), which Cramer says is now too valuable to not be considered a takeover target.

In Defense of CSX's CEO

Cramer is starting his own one-man crusade to stand behind Michael Ward, CEO of CSX (CSX Quote - Cramer on CSX - Stock Picks).

With the Federal Reserve now cutting rates, railroads are the place to be, Cramer says. That's why he doesn't understand why two activist investors -- TCI and 3G -- are clamoring for Ward's removal.

"Ward's done an amazing job," Cramer pointed out. CSX is up 254% in five years, more than any other rail stock. "This man knows how to run a railroad," he noted.

Ward said he also doesn't understand the calls for his ouster. CSX, he notes, is in the top 10 of the S&P 500, has doubled its dividend and raised its buyback program. The company is also investing $1.7 billion into the business for long-term growth. Ward said he's proud of what CSX delivers to its shareholders.

Cramer reiterated his buy on CSX and encouraged its shareholders to vote in favor of Michael Ward.

Trading Strategies

"Discipline always trumps conviction," Cramer reminded viewers, as he detailed some of his trading strategies. "Buying stocks is not marrying them," he said, adding it's OK to like a stock at a certain price and not like it at a higher price.

That's the case with agriculture stocks, Cramer said. Companies like Monsanto (MON Quote - Cramer on MON - Stock Picks) and John Deere (DE Quote - Cramer on DE - Stock Picks) have both rallied in recent days, and Cramer said investors need to take some profits. "You don't have a profit until you sell," Cramer stressed.

The same strategy applies to stocks like Apple (AAPL Quote - Cramer on AAPL - Stock Picks) and MasterCard (MA Quote - Cramer on MA - Stock Picks), Cramer noted. Both stocks had huge runs and had investors taken profits on the way up, they wouldn't have been hurt by the big declines.

Cramer then revisited his "Stress Index," a list of homebuilders and mortgage lenders. The index was at 100 when he created it on Aug. 3, but fell to 47 percent two weeks ago when Cramer began recommending buying stocks on the list.

Had investors followed this strategy, he noted, investors would've benefited from the recent rally and netted a 10 percentage-point gain.

A Market for Damaged Autos

Cramer welcomed Willis Johnson, founder of auto remarketer Copart (CPRT Quote - Cramer on CPRT - Stock Picks), to the show to discuss the company's business model.

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