Cramer's 'Mad Money' Recap: Investing in Ag Stocks

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"If you want to make money, you need to invest in agriculture," Jim Cramer told viewers of his "Mad Money" TV show Tuesday.

He then introduced his new "Fabulous Five" list of agriculture stocks, including Mosaic (MOS Quote), Potash (POT Quote), Agrium (AGU Quote), Monsanto (MON Quote) and John Deere (DE Quote).

Cramer first got behind these agriculture names in 2005, and since then the stocks have performed remarkably well. Mosaic is up 80% since its first mention on the show, while Agrium is up 250%, Potash is up 100%, Monsanto is up 220% and Deere is up 150%.

Cramer expects the stocks to continue to sell off for the next few days, but he says he would be a buyer on any weakness.

Cramer says his reasons for owning these stocks have now changed.

Originally, Cramer said he liked these names for their exposure to the boom in corn-based ethanol production in the U.S. But he now says there's an even bigger driver for these five stocks: the growing global famine.

Cramer cited a recent Financial Times article that detailed how rising food prices is leading to increased food rationing and even food riots in some countries. The rising prices of commodities such as wheat, corn and soybeans are readily apparent in the market, and Cramer says, "These prices are starving people."

All of Cramer's new "Fabulous Five" stocks, however, are companies poised to help with the growing global famine. Each, Cramer notes, helps make producing grain more efficient, and that's exactly that the world needs.

Of the five, Cramer said Mosaic is probably the best positioned to prosper, but feels all five are in a multi-year bull market.

A Strong Quarter

Cramer once again welcomed Michael Johnson, Chairman and CEO of Herbalife (HLF Quote) to the show to discuss the company's recent quarterly results.

Herbalife reported sizeable growth, with sales up 20% in North America, up 50% in South America and up 145% in China.

Johnson said he's very proud of the company's distributors and the company's story. He dispelled the notion that Herbalife is a counter-cyclical stock that only does well in slower economic times. Instead, he said, the company has flourished in both good and bad economic times.

Cramer had nothing but praise for Herbalife and Johnson, saying "this guy is money."

A Thriving Wireless Market

Cramer said he's a buyer of Telkom Indonesia (TLK Quote), another foreign wireless stock that he says is a "BuyBuyBuy."

TLK currently controls more than 50% of both the wired and wireless telecommunication market in Indonesia, a country with the world's fourth-largest population. Cramer says he likes TLK for two reasons: under-penetration and under-utilization.

Only about 40% of the population in Indonesia currently has a cell phone, and that leaves a huge opportunity for TLK, which operates in an oligopoly that prohibits competition.

Cramer also noted that the average wireless subscriber in Indonesia only uses about a quarter of the minutes that subscribers in other countries do.

According to Cramer, the fears with TLK have been that increased competition will cause lowers rates in Indonesia, and that will hurt TLK's profits. But with subscribers only using a fraction of the minutes that those in other countries do, Cramer says the lower rates will only increase usage.

Cramer also likes the company's 2.6% dividend yield, and its current valuation, which is only at 13 times earnings despite the company's 21% growth rate. "At these levels, TLK is a steal," says Cramer.

Looking Beyond the Quarter

Cramer also welcomed Ray Milchovich, chairman and CEO of Foster Wheeler (FWLT Quote), stock which he owns for his charitable trust, Action Alerts PLUS, to the show to discuss the company's major earnings miss and the resulting stock decline.

Milchovich defended the company's decision not to preannounce the earnings shortfall by stating it's not the company's policy to preannounce any earnings-related news. He said what should be most important to investors is the company's 2008 outlook, which has not changed from last quarter.

When pressed about the company's declining gross margins, Milchovich said he feels the current gross margin estimates are sustainable, but he's not predicting any growth in margins for the rest of this year.

He likened the decline in Foster Wheeler's stock price Tuesday to a similar decline in the company's second quarter and said he fully expects the stock to bounce back in similar fashion. He also said investors need to consider the bigger picture.

Cramer said he expects Foster Wheeler to still see some pain in the coming days, as analysts will likely downgrade the company and lower estimates. He still stands behind the company, however, and would be a buyer of the stock in a few days.

Lightning Round

Cramer was bullish on Accenture (ACN Quote), Petrobras (PBR Quote), Mastercard (MA Quote), Southwestern Energy (SWN Quote), XTO Energy (XTO Quote) and Prudential (PRU Quote).

Cramer was bearish on Infosys Technologies (INFY Quote), Petrobras (PZE Quote), Sigma Designs (SIGM Quote) and Genworth Financial (GNW Quote).

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