Cramer's 'Mad Money' Recap: How to Play the Earnings Season

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"We can't be too optimistic about this earnings season," Jim Cramer cautioned viewers of his "Mad Money" TV show Friday.

"The odds just simply don't favor investors during the few short weeks that most companies report their earnings," said Cramer, who then outlined his game plan for the next few weeks.

Cramer: Banks' Woes Bound to Worsen

Cramer says the mortgage crisis will continue to weigh on the financial stocks. Even Goldman SachsGS, a stock which he owns for his charitable trust, Action Alerts PLUS, only saw a momentary boost when it reported strong earnings, he noted.

Cramer's outlook for technology stocks was equally lackluster. With the exception of AppleAAPL, Cramer expects only estimate cuts and earnings misses from the tech sector. "I have no conviction that any tech company can beat their numbers," he said.

Even Cramer favorite Research In Motion RIMM should be sold on any lift.

In other sectors, Cramer was equally cautious. He still likes Costco COST and would possibly consider WalMart WMT on a pullback, but sees little else in the retail sector worth buying.

He also was leary of mining and mineral stocks as well as the oil and gas stocks as both sectors will be hard pressed to impress Wall Street this quarter.

Cramer does see some positives in the markets, saying food and drug stocks should do well. He likes Schering-Plough SGP, another stock which he owns for his charitable trust, Action Alerts PLUS.

He also called Kellogg K, Pepsi PEP and Coca-Cola KO safe bets.

And he reiterated buys on US Steel X, Potash POT and Textron TXT and still expects great earnings from all three companies.

Get Pass the Negativity

For "Speculation Friday," Cramer highlighted AMAG Pharmaceuticals AMAG, a biotech company that is working on a drug called Fermoxytol to help deliver iron to diabetic patients.

According to Cramer, Fermoxytol is a game-changing drug that is safer than current methods and more convenient and easier to administer, all of which translates to lower costs for healthcare providers.

Cramer expects the the drug, which is awaiting FDA approval, to be a shoe-in to receive that approval.

Cramer said that now is the time to buy AMAG because the negativity surrounding the company has gotten out of control.

Since September of 2007, the stock has come down considerably due to concerns surrounding its secondary stock offering. Merrill Lynch recently downgraded the stock, a move Cramer called "ill-timed" and "wrong."

"Take advantage of the false negativity," said Cramer.

A Natural Gas Winner

"There are few things safer than an unfairly beaten down stock that has a huge yield," says Cramer.

That's why he's recommending Enterprise Products EPD, a mid-stream energy company that manages natural gas pipelines.

Since Cramer first recommended EPD on May 8, 2007, the stock has been losing ground. However Cramer notes that with the company's 6.9% dividend yield, the losses are smaller than they appear. He suggested investors average down at the current price to lower their cost basis.