Cramer's 'Mad Money' Recap: Jan. 8

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Jim Cramer recommended Caterpillar (CAT Quote) as the fourth of his "Top 5 Dow Stocks" on his "Mad Money" TV show Thursday. But, he said, this stock should not be bought right now.

Cramer said his thesis on Caterpillar is simple: If President-elect Barack Obama's stimulus package passes, Cat will get orders. Since the plan was first announced, Caterpillar shares have been on fire, and Cramer said the stock and the estimates are currently too high to pull the trigger.

Caterpillar will likely have a disappointing first quarter, but Cramer said the reason to own Cat is for the second half of 2009, when he predicts the housing market will bottom. Until then, he said, Caterpillar's juicy dividend yield will pay investors to wait.

Historically, Caterpillar has been a great stock to own when its yield crosses over 4%. In October, 1990, shares rose 44% in 5 months after hitting the 4% yield level. In October, 2000 the yield again hit 4%, prompting the shares to jump 65% in the following six months. And finally, it occurred again 2002, with shares rising 135%, said Cramer.

Cramer said he sees Caterpillar hitting $55 a share by the end of the year, but not before going lower first. He told investors to hold off buying shares now until the stock reaches $40 a share.

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