Cramer's 'Mad Money' Recap: May 22

A Winning Natural Gas Hand

Historically speaking, the price of oil trades at six times that of natural gas, said Cramer. So how should investors play the oil and gas market when the price of natural gas has plummeted and oil's risen to sixteen times the price of gas?

Cramer said the way to play it is with Anadarko Petroleum (APC Quote), a stock that he last recommended on Jan. 12 and is up 12% since then.

Cramer said his interview yesterday with Micheal Linn, CEO of Linn Energy (LINE Quote) has restored his faith in natural gas as a bridge fuel to an alternative energy future. He said with industry consolidation coming, natural gas should be a given to head higher.

Anadarko, on the other hand, has been headed lower on the heels of a large secondary offering of stock on May 12. Cramer said while this issuance of stock was bad for shareholders, it's good for Anadarko, which was able to clean up its balance sheet and is now able to partake in the coming consolidation.

With 65% of its production coming from natural gas, Cramer said Anadarko has the right amount to natural gas exposure. The company also has 10 new large discoveries, $2.2 billion in cash on its books and a geographic diversity not found anywhere else.

Cramer said Anadarko is the clear winner going forward.

Mea Culpa

In his "Sell Block" segment, Cramer issued a mea culpa and released defensive contractor Northrop Grumman (NOC Quote) from the Sell Block with a glowing recommendation.

Cramer recommended selling Northrop on March 6, based largely on fears that the entire defense industry would be on Obama's enemies list. But that was a mistake, he said, noting that defense spending is an untouchable industry given the current political climate. While Cramer felt caution was necessary in March, that call proved very wrong.

In reality, the country's current defense budget is 4% higher than last year's and Northrop recently raised its dividend by 3 cents a share. Many of the projects currently in the company's backlog are now heading into production, including eight Virginia-class submarines, he said.

Northrop has an aggressive profitability plan, with better supply-chain management, improving margins and a management that knows when to say no to risky projects, he said.

"Northrop, I never should've doubted you," said Cramer. He called the stock a buy, especially under $43 a share, where it's yield hits 4%.