This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Cramer's 'Mad Money' Recap: Getting Rich Carefully


"I learned this the hard way when my charitable trust decided to buy Juniper Networks (JNPR), the maker of networking and communication equipment, back in 2011," said Cramer. Juniper encountered shortfalls and blamed a lack of Japanese orders in the wake of the tsunami and Fukushimi Daiichi nuclear disaster. But the stock continued to drop. He stuck with Juniper because the company had a ton of cash.

Oops. Juniper's blame-the-customer act was a lame alibi, Cramer said. It turns out Cisco was taking market share the whole time and simply kicking Juniper's butt with a better mousetrap.

There's a pretty simple moral here: When a company blames the customer, check to see whether the customer isn't actually still buying from a different vendor.

Beyond EPS

A huge part of this business is figuring out where a given stock is headed, said Cramer. That isn't always easy. Most stocks, most of the time, trade on their earnings-per-share numbers. When the earnings are headed lower, so is the stock; when the earnings go higher, the stock rallies, too.

But for some industries, earnings are not the most important metric, said Cramer. If the only thing you're watching is the earnings per share, you could end up getting clobbered or missing some fabulous opportunities. Watch the key metrics for everything you own.

For example, Cramer said, when it comes to oil companies, production growth is key. For many tech stocks, it's the average selling price of their products. In these two sectors, those metrics are more important that anything related to beating the earnings estimates. Devon Energy (DVN) sagged due to production shortfalls, not earnings per share; Chevron (CVX) rallied with lower earnings and higher production growth.

Another mea culpa: Cramer admitted he totally missed the bottom for Micron MU, the semiconductor company that makes memory chips, back at the end of 2012. Micron's stock had been a dog for more than a decade. But then the stock jumped higher. "What did I miss?" Cramer asked.

DRAMs, or dynamic random access memory chips, had a nice bump up in their average selling prices during the quarter. DRAM business had been so horrible for so long that many companies in the industry had simply given up, Cramer said. So supply had become constrained. Micron's been off to the races ever since, more than tripling from December 2012 to December 2013.

One last metric to note, said Cramer: when a company is based in the United States but does a lot of business in emerging markets, particularly China. One of the best buys his charitable trust ever made was picking up Yum! Brands (YUM), the parent of KFC, Taco Bell and Pizza Hut, off a sudden decline in Chinese sales because of a KFC tainted-chicken scandal, Cramer said.

3 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,001.22 -38.27 -0.22%
S&P 500 1,988.40 -3.97 -0.20%
NASDAQ 4,538.5510 +6.4470 0.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs