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NEW YORK (
) -- With the
Dow Jones Industrial Average
just a stone's throw away from its five-year high, Jim Cramer told
viewers Tuesday he's not celebrating the milestone, but he's also not assuming this is the top either.
Cramer said there are a lot of reasons why the markets are different this time around. He said that back in 2007 the Dow was at 14,000 based on an unregulated housing market, derivatives that no one understood, a booming Chinese economy and an insatiable appetite for all things tech. But today, the companies that make up the Dow are in far better shape than they were in 2007, and the world's economy is on the mend.
The Dow is just a group of stocks, Cramer reminded viewers, so just think about what would happen if they replaced a stock like
Bank of America
with a stock like
Cramer noted that
free cash flow in 2007 was $11 billion. Today, that number is $20 billion.
had $5 billion in cash flow, while today it has $12 billion. Stocks like
, another Dow component, aren't suffering from a crashing housing market but profiting from a growing one.
? Isn't that company far better off now, with its Marvell and Lucasfilm acquisitions, than it was in 2007 without them?
Cramer said the markets didn't deserve to be at 14,000 last time, but today they most certainly do.
Off the Charts
In the "Off The Charts" segment, Cramer went head to head with colleague Scott Redler to see if the markets really can stay above their all-time highs. Back on Feb. 14 of last year, Redler boldly predicted the
would see 1,700 by 2015. Based on what he's seeing now, Redler feels that target could come a whole lot sooner.
Redler took a long-term view of the S&P using a monthly chart going all the way back to 1976. He noted that during the 1980s, the index rallied 250%. Then during the 1990s, it rallied another 360%. Thus there's precedent for large, multi-year moves to the upside. During the 2000s, however, the markets pulled back and formed a double top with the S&P near 1,500 in 2000 and again in 2008.
So can the S&P get past 1,500 this time? Redler thinks yes. He noted that the S&P's daily chart shows a pattern of higher lows in recent weeks and very little resistance over 1,500. The average is clearly above its eight-day and 21-day moving averages, another sign of strength.
Cramer said he agrees with Redler that after a decade of consolidation it now looks like the S&P 500 and the broader markets are poising for a well-deserved move into record territory.
In the "Executive Decision" segment, Cramer spoke with Rick Goings, chairman and CEO of
, which just delivered a two-cents-a-share earnings beat and gave shareholders a 72% dividend boost, taking its yield to 4.8%. Shares of Tupperware are up 340%, including reinvested dividends, since Cramer first recommended it in October 2006.
Goings said Tupperware has a lot of confidence in its approach and has multiple engines of growth, which is why it was able to take such a bold step in raising its dividend so substantially. He said Tupperware has no interest in making acquisitions, so it remains committed to both stock buybacks and dividends as ways to reward shareholders. Tupperware is a "cash generating machine," said Goings.
Goings then commented on the battle raging on regarding
and the shadow being cast over direct sellers like Tupperware. He said there's a clear distinction between a direct seller, whose salespeople sell directly to retail customers, and multi-level or network marketers, who sell primarily to their distributors.
Goings noted that network marketers are largely nothing more than wholesale buying clubs for their members, but that is nothing like Tupperware, where 90% of all sales are to retail customers.
How can Tupperware be so sure of that 90% sale figure? Goings said it's because his company manages every aspect of its business and knows exactly where every piece of merchandise is going. He said Tupperware has meetings every week that closely monitor all aspects of the business right down to every salesperson and every customer.
In the Lightning Round, Cramer was bullish on
Divide and Conquer
In his "Divide and Conquer" segment, Cramer ran down his list of companies such as
that should break themselves up to bring out shareholder value, or be acquired.
tops his list. He said the missile and space systems maker's ammunition division would be worth a ton of money to just about any defense contractor in need of growth.
crane business is equally valuable, noted Cramer, as construction equipment is on fire and has no business under the same roof as food service equipment. Cramer said
Johnson & Johnson
is ripe to split itself up now that the company has a new CEO to fix its long history of recalls and missteps.
Next on the list,
, the $2.5 billion healthy-food colossus that would be a perfect fit for any of the larger food giants to purchase.
would also be a prime takeover target, Cramer noted.
Rounding out the list, Cramer said
, along with
, are also prime candidates to be bought, and
Bed Bath & Beyond
should just take itself private, as that stock is too cheap to ignore.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer commented on one rather significant line from Valero's conference call, the one where the company stated that it has replaced all foreign oil going into its refineries with domestic, American crude.
Cramer said this fact is big news for Valero because it now gets to buy cheaper American oil and still sell it at Brent crude gas prices. It's also tremendously significant for America, he said, as it proves how much oil and gas America now has in its oil shale regions. This is also why Hess is looking to spin off its East Coast refineries and storage, he said, because Hess gets all of its crude from overseas.
The market is clearly behind the curve, said Cramer, and if Washington only embraced our domestic oil and gas, this trend would take off like a rocket.
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-- Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer's Action Alerts PLUS had a position in HD.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC Universal or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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