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NEW YORK (
) -- Feel like you're getting stepped on by the Wall Street machine? Get used to it. That was Jim Cramer's sad commentary to
viewers Thursday. He thinks individual investors won't be getting justice any time soon because there's simply no incentive for Washington to fix the problem.
Who can blame investors for feeling helpless, unprotected and alone in the stock market? According to Cramer, markets appear rigged, and the only losers appear to be the shareholders.
initial public offering fair? With news that
may have alerted some of its biggest customers about slowing growth at the company, it appears not. Were investors at
J.P. Morgan Chase
misled by CEO Jamie Dimon, who repeatedly said things were going great even though the company was in the process of losing $5 billion? It appears so.
As if these offenses against shareholders weren't bad enough, Cramer said it gets even worse: Both Morgan Stanley and J.P. Morgan will use shareholder money to investigate and defend themselves against any wrongdoing. If they're found guilty, guess what? They'll use shareholder money to pay the fines, too.
Cramer said companies get away with stunts like this because the system is broken and Washington isn't doing anything to fix it. While the big banks and hedge funds have huge lobbies in Congress, the individual investor has none. Cramer said the bad apples on Wall Street must pay for their actions, and that will only happen if the government starts targeting them directly.
"Give prosecutors more power," Cramer concluded, and Wall Street will start cleaning up its act in a hurry.
Another Suggestion For J.C. Penney
Cramer wasn't done with suggestions for
CEO Ron Johnson on how to revive the ailing retailer. After comparing J.C. Penney's turnaround attempt to that of
Pier 1 Imports
Monday today Cramer compared Penney to the turnaround in
Cramer explained that when Chico's began its turnaround almost two years ago, the company took the opposite approach Penney's Johnson. Chico's started with a hands-on approach, made no promises to Wall Street and slashed its earnings estimates. It then spent more money on infrastructure while closing stores, returning its brands to profitability.
Chico's had lost its way with its customers, explained Cramer. That's why the company reshuffled its merchandise and took the rare step of raising prices in order to attract its core, older customers while shunning a younger demographic.
This strategy worked. Chico's reported a 21% pop in year over year revenue with a 9.6% increase in same store sales. Now that Chico's is profitable, the company is only returning to a growth strategy that is more in line with Wall Street's expectations.
"The proof is in the pudding," Cramer concluded. J.C. Penney needs to stop pandering to Wall Street and get to work on the almost impossible task of a retail turnaround.
In A Pickle? Here's How To Play Defense
Investors need to play defense with their portfolios, Cramer told viewers. That means high-quality domestic companies with no exposure to the trials and tribulations of Europe and a juicy dividend yield. One such company that fits the description is
, purveyors of Ortega tacos, Cream of Wheat and B&G pickles.
Cramer said what makes B&G great is not its products per se but its business model. The company buys ailing brands from much larger companies and nurses them back to health for sizable profits. While many of B&G's acquisitions are number one or two in their categories, these brands simply don't even register at the bigger companies.
B&G may seem like a ho-hum investment, but slow and steady are exactly what investors should be seeking, said Cramer. The company has the unique talent of being able to reinvigorate brands, catering to dollar stores, discount chains and cost clubs by making exclusive products just for those markets.
In an environment where commodity costs are falling, Cramer said that B&G, with its excellent balance sheet and great gross margins, is in a terrific position to surprise Wall Street. The company last reported a one-cent-a-share earnings beat on a 19% rise in revenue. Shares trade at just 15 times earnings and the company has a 12% long-term growth rate.
Here's what Cramer had to say about caller's stocks during the "Lightning Round":
: "It's a challenged company with TV sales weak. I'm going to say don't buy."
: "Visa is terrific. Every time it goes down, buy some."
: "This is an overvalued stock. It's OK, not great."
Kodiak Oil & Gas
: "I think oil is going to $85 a barrel. That makes Kodiak a spec. "
VelocityShares Daily 2X VIX
: "I don't like to trade that stuff. I have no edge so I can't take a position."
: "I think that GameStop is in a very difficult position. Don't want to touch it."
: "Long-term upside, yes, but there's no dividend protection so I'm not going to recommend it."
: "I think they're cheap. They have great brands that are worth more broken up."
Avoid These Stocks
In the Thursday "Sell Block" segment, Cramer highlighted several stocks that investors need to avoid at all costs.
has a broken business model and should be sold at all costs. He said same-store sales, not cash flow, is the key metric to watch, and Best Buy's sales plummeted 5.3% in its most recent quarter.
Cramer was also negative on
, saying this industry still needs government subsidies to survive and those subsidies are drying up quick. The estimates are still too high, he warned, and First Solar is losing money.
Cramer also put three stocks in the penalty box, saying investors need to wait at least one quarter before pulling the trigger. He said
stumbled in its last quarter, so he needs to see whether bigger problems exist. The same applies to
where the company's Ugg boots may or may not be making a comeback.
Finally, Cramer thinks
, which is levered to Europe, is another wait-and-see situation.
The J. Crew Chief
In a special interview, Cramer sat down with CNBC colleague David Faber to discuss Faber's latest documentary on
( JCG) CEO Millard (Mickey) Drexler, which debuts Thursday evening.
Faber said Drexler, while unknown to many, is one of the greatest retailers of our generation. He said Drexler's work turning around
would have been noteworthy enough, but Drexler has continued to innovate and succeed in the cut-throat retail world.--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 JPM.
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