Cramer's 'Mad Money' Recap: Get Ammo for Next Dip (Final)

With the major indices racing higher, Cramer says it's time to sell into strength to have ammunition to buy back in on the next dip.
Author:
Publish date:

Search Jim Cramer's Mad Money trading recommendations using ourexclusive Mad Money Stock Screener and watch Jim Cramer's Mad Money Post Game videoexclusively on TheStreet.com.

NEW YORK (

TheStreet

) --"Don't get lost in the euphoria of up days like today," Jim Cramer warned the viewers of his "Mad Money" TV show. He said while everything was trading higher today, the fundamentals haven't changed, which is why he continued to recommend selling into strength to have the ammunition needed to buy back in on the next dip.

There are some stocks, however, that Cramer said are worth holding onto, even on the up days. One such stock is that of

Apple

(AAPL) - Get Report

, a stock which Cramer owns for his charitable trust,

Action Alerts PLUS. Cramer said Apple is a special circumstance, where we know shares are headed dramatically higher.

Cramer said with all of the buzz surrounding Apple's marketcap exceeding that of arch rival

Microsoft

(MSFT) - Get Report

, investors shouldn't be scared away by that valuation, or by Apple's $250 share price. He said Apple's valuation isn't wrong, nor silly, it makes perfect sense.

Cramer called Apple the greatest manufacturer on Earth, a company that's selling into huge end markets for PCs, phones, mobile devices and of course, music. He said Apple is still just beginning to penetrate the cell phone market. The company's market share is still in the single digits, in fact. And with the iPad, Apple created a whole new category of devices, and can't seem to keep them on store shelves.

Cramer said Microsoft, however, has saturated its primary market for PC operating systems, and therefore doesn't command a growth multiple. But Apple, with its $50 a share in cash, could earn as much as $17 to $20 a share in 2011, which Cramer said gives the stock only a 12.5 multiple. He reiterated his $300 price target on the stock, which would still only give Apple a price-to-earnings multiple of 15.

Executive Decision

In the "Executive Decision" segment, Cramer sat down with Ray Milchovich, the outgoing chairman and president of

Foster Wheeler

, an energy engineering and construction giant whose shares have fallen 24% from their recent highs on fears that oil and gas projects might be scaled back on environmental concerns.

Milchovich said that Foster Wheeler is a pure play on energy infrastructure, and with the recent bearish views on energy, his company's stock has taken a hit. But, he noted, the company believes that by the second half of 2010, another build cycle will have begun, and Foster Wheeler will be positioned to capitalize on it.

Milchovich also noted that in the Asia Pacific region, liquified natural gas is proving to be a crucial new fuel for the region and he expects further investment in natural gas. While here in the U.S., Milchovich said that recent discoveries and technology have proven that natural gas could be a big player, if Washington gets on board. He said that an energy plan without fossil fuels can't exist in the U.S., and that natural gas is the logical choice to meet our energy needs.

Finally, when asked about what makes him most proud at Foster Wheeler, Milchovich said he's delighted to see a company that once teetered on bankruptcy now in a position to compete with anyone around the globe, and do so with high margins thanks to its disciplined approach to its business.

Cramer wished Milchovich well and said that now's the time to dive back into Foster Wheeler stock.

Sell Block

In the Thursday "Sell Block" segment, Cramer released

Annaly Capital

(NLY) - Get Report

from solitary confinement. He said it's now OK to pull the trigger, and buy some Annaly.

Cramer sentenced Annaly to the sell block on March 7, 2008 amidst fears that the company wouldn't be able to secure the short-term funding it needed to continue its operations. Back then, Annaly traded at $15 a share, down from a high of $20 a share. The stock continued to slide to just $11 a share in the height of the financial panic, before starting to recover.

But Cramer explained that Annaly, a mortgage real estate investment trust, or REIT, is now well positioned to profit, as it borrows money at very low interest rates to invest in higher-yielding mortgage bonds. Annaly currently returns 90% of its profits to shareholders, which affords the stock a 15.5% dividend yield.

While some still fear that refinancing risks and mortgage defaults could derail Annaly, Cramer said most of these fears are already baked into the company's share price. The stock currently trades at less than the company's $18 a share book value, despite having returned 469% to sharesholders over the last 10 years and 42% over the last five years.

Cramer said investors who stick with Annaly could see their money double in just four and a half years, assuming they reinvest their dividends.

Buy the UIL Secondary

There is one company benefitting from the European contagion, and that's the Connecticut utility

UIL Holdings

(UIL)

, said Cramer.

Cramer explained that UIL is buying natural gas customers from a Spanish utility that presumably is in desperate need for cash. The deal, worth $1.3 billion, nearly doubles UIL's customer base to almost 700,000 customers and diversifies it away from being solely an electric utility to an electric and natural gas utility.

Cramer said there aren't too many utilities out there with truly organic growth, and UIL is now one of them. The deal provides the company with enhanced cash flow per share almost immediately, and is additive to earnings beginning in 2012, and that's before any cost savings have been applied.

Dividend Stock Ideas 10 High-Yielders Under $5

UIL sports a 7.1% dividend yield, but even with that yield, Cramer advised viewers not to buy UIL in the open market. He instead advised investors to call their broker and ask to get in on the secondary offering of shares that will be coming soon to finance the acquisition. "That's the deal you want to be in on," said Cramer.

Lightning Round

In the Lightning Round, Cramer was bullish on

Novellus Systems

(NVLS)

,

General Mills

(GIS) - Get Report

,

Capital One Financial

(COF) - Get Report

,

Bank of America

(BAC) - Get Report

,

JPMorgan Chase

(JPM) - Get Report

and

Citigroup

(C) - Get Report

.

Cramer was bearish on

TiVo

(TIVO) - Get Report

,

Visa

(V) - Get Report

and

Maxim Integrated Products

(MXIM) - Get Report

.

-- Written by Scott Rutt in Washington D.C.

To watch replays of Cramer's video segments, visit the Mad Moneypage on CNBC

.

Want more Cramer? Check out Jim's rules and commandments forinvesting from his latest book by

clicking here.

For more of Cramer's insights during the Lightning Round, clickhere

.

At the time of publication, Cramer was long Apple, Bank of America and JPMorgan.

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."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, TheStreet.com or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor TheStreet.com, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.