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As "toys have become hot again," market players must choose between owning

Mattel

(MAT) - Get Report

and

Hasbro

(HAS) - Get Report

, Jim Cramer told viewers of his "Mad Money" TV show Tuesday.

Cramer said that people shouldn't own both of these stocks because he believes in the importance of diversification.

Looking at the companies' gross margins and buyback programs, Mattel might seem like the "obvious buy" here; but in fact, Hasbro is the stock that's worth owning out of the two, he said.

"Toy companies will rise and fall based on the quality of their products," Cramer said. "And unlike Mattel, Hasbro has real toys in its pipeline."

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For Mattel, all people can hope for is a reinvention of its Barbie or Elmo doll, he said. Although the company's American Girl has been performing well -- Cramer believes its Polly Pocket recall shouldn't hurt Mattel -- Hasbro has toys kids actually want to play with.

(Mattel is recalling 4.4 million Polly Pocket magnetic play sets, including 2 million sold outside the U.S., after three children were admitted to the hospital with serious injuries related to swallowing tiny magnets that fell off the toys, the U.S. Consumer Product Safety Commission announced Tuesday.)

Also, in addition to a recent deal Hasbro made with

Marvel

( MVL) to make Spiderman toys, the company has Transformers, about which a movie is coming out next year, he added.

As soon as the movie comes out, "the money is going to be rolling in."

Moreover, even though Hasbro's income from toys has been sliding, Cramer believes that Transformers should "offset this decline." Also, the company's board game business seems to be turning around, he said.

The bottom line: "Spiderman and Transformers are better than Barbie."

Buy on Booted CEOs

According to Cramer's theory on options backdating, when a company's chief executive officer "gets canned" or resigns after an options scandal, market players should pull the trigger and buy that stock.

If people bought

KB Home

(KBH) - Get Report

off of Cramer's recommendation based on this theory, they should have made a 10% profit in two days, he said.

Now Cramer believes that people should buy

Cyberonics

(CYBX)

, a company that makes brain-implant devices used to treat depression.

The CEO, Robert "Skip" Cummins has left Cyberonics, and now the stock looks like it's "ready to run," he said.

The fact that the CEO resigned after taking out backdated options at Cyberonics tells Cramer that he must have known something.

"You take backdated options because you know something about the future and think it will be good," he said. Maybe the CEO thought a big takeover bid was finally on the horizon or thought something else positive was in store, Cramer said, adding that it is even possible that Cummins knew he was going to get fired.

"Cummins was the one who was keeping the company's stock down," he said.

He turned the company's product into the most controversial device in the medical community. When he got approval for it, Cummins wrote an email to a reporter at

TheStreet.com

who was bearish on the device, saying that this was only the beginning of the reporter having to eat the garbage he'd been writing about the stock.

"People who are CEOs don't talk like that," Cramer said. "His combativeness turned the company into a pariah. The CEO was the biggest dead weight on the stock."

In addition, Cramer said he wouldn't be surprised if

Medtronic

(MDT) - Get Report

bought Cyberonics.

"The stock looks expensive, unless a takeover is in the wings," Cramer said. But even if it doesn't get taken over, the company "fits the bill for an options backdating bounce."

And it doesn't hurt that the CEO, who was "the single worst thing about the company," has left, he said.

If market players buy Cyberonics on a downturn, they could make some "big, mad money."

Cramer welcomed

Federated Department Stores

( FD) Chairman and CEO Terry Lundgren to the show and asked him about the company's merger with

May Department Stores

.

The merger is right on track," Lundgren responded. "We're early in the game here, and I feel great about where we are and where we're going."

When Cramer asked him how he stopped consumers from having the psyche of not buying merchandise unless it was on sale, Lundgren said, "we tried to give better value more often."

Shoppers didn't have to "wonder if today was a good day to shop," he went on to say. Federated is not trying to confuse shoppers with different gimmicks, but is trying to promote every-day values, and it seems to be working, the CEO added.

This is the retail play that hasn't moved yet, and that is a mistake, Cramer said. "It is a triple buy."

To view Cramer's interview with Terry Lundgren, please click here.

BEA Catcher

"

BEA Systems

( BEAS) is an unequivocal buy" which has been "unfairly" hit with two downgrades, Cramer told viewers.

However, a few months from now these analysts should go on trial for keeping people out of BEA Systems before it goes on a run, he said, calling the company "the single best software play in China, where year-over-year growth was 50%."

The analysts who recently downgraded BEA are deeply focused on the company's past, Cramer said.

But he believes that its options probe should be completed in December, and then all of the company's problems should go away.

Just as

Network Appliance

(NTAP) - Get Report

and

Rackable Systems

(RACK)

recovered because of their positive guidance, Cramer thinks the same should happen with BEA Systems, which has raised its revenue guidance.

Not only is BEA a possible acquisition target, but also the company is "sitting on $1.4 billion of cash," he went on to say. "The initial panic is over, and it's finally safe to buy this company."

Lightning Round

Cramer was bullish on

MasterCard

(MA) - Get Report

,

New York Stock Exchange

(NYX)

,

Google

(GOOG) - Get Report

,

Best Buy

(BBY) - Get Report

,

Sirius Satellite Radio

(SIRI) - Get Report

,

FLIR Systems

(FLIR) - Get Report

,

Nice Systems

(NICE) - Get Report

,

L-1 Identity Solutions

( ID),

American Capital

(ACAS)

,

Goldman Sachs

(GS) - Get Report

,

IBM

(IBM) - Get Report

and

J.C. Penney

(JCP) - Get Report

.

Cramer was bearish on

Arch Chemicals

( ARJ),

Haverty Furniture

(HVT) - Get Report

,

Nordic American Tanker Shipping

(NAT) - Get Report

,

XM Satellite Radio

( XMSR),

Vasco Data Security

(VDSI)

,

Nasdaq

I:IXIC

,

Tyco

(TYC)

,

Intermec

(IN)

,

Dollar General

(DG) - Get Report

,

Family Dollar

(FDO)

and

Wal-Mart

(WMT) - Get Report

.

During his "Sudden Death" round, Cramer was bullish on

Genomic Health

(GHDX) - Get Report

and

LaBranche

( LAB).

He was bearish on

Acxiom

(ACXM)

,

Emdeon

(HLTH)

and

Convergys

(CVG)

.

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

click here.

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

clicking here

.

At the time of publication, Cramer was long Goldman Sachs.

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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