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NEW YORK (
) -- It's easy to focus on what's wrong with the markets, Jim Cramer told his
TV show viewers Thursday. So why not focus instead on what's going right, like housing? "Housing is coming back," noted Cramer, "and it's going to take a lot of sectors with it."
Cramer said the housing market may have bottomed out in 2007, but things are finally beginning to change as homebuilders like
are up 31% and 40% for the year, respectively. So with home builders finally starting to build more homes, investors need to ask, what else comes with that?
Home builders need materials, said Cramer, so why not look into a
? All of these stocks are cheap.
Home buyers will need loans, so that's good news for
, said Cramer. They will also need insurance, think
While those may be the obvious plays, Cramer said there are plenty of other companies that benefit as well.
will provide cable service to many new homes while
will provide phone service.
Cramer also touted retail, which does well when homes are increasing in value. He likes
Bed Bath & Beyond
, along with
, a stock which he owns for his charitable trust,
Action Alerts PLUS.
In the "Executive Decision" segment, Cramer once again sat down with Richard Pops, chairman and CEO of drug maker
, a company that expects to see double-digit revenue growth next year.
Pops said that the trend of big pharmaceutical companies losing patent protection for blockbuster drugs continues, which is excellent news for patients around the world as cheaper, generic versions are being proliferated to everyone. On the flip side, Pops said that the world's largest drug makers are getting very aggressive in their pursuits to replace those drugs and are snapping up smaller biotech firms to do so.
Pops said that Alkermes is now in the sweet spot; it's large enough that it has all of the resources it needs to make medicines, get them approved and manufacture them, but it's also not too big that bureaucracy slows its pace of innovation. That said, Pops also admitted that when it comes to marketing and educating doctors on new treatments, Alkermes has a better job to do.
One of Alkermes' most promising treatments is for alcoholism. Pops noted that unlike drug addictions, which are often treated with medications, alcoholism is often treated with counseling alone, which makes for an uphill battle to educate both patients and doctors that alternatives are available. Alkermes also has a promising drug in phase III testing for schizophrenia.
Cramer said he continues to like the innovation and growth at Alkermes, even if the company remains a speculative play, as it still has no earnings.
"Individuals can be better stock pickers than the pros," Cramer told viewers, as he revisited the Hospitality Index, a group of stocks created by restauranteur Danny Meyer in 2009. During the heart of the recession, Meyer theorized that companies focused on delivering outstanding customer service would outperform those that aren't. The Hospitality Index consisted of 17 stocks including
Chipotle Mexican Grill
Since its introduction in 2009, the
has delivered a 65% return while the Hospitality Index returned a stellar 257% return with only one stock,
, posting a loss.
Cramer said it's easy to see why a $5,000 investment in these companies is worth $48,000 today, as all of them deliver a customer experience that's world class. Whole Foods posted the highest return among the 17 stocks, with Chipotle Mexican Grill and Apple rounding out the top three.
Cramer said the same things that have made these companies a success over the past three years still hold true today and are proof positive that someone with no knowledge of stocks can pick better names than professional analysts.
Here's what Cramer had to say about the stocks that callers offered up during the "Lightning Round":
: "Wow. I don't like that stock at all. That stock can go lower, much lower."
Pan American Silver
: "It's the best house in a shaky neighborhood. I don't want to own any miners, they're too dangerous."
: "This is a dicey stock. If you consider it a speculative stock, I'll bless it as a long-term bet on oil."
: "They don't have yield protection, which makes me nervous. Be very careful, but I like it."
: "The stock is down 25%. It hasn't seen a bottom yet. Let's look at it again between $6 and $9 a share."
Chesapeake Granite Wash Trust
: "I don't want to own it right now. I think you can buy it lower."
Deere & Company
: "It's a good company but the commodities are weak. I want to be careful."
Off The Charts
In the "Off The Charts" segment, Cramer went head to head with colleague Tim Collins over the health of the markets using the
CBOE Volatility Index
, commonly known as the "VIX", or sometimes the "fear index."
Looking at a weekly chart of the VIX, Collins noted that it has patterns of spikes to the upside that correlate with market downturns between 5% and 10%. Looking at the VIX's recent action revealed an eerie similarity to the market downturn in early 2011.
Collins research called out the Relative Strength Indicator, or RSI, the stochastics and the CCI, or Commodity Channel Index, as all pointing to a coming upturn in the VIX in the near future, exactly as they did in early 2011. Additionally, the daily chart of the VIX also displayed a bearish "W" formation, further confirming the trend.
Cramer said that in today's markets, investors need to use every tool at their disposal, thus the technicals are warning investors to be more cautious going forward, as another 5% drop to the downside could be looming. "Keep your eye on the VIX," Cramer concluded.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer took a minute to praise
CEO John Chambers for his cautious outlook on the company's conference call this week.
Cramer said he's still not happy that Cisco continues to blindly buy back its own stock. The company bought 27 million shares at an average price of $20.28 a share this quarter alone, while shares now trade at a mere $16.81.
But despite this continued blunder, Cramer said that Chambers has engineered a world-class management team that delivers world-class solutions to its customers. The company is no longer bloated and it continues to vanquish its rivals as it continues to take share.
That's why Cramer said it was prudent for Chambers to become less bullish on the conference call. While everything is going right inside the company, outside factors, including decreasing government spending, are an issue that every technology company will need to address in the near future.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer's Action Alerts PLUS was long COST, AAPL, USB.
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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