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Walgreen

(WAG)

is a broken stock, not a broken company, Jim Cramer told viewers of his "Mad Money" TV show Tuesday.

Walgreen, which has long been one of Cramer's favorite pharmacy stocks and touched $42 on Monday, is being "condemned" by people for the wrong reasons. The stock closed at $45.11 on Tuesday.

Investors fear that

Wal-Mart

(WMT) - Get Report

is going to "undercut" Walgreen with lower prices.

What's really "killed" the stock is that people believe it has stopped growing, when in reality, it is "only seeing a slight decline" in this area, Cramer said.

The case against Walgreen is "full of holes," he said. And the people who crushed Walgreen and said it's not a good stock don't know what they're talking about. "The company is not broken at all," Cramer said.

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If people give Walgreen the same type of multiple that

Coca-Cola

(KO) - Get Report

gets, then Walgreen is a $72 stock, Cramer said. In addition, if you compare it with

PepsiCo

(PEP) - Get Report

, then Walgreen's going to $70, he said.

Moreover, the Wal-Mart problem is the first thing Walgreen addressed in its conference call. In reality, Walgreen's prices are as cheap -- if not cheaper -- than Wal-Mart's, Cramer said.

Walgreen is a "cheap stock" that "should have much higher margins soon," he said. "It is far from a broken company. It is a broken stock that will soon be healed."

Hotness

Cramer said he's caught an "overlooked IPO" in

DivX

(DIVX)

. And he believes that the stock, which has increased almost 17% after its IPO, still has a lot of potential to make people money.

DivX is a company that makes software for video compression and decompression and does 18% of its business with

Google

(GOOG) - Get Report

, Cramer said.

"We love Google and anything connected to Google," he said. "Soon there is going to be a bandwidth shortage, and that's why we believe DivX is sexy."

But that's not the only reason Cramer likes the stock. Sure, DivX may have "hotness potential," but the real reason he likes it is because of its fundamentals.

"I regard the numbers here as a thing of beauty," Cramer said.

DivX has a great business model, with 80% of its business coming from licensing fees. In addition, for 2005, DivX's gross margins were 89%. Additionally, in three straight years, DivX has doubled its revenue, he said.

The company has accelerated revenue growth, Cramer said. People missed getting into this stock because "it's a small company that is off the radar screen," said Cramer, who believes that DivX could be the next

Akamai Technologies

(AKAM) - Get Report

.

In fact, Cramer said DivX is "such a screaming buy" that it would be "criminal" not to recommend it.

Best Name in Pharma

Next Cramer ran his screens to see what seemed "out of whack." He looked for stocks with more than a $50 billion market cap, one year's earnings-per-share growth of at least 25% and at least 20% growth expected next year.

Although investors might expect more stocks to pop up with this search, only four names appeared in this category:

America Movil

(AMX) - Get Report

, Google,

Apple

(AAPL) - Get Report

and

Genentech

(DNA)

.

The cheapest stock on this screen was Genentech, which Cramer said has the "most upside and potential here by far."

Genentech, a stock near its 52-week low, doesn't deserve to be "so down and out," Cramer said. In fact, Genentech is the "best name in pharma, with the possible exception of

Johnson & Johnson

(JNJ) - Get Report

and

Schering-Plough

(SGP)

," both of which Cramer owns for his charitable trust,

Action Alerts PLUS.

Genentech is a good company that is down for some "not-so-important, short-term reasons," he said, adding that it "amazes" him that it's not near its 52-week high.

"First, Genentech should be able to hit its 25% growth for the next few years," Cramer said. "I have no problem believing it could have

a 31% long-term growth rate."

Genentech is cheap because of short-term catalysts, he said. First, people are waiting to see if the Food and Drug Administration will approve a Rituxan, Genentech's No. 1 drug, to be used to treat low-grade, non-Hodgkin's Lymphoma. Cramer believes that Genentech will get a nod for this.

Another decision that's going to take place next month is on Avastin. If this drug is approved by the FDA, it could be used for lung cancer and could "more than double sales" for Genentech, Cramer said. He believes that Genentech should get the nod here as well.

Another decision taking place next month deals with Genentech's Herceptin drug.

Cramer believes that "any possible bad news has already been priced into Genentech" as it is so low. The bottom line: "People should be buyers of Genentech."

Cramer welcomed

Lennar

(LEN) - Get Report

President and CEO Stuart Miller to his show and asked him his thoughts on why the stock is going up.

"We're talking about being primarily focused on our balance sheet, keeping our inventory levels low and recognizing that the market is a little or a lot soft right now," Miller said. "But we're preparing for what happens when the market turns around."

At this point in the cycle, typically a company's debt to total capital spikes horribly, Cramer said. He asked where Lennar's debt to total capital is.

At quarter end, it was 31.9%, down from 37% a year ago, Miller said.

"We're focused on keeping that inventory really light, and cash and liquidity really strong," he went on to say. "There is a difference between what people want to pay for homes and what homes are worth.

Miller said there has been an inventory buildup in the marketplace that he believes "is going to correct in due time, which is why we think liquidity is king."

To view Cramer's interview with Stuart Miller, please click here.

Lightning Round

Cramer was bullish on

Altria

(MO) - Get Report

,

Halliburton

(HAL) - Get Report

,

Lincoln National

(LNC) - Get Report

,

T. Rowe Price

(TROW) - Get Report

,

Legg Mason

(LM) - Get Report

,

I-Flow

(IFLO)

,

Johnson & Johnson

(JNJ) - Get Report

,

Harley-Davidson

(HOG) - Get Report

,

USG

(USG)

,

Sonic

(SONC)

,

General Dynamics

(GD) - Get Report

,

Limited Brands

(LTD)

,

TJX

(TJX) - Get Report

,

Automatic Data Processing

(ADP) - Get Report

,

Prudential

(PRU) - Get Report

and

Yamana Gold

(AUY) - Get Report

.

Cramer was bearish on

Evergreen Solar

(ESLR)

,

Walter Industries

(WLT)

,

Freeport-McMoRan

(FCX) - Get Report

,

Tibco Software

(TIBX)

and

Principal Financial

(PFG) - Get Report

.

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

Foster Wheeler

(FWLT)

, which he owns for his charitable trust,

Action Alerts PLUS, and

Piper Jaffray

(PJC) - Get Report

.

He was bearish on

Maxwell Technologies

(MXWL) - Get Report

.

For more of Cramer's insights during the 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 Halliburton, Schering-Plough, Foster Wheeler, Altria and Johnson & Johnson.

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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