Cramer's 'Mad Money' Recap: July 8 - TheStreet

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"We've got some new market leaders," Jim Cramer told viewers of his "Mad Money" TV show Tuesday. "The drug and health care stocks that were so hated just one week ago were the ones up today."

Cramer said the safest and most consistent group in a market of high energy prices, high raw costs and a slowing economy is healthcare. He said the health care stocks are worth owning, as the big money managers move their money into these recession-proof names.

Cramer cited the AMEX Pharmaceutical index, which fell to a low of 283 recently from 355 but has since rebounded, as one indicator of the groups recent strength.

Within the health care group, Cramer recommended

Smith & Nephew

(SNN) - Get Report

as his favorite. The company reported a disappointing first quarter that caused shares to fall 11% from $64.53 to just $57.40 on May 1. Cramer called today's price of just over $52 a share an opportunity to own a great stock at a much too low price.

Smith & Nephew has a diversified portfolio of health care businesses. It gets 37% of its revenues from orthopedic reconstruction and it has a orthopedic trauma, endoscopy, and advanced wound care business as well. Cramer said all of its businesses are good and stable.

Cramer: I've Written Off Lehman

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Cramer said Smith & Nephew's recent earnings miss was due to its recent acquisition of a Swiss-based company, which created $100 million of additional sales costs along with $10 million in unforeseen investigation costs. "This news was over done," said Cramer, noting the company posted $3.37 billion in revenue for 2007.

With the worst behind Smith & Nephew, he expects the company to begin seeing the benefits of their mergers going forward. He also likes the company's $1.5 billion stock buyback program.

"Health care is back and bigger than ever," Cramer told viewers.

Breaking the Silence

"I think we are still facing some major financial collapses in the banks and brokers," Cramer told viewers.

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Despite small run-ups in those stocks recently, he's worried about the fundamentals of

CitiGroup

(C) - Get Report

,

Bank of America

(BAC) - Get Report

,

Washington Mutual

(WM) - Get Report

and

Wachovia

(WB) - Get Report

.

And he's worried about the relative silence surrounding

Freddie Mac

( FRE) and

Fannie Mae

( FNM) and brokers

Lehman Brothers

( LEH) and

Merrill Lynch

( MER).

Even the Federal government is eerily silent, said Cramer. "You could hear a pin drop." He said the

Federal Reserve

is no longer in control of the banking situation and will be powerless to stop at least one of these institutions from failing. He said the Fed needs a plan and needs to let the markets know that there's a plan.

Cramer faulted both presidential candidates for not addressing this on-going issue.

To show how grave the situation has become, Cramer started a stress index last August to gauge the market strength of mainly home builders and banks. The stress index closed today at just 20, having lost 80% of its value.

Cramer urged the Fed to break the silence and let the markets know there is a plan.

In Defense of Steel

Cramer welcomed Dan Dienst, CEO of

Sims Metal Management

(SMS)

to the show to find out if the mounting pressures on the steel industry are signaling a reversal for the group, or a buying opportunity.

Dienst said that he is not seeing a deterioration of the steel market. "There is still a voracious appetite for metals," he explained. Dienst said his company still has great earnings visibility, and he sees strong demand for steel in the foreseeable future.

According to Dienst, U.S. auto demand is not significant when compared to the global demand for autos and other steel needs.

Cramer told home gamers they should consider beginning a position in Sims or other steel stock.

Mad Mail

In this segment, Cramer told a viewer that he would not put

General Motors

(GM) - Get Report

CEO Rick Wagner on his Wall of Shame. Wagner was doing a lot of things right and could not have foreseen oil at $150 a barrel, he said.

He told a second viewer that he's a buyer of

L-3 Communications

(LLL) - Get Report

and is not worried about Obama dismantling the defense budget.

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Lightning Round

Cramer was bullish on

CONSOL Energy

(CNX) - Get Report

,

Comcast

(CMCSA) - Get Report

,

Ariba

( ARBA),

Google

(GOOG) - Get Report

,

Yahoo!

(YHOO)

,

Chesapeake Energy

(CHK) - Get Report

and

John Deere

(DE) - Get Report

.

Cramer was bearish on

Time Warner

(TWX)

and

NYSE Group

(NYX)

.

Want more Cramer? Check out Jim's rules and commandments for investing by

clicking here

.

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

.

At the time of publication, Cramer was long Deere & Co.

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.