Click here for an archive of Jim Cramer's MadMoney recaps.Click here to get Jim Cramer's Mad Money Post Game video exclusivelyon TheStreet.com.
NEW YORK (
) -- Jim Cramer told the viewers of his "Mad Money" TV show Monday that one key phrase appeared over and over again from this month's flurry of corporate earnings, and that phrase may have caused the markets to reach its highs for the year.
Cramer said the phase "business is stabilizing, albeit at lower levels" was a phrase repeated in dozens of conference calls this quarter, from companies as wide ranging as
. He said that while the first part, stabilizing, has led the markets off the March lows, the second part, "albeit at lower levels," is not bullish for the future.
According to Cramer, the markets cannot rally past Dow 10,000 without earnings actually improving, either to levels seen before the markets tanked, or better. Without those earnings, he said, the markets simply don't have enough momentum to power ahead much further.
There are a few bright spots in the markets, he said. Companies such as
all reported things were improving at their companies, for example. Others, like
, reported that things were at least on par with expectations, he said.
The rest of the markets, however, were not so lucky, said Cramer. And with earnings stuck "at lower levels," the markets may also settle out "at lower levels" as well.
In the "Executive Decision" segment, Cramer spoke with Rob Gross, CEO of
, which is up 18% since Cramer last recommended it on May 15, and up 48% since he originally recommended it on Aug. 18, 2008.
Gross said his company, though still fairly small with $350 million in annual sales, has the opportunity to grow by 300% in its current footprint alone. He said his company is rapidly becoming the lowest cost auto repair operator out there.
When asked about what's driving his company's success, Gross said the extensive car dealer closings have made Monro the most convenient repair option in many markets. Conversely, he said the Cash For Clunkers program, which junked 750,000 cars, has done little to affect his business on the downside.
Gross also said when it comes to tires, the company buys 1.7 million of them, giving the company tremendous leverage and pricing advantages with its vendors.
Cramer said he's still a believer in the Monro story and would be a buyer of the stock. He sees it going to $34.
In Praise of Natural Gas
Cramer once again spoke with Pennsylvania Gov. Ed Rendell about the state of natural gas in America, along with the governor's recent decision not to tax natural gas from the state's Marcellus shale region.
Cramer commended Rendell for the bold move not to levy taxes on his state's huge natural gas reserves. Recent studies have estimated that if Pennsylvania were to fully tap into its gas reserves, it would rival an OPEC nation.
Rendell said his decision was based on one thing, jobs. He said that exploiting the natural gas in his state will create tens of thousands of jobs, from engineers to blue collar workers. He said the potential for natural gas in Pennsylvania is huge for both the state and property owners. Currently Pennsylvania leases just 30,000 state-owned acres for drilling, but expects to generate $200 million from those leases.
When asked why Congress and others are slow to understand the potential of natural gas given the huge advancements in technology, Rendell said that people are simply slow to react to change.
He said that if every state owned fleet were forced to convert to natural gas, the pipelines and infrastructure needed to support it would be built and the country's dependence on foreign oil would be stopped.
Tale of Two Defense Stocks
"Not all defense contractors are created equal," Cramer warned viewers. Case in point,
, two stocks that got hammered last week, but only one deservingly so.
Cramer said while a company's sector usually accounts for the 50% of a stocks potential, sometimes the internal challenges a company faces means a lot more than the other 50%. That's the case at Lockheed, said Cramer, as the company continues to struggle with its pension obligations. By all accounts, the pension situation at Lockheed is getter worse, not better, he said.
Then there's the issue of what Lockheed makes. Cramer said the company is continually getting shafted by shifting priorities at the Pentagon. Company executives even admitted "near-term challenges," at its F22 Raptor program winds down and other programs from presidential helicopters to search and rescue choppers are getting cancelled. Even the company's space systems are under fire in Washington, said Cramer.
While trading at just nine times earnings, Cramer said Lockheed may seem cheap, but that's only the case if you believe the company can deliver those earrings.
On the flip side, Cramer said Northrop has what the new Pentagon wants, and won $10 billion in new contracts last quarter. The company's backlog is increasing and all of its segments are performing well. Northrop is growing at 12%, said Cramer, compared to just 7% at Lockheed, and that's why Northrop is the better buy.
Cramer was bullish on
( TLAB) and
He was bearish on
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
For more of Cramer's insights during the Lightning Round, clickhere
At the time of publication, Cramer did not hold any positions in the stocks mentioned.
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.