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) -- "The averages don't reflect the most significant milestone of the year," Jim Cramer told the viewers of his

"Mad Money"

TV show Wednesday, as he opined on the pending bankruptcy of


Cramer said that the death of Blockbuster means that some of his long-held rules would have to broken.

Cramer said


(NFLX) - Get Netflix, Inc. Report

is the beneficiary of Blockbuster's fall and is the new king of all things cinematic. According to Cramer, Netflix's $8.2 billion market cap is too low now that it has cornered in-home movie watching.

He said many would argue that Netflix, after a monster run to the upside, is just too expensive. That's where the rule breaking comes in. Cramer said that normally stocks are measured on their price-earnings ratio, and normally he's willing to pay a multiple that's twice a company's growth rate. But in the case of Netflix, other metrics need to be used.

Cramer said that when a stock punches through his price-earnings metric, he looks at the company's value as a takeover target. In the case of Netflix, there aren't any likely suitors, so Cramer moved to a third valuation metric, one he said needs to be used with caution.

Cramer said his final valuation metric is the notion that a company's market cap is simply too small for its market opportunity. This metric works for a stock like

TheStreet Recommends

(CRM) - Get, inc. Report

, which is highly valued, but still far too small for a stock that could become the next


(MSFT) - Get Microsoft Corporation Report



(ORCL) - Get Oracle Corporation Report


Cramer said only a few stocks fit into this group of valuation exceptions.


(AKAM) - Get Akamai Technologies, Inc. Report

is another one, he said, as is

(AMZN) - Get, Inc. Report

, a stock that's only valued at twice that of


(TGT) - Get Target Corporation Report

, despite being the world's largest online department store. Cramer said Amazon is worth $177 a share.

And that's why Netflix, despite its 10 point gain today, is still a buy, said Cramer.

Gold and the Fear Trade

Continuing his "Chart Week" series of teaching technical analysis, Cramer welcomed John Roque, managing director of the WJB Capital Group, to the show to discuss the technical analysis of gold versus the

S&P 500


According to Cramer, every portfolio should have some gold, whether it be gold stocks, the

SPDR Gold Shares

(GLD) - Get SPDR Gold Shares Report

ETF or even gold coins. Cramer said ultimately, his price target on gold remains $2,000 an ounce.

Roque agreed with Cramer's sentiments as Roque highlighted a chart comparing the price of gold to the S&P 500 going back 80 years. He said on average, gold trades at 1.5 times the value of the S&P 500, but in times of crisis, such as the Great Depression and the Soviet invasion of Afghanistan, the value of gold rose to four times, and even six times, the value of stocks.

Roque said that gold benefits from all sorts of inputs, including inflation and deflation risks, and as we just saw, sovereign debt risks as well. He said that gold is not in a bubble period. Bubbles, he said, are caused by greed, and in today's market, gold is moving based on fear. Better still, to date, the gold stocks have not participated in this gold rally.

Takeover Fever



(DELL) - Get Dell Technologies Inc Class C Report




(HPQ) - Get HP Inc. Report

bidding war for


(PAR) - Get PAR Technology Corporation Report

, and



(IBM) - Get International Business Machines Corporation Report

purchase of


( NZ), Cramer said the data storage stocks have gotten too hot to handle.

Cramer said every stock in the data storage sector has risen on takeover fever, but this fever will be coming to an end once the acquirers come to their senses. He said while the fundamentals are sound, he'd take a pass on companies like

Compellent Technologies

( CML),

Isilon Systems

( ISLN),

CommVault Systems

(CVLT) - Get CommVault Systems, Inc. Report



(TDC) - Get Teradata Corporation Report

, at least until the stocks cool off a bit.

Cramer said that while its true that the amount of data stored in the world is doubling every 18 months, and these companies offer great technology that companies need, with the stocks trading at an average of 45 times earnings, investors simply need to wait.

Am I Diversified?

Cramer spoke with callers to see if their portfolios have what it takes. The first caller's portfolio included

MedcoHealth Solutions




( MOT),

Bank Of America

(BAC) - Get Bank of America Corp Report


iShares Silver Trust

(SLV) - Get iShares Silver Trust Report



(MMM) - Get 3M Company Report


Cramer said "Yes!" to this portfolio.

The second caller's top holdings included


(CSX) - Get CSX Corporation Report


Health Care REIT



NextEra Energy

(NEE) - Get NextEra Energy, Inc. Report



(TOT) - Get Total SA Report



(PEP) - Get PepsiCo, Inc. Report


Cramer said he'd bless this portfolio.

The third caller had


(T) - Get AT&T Inc. Report



(MO) - Get Altria Group Inc Report



(DD) - Get DuPont de Nemours, Inc. Report



(NRG) - Get NRG Energy, Inc. Report



(CRNT) - Get Ceragon Networks Ltd Report

as their top five stocks.

Cramer said Ceragon and AT&T were too similar and he'd sell Ceragon and replace it with an oil stock.

Lightning Round

Cramer was bullish on


(C) - Get Citigroup Inc. Report





(BIDU) - Get Baidu Inc. Report


He was bearish on

Diana Shipping

(DSX) - Get Diana Shipping Inc. Report


Baker Hughes



Allied Irish Banks




(JOBS) - Get 51job Inc. Report


--Written by Scott Rutt in Washington, D.C.

To contact the writer of this article, click here:

Scott Rutt.

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To watch replays of Cramer's video segments, visit the Mad Moneypage on CNBC


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clicking here.

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


At the time of publication, Cramer was not long any stock mentioned.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for, Inc., and CNBC, and a director and co-founder of All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of 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, 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 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, 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, 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 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, 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.