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) -- "Always own best of breed," Jim Cramer announced to the viewers of his

"Mad Money"

TV show Thursday, as he reviewed one of his cardinal rules of investing.

He said it's always worth it to pay up for the highest quality stock in any given sector.

To illustrate his point, Cramer looked at the earnings of three consumer product giants,


(KMB) - Get Report



(CL) - Get Report


Procter & Gamble

(PG) - Get Report

, a stock which Cramer owns for his charitable trust,

Action Alerts PLUS.

Cramer said Kimberly's results were a genuine disaster, missing street estimates by 14 cents a share while guiding estimates downward for the year. At issue were the company's rising input costs and increased competition from private label brands.

Colgate, however, delivered a two-cent a share earnings beat, but Cramer called this beat misleading, as it primarily came from cost cutting. In reality, sales at Colgate were down 1.4%, and the company saw decelerating growth in many of its product lines.

Then there was Procter & Gamble, which also beat by two cents a share, but unlike Colgate, Procter's upside came from increased sales. Cramer said Procter can perform better than its peers based largely on its scale.

Procter has 22 brands producing over $1 billion in sales, with another 20 brands coming in between $500 million and $1 billion in sales. Cramer said Procter can offset rising costs by just fractional moves in its unit volumes.

Cramer said Procter is also a turnaround story, with a new CEO focused on product innovation and expansion into emerging markets, which now accounts for 30% of company sales. Trading at 15 times earnings, Cramer said Procter does sell as a premium to both Colgate and Kimberly, but that premium is rightfully deserved.

Bright Roadmap

In the "Executive Decision" segment, Cramer sat down with Sandeep Vij , president and CEO of

MIPS Technology

( MIPS), a semiconductor design firm whose shares have risen 218% so far this year.

Vij said the technology at MIPS has always been very strong, but the company has moved itself from being a provider of just processors to a provider of solutions for many different applications. He said one major part of his job is meeting with clients and selling them on the company, its technology and its roadmap for the future.

One bright spot for the company is



(GOOG) - Get Report

Android cell phone software, which MIPS now has running on its processors. Vij said MIPS has a very power efficient platform on which Android can run.

In addition to the huge opportunity in smartphones, Vij said MIPS is also benefitting from the digital home, where it's No. 1 in digital TV processors, as well as No. 1 in set-top boxes, DVD players, digital cameras and WiFi access points. "Most consumers have several MIPS processors in their home right now," said Vij.

Cramer called MIPS a great way to play the growth of Android and the mobile Internet tsunami. MIPS trades at 24 times next year's earnings, but Cramer still called the stock inexpensive.

Discount Power

Turning to the retail sector, Cramer sat down with Steve Tanger, CEO of

Tanger Factory Outlets

(SKT) - Get Report

, which currently trading at its 52-week high, with a 3.2% yield to boot.

Tanger said his outlet centers give consumers the opportunity to buy items direct from the manufacturer at prices 30% to 50% off traditional retail. He said consumers love the convenience of regional malls, and often go there to hang out, but when they want to buy, they come to the outlets.

When asked about his company's fabulous results, Tanger said his tenants have done a fabulous job of cutting costs and bringing down inventory levels. He said Tanger is now ahead of where it was before the recession took hold, and is once again a growth story.

When asked about competition from online retail, Tanger said that online sales have their niches, but when it comes to footwear and apparel and anything that comes in sizes or colors, people like to shop in person and try it on. That's why, he said, online apparel sales have a 30% to 50% return rate.

Finally, Tanger said that shopping at outlets is not seen as a "trade-down" play any longer. He said that consumers want better prices in good times and the need better prices in tough times, and that's why Tanger has been so successful, with sales up 6.3% this past quarter.

Am I Diversified?

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





(HON) - Get Report



(HES) - Get Report


Home Depot

(HD) - Get Report


Hot Topic

( HOTT).

Cramer said this portfolio was not diversified when it comes to to the letter "H," nor was it diversified with two retail stocks. He recommended selling Hot Topic in favor of a healthcare stock.

The second caller's top holdings included

Bristol-Myers Squibb

(BMY) - Get Report



(F) - Get Report



(C) - Get Report


Nordic American Tanker

(NAT) - Get Report


Compass Diversified

(CODI) - Get Report


Cramer said this portfolio was properly diversifed.

The third caller had


(SDR) - Get Report


Fly Leasing

(FLY) - Get Report


Annaly Capital

(NLY) - Get Report






(MO) - Get Report


Cramer said this portfolio works for him.

Lightning Round

Cramer was bullish on


(IMGN) - Get Report


PMI Group

( PMI),


(T) - Get Report



(VZ) - Get Report



(MSFT) - Get Report


RF Micro Devices



Triquint Semiconductor



Skyworks Solutions

(SWKS) - Get Report


JPMorgan Chase

(JPM) - Get Report


Wells Fargo

(WFC) - Get Report



(C) - Get Report


Ford Motor

(F) - Get Report


He was bearish on

Vonage Holdings

(VG) - Get Report


Exxon Mobil

(XOM) - Get Report


Cramer continued his recommendation of Tanger Outlets.

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

To contact the writer of this article, click here:

Scott Rutt


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At the time of publication, Cramer was long Procter & Gamble.

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.