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NEW YORK (
) -- It's easy to tell investors to sell everything, Jim Cramer told
viewers Monday after another rough day on Wall Street. But that would be a mistake because many stocks are still making new highs.
Cramer then listed five reasons why investors need to stick to their guns.
1. The Europeans are not brain-dead. Despite the continued problems in Europe, the bailouts keep coming and the Europeans are becoming experts at keeping all of the balls in the air and plodding forward.
2. Obamacare could be overturned. If the health-care reforms are indeed overturned it would be a huge weight off the markets' shoulders.
3. Lower oil prices. While many economists worry about what lower oil prices mean for the global economy, here in the real world lower gasoline and energy prices mean a huge tax break for corporations and individuals alike.
4. You can't get back in with ease. Cramer reminded investors who think they can sell now and get back in later that calling a bottom is extremely hard, especially in a market that can rally 700 points on the slightest of good news.
5. The U.S. natural gas glut. Cramer once again pleaded with U.S. leaders to take notice of our once-in-a-lifetime chance to become energy-independent and put millions of people to work in the process.
For all these reasons, Cramer concluded, investors need to stay in the game and not give up on the stock market.
Between Good and Great
In a tough market, the difference between a good stock and a great one matters, Cramer told viewers, as he pitted
in an all-organic battle to the death to see which one reigns supreme.
Cramer said that if comparing on price alone, Fresh Market would come out on top as the company trades at 31 times earnings with a 22% growth rate, compared to Whole Foods at 34 times earnings with an 18% growth rate. But there's a lot more to consider than price alone.
Typically investors would choose a smaller regional-to-national story like Fresh Market over a larger company like Whole Foods because the smaller player would offer faster growth. But in today's competition, Whole Foods turns that logic on its head as the larger player is also the faster one.
Cramer said that Whole Foods is on fire, delivering $878 per square foot of sales in its most recent quarter with a five-cent-a-share earnings beat and better same store sales. The company is also accelerating its new store rollout.
Meanwhile, Fresh Market, while a solid competitor, is only delivering $500 per square foot of sales and is indeed growing slower than that of Whole Foods.
That's why Cramer has long contended that Whole Foods is the best-of-breed player in the organic food space and will remain so again today.
Another Taste Comparison
Sometimes picking stocks isn't about the numbers, it's all about taste, Cramer said before his second head-to-head matchup, this time between
, a stock which he owns for his charitable trust,
Action Alerts PLUS, and the newly-minted
Burger King Worldwide
Cramer said that when he talks about taste, he's not talking about the taste of a Big Mac versus a Whopper, but rather the tastes of the investor who wants to own the stock. In the short term, he said, traders will likely go for Burger King, but for longer-term investors, McDonald's is the way to go.
It's all about risk tolerance, said Cramer. Burger King is a brand new entity and is in the middle of a major turnaround. How long will that turnaround take? How much will it cost? No one knows. But in an environment where input costs are falling and consumers are trading down to lower-cost dining, there will likely be a lot of short-term catalysts for Burger King.
Meanwhile, there aren't a lot of news items headed McDonald's way in the near future, which makes it a longer-term play, said Cramer. McDonald's is a consistent player with a juicy 3.1% dividend yield that makes it perfect for investors as opposed to traders. Shares of McDonald's are also well off their highs and trade at just 14 times earnings.
Cramer concluded by calling McDonald's a consistent "A-" student that's not very exciting compared to Burger King, which is a "C+" student that's hitting the books to become a solid "B" student.
Here's what Cramer had to say about caller's stocks during the "Lightning Round":
: "I have liked the stock but it's just moved too much. Let's wait for a pullback."
Bed Bath & Beyond
: "I need to see a total breakdown of this stock before I can tell you to get in."
Baytex Energy Trust
: "These are all ratcheting down their distributions. I'm going to say don't buy."
: "You can't buy this one until it yields 4%. There's no floor in the stock yet."
: "No, no. When the market is bad, stocks like that won't hold up."
: "I do not believe that dividend is sustainable. I want to say to hold off."
: "It has a good yield, and with oil and gas coming down this one is terrific. I'm not against this one right here."
: "This may be a decent speculative play. The question is, can they make money. It seems wrong to sell it here though."
Another Food Fight
investors should also have a high-yielding consumer packaged foods company in their portfolio, said Cramer, as he kicked off his third match-up of the night, this one between
Cramer said that if he were back at his old hedge fund he'd start a paired trade going long ConAgra and short Kellogg. Why? Because in an environment where the prices of everything from ingredients to packaging and transportation are falling, ConAgra has the most to gain.
ConAgra currently has 25 brands that are number one or two in their category, said Cramer, everything from Slim Jim and Orville Redenbacher popcorn to Pam cooking spray. While ConAgra has a plan for growth, executives at Kellogg seem to be stepping on their own toes.
Kellogg saw a 1.3% decline in sales in its most recent quarter, said Cramer, and the company cut guidance and its share repurchase program thanks to a decline in market share. Meanwhile, ConAgra saw its volumes decline, but revenue increase thanks to higher prices and falling prices. The company offered upbeat guidance and is moving into more lucrative private label arrangements.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer again opined on the falling price of oil and the obliteration of the oil and gas stocks along with it. He said the oil service group is to totally in the control of big money managers, all of whom are betting on weak demand from Europe and China.
But in their haste to throw out the entire sector, Cramer said the managers have neglected to take note of the dramatic increase in U.S. oil and gas production, as well as the inedibly low prices of the stocks they've been shorting so heavily.
Cramer said that after this quarter is over, he would consider buying into some of these beaten-down names.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer's Action Alerts PLUS had a position in MCD.
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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