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When Jim Cramer learned that

Biosite

TST Recommends

( BSTE) got a takeover bid from

Beckman Coulter

( BEC), he immediately started thinking about which stock could follow in Biosite's footsteps, he told viewers of his "Mad Money" TV show Monday.

Now Biosite, a stock Cramer recommended to viewers on his Feb. 23 show, is in the past, and people must sell it, he said. Market-players should take their profits from Biosite and buy

Cepheid

(CPHD)

as "the next great diagnostics play," Cramer said.

Last weekend, there was an article in

Barron's

that said the Veterans Administration is mulling who should get the big contract for staph-infection tests in hospitals, and Cramer believes tiny Cepheid could get the contract over

Becton Dickinson

(BDX) - Get Report

.

And even if Becton Dickinson does get it, that company is too big, and winning the contract won't have as positive an effect on the stock as it would on Cepheid's, Cramer said. "If

Cepheid gets the deal, it could soar," he said.

If Cepheid doesn't win the contract, it still should go up, Cramer said. He said the diagnostics business is "hot" and that even though the Democrats in Congress are anti-Big Pharma, they seem to like diagnostics companies.

Cepheid also could be a good takeover candidate for a company looking to expand its diagnostics division.

Cramer urged people to wait three days before buying the stock and to use limit orders.

'The Benefit of the Doubt'

"There are times when trust will make you more money than distrust," Cramer told viewers as part of his weeklong "Benefit of the Doubt" series. "There are some CEOs that will make you more money if you take what they say at face value, even if they screw up, than if you place your bets against them."

Some of these managers, he said, "deserve the benefit of the doubt." Although this may run against any single instinct people have, it's true. When Cramer talks about deserving the benefit of the doubt, he said he's referring to managers in the consumer products and retail industries.

"I'm talking about something more important than the numbers," he said, adding that the time frame for these stocks is longer than 24 hours. "We're not trading here."

Image placeholder title

One such CEO who deserves the benefit of the doubt is

Coach's

(COH)

Lew Frankfort, Cramer said. Last May, when Coach missed its numbers, Frankfort went on the show and said it was a one-time thing, Cramer said. And if viewers gave him the benefit of the doubt then, they might have caught a double in the fancy-handbag maker, Cramer said.

The first name on Cramer's Benefit of the Doubt list on Monday was

VF Corp.'s

(VFC) - Get Report

Mackey McDonald.

When people wanted VF to get rid of its Vanity Fair bra business, it did, Cramer said. Instead of going up after that, the stock suffered. But now, a month later, the stock is up significantly, he said.

"This man is a man I can trust," he said. "When VF misses a number, you can take it as a buying opportunity."

Activists and Underperformers

The new template is that an underperforming management plus an activist investor equals money, Cramer said. A stock that fits this model and one that investors should consider getting into is

PDL BioPharma

(PDLI) - Get Report

.

The company gets millions of dollars in royalties, but people wouldn't know that from the performance of its stock. PDL BioPharma's management has made "many bad decisions" over the years and turned the company into something people don't want to touch with a 10-foot pole, Cramer said.

But now that credible activists have moved in and have estimated that the $20 stock should reach $39 to $59, he believes it is time for viewers to get in as well. The activists will be doing the "heavy lifting" here to get the management to start acting more intelligently, and all that market-players have to do is "piggyback" off that, Cramer said.

PDL BioPharma has taken its money from royalties and "spent it like a drunken sailor," he said. "This was a company that should have been printing money, but it was bleeding it."

Some excessive spending includes PDL BioPharma's $500 million acquisition of ESP Pharma and $200 million to $250 million in capital expenditures when the company thought it was three years away from delivering its first drug, Cramer said.

Cramer said he got the idea from Stockpickr.com's

portfolio of stocks targeted by activist investors.

Mad Mail

In his "Mad Mail" segment, Cramer told a viewer that he prefers

Transocean

(RIG) - Get Report

, which he owns for his

Action Alerts PLUS charitable trust, to

Weatherford International

(WFT) - Get Report

because the latter has too much exposure to Canada.

Responding to another mailer, Cramer said he would pull the trigger on

Quest Diagnostics

(DGX) - Get Report

, which he also owns for his charitable trust, because it has a big buyback and he believes "it's a bull stock."

Lightning Round

Cramer was bullish on

Transocean

(RIG) - Get Report

,

Washington Mutual

(WM) - Get Report

,

Bank of America

(BAC) - Get Report

,

Thermo Fisher Scientific

(TMO) - Get Report

,

Western Union

(WU) - Get Report

,

Freeport-McMoRan

(FCX) - Get Report

,

Best Buy

(BBY) - Get Report

,

Northern Orion Resources

( NTO),

Lundin Mining

( LMC),

BigBand Networks

( BBND) and

Cisco

(CSCO) - Get Report

.

Cramer was bearish on

Helix Energy

(HLX) - Get Report

.

There Goes Swifty!

During his "Sudden Death" round, Cramer was bullish on

Western Refining

(WNR)

,

Valero Energy

(VLO) - Get Report

and

Energy Metals

( EMU).

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

.

Want more Cramer? Check out Jim's rules and commandments for investing from his popular book by

clicking here

.

At the time of publication, Cramer was long Quest Diagnostics and Transocean.

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.