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NEW YORK (
) -- "Investing in U.S. Treasuries isn't prudent; it's reckless," Jim Cramer told the viewers of his "Mad Money" TV show Tuesday.
He said that with so many great stocks out there, investors would be far better served staying in equities.
Responding to data that showed an increase in capital heading towards low-yielding bond funds, Cramer said he cringed at the horrible decisions investors are making. He said that bond funds, while safe, offer no upside, and investors who invest in them will never recover the losses incurred during the crash.
Cramer said the U.S. government will be issuing a lot of bonds in the coming years to finance growing deficits. He wondered why anyone would want to invest in a security that is constantly diluting itself.
As an alternative, Cramer suggested stocks with high-dividend yields. He reminded viewers of the power of compounding dividends, and the favorable tax treatment dividends receive. He also noted that stocks that pay and raise dividends are often great companies that appreciate in value as well.
Cramer recommended stocks like
as three great examples of dividend stocks.
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Cramer also suggested other stocks, that may not have dividends but represent great value at the moment. He said that
, a stock which he owns for his charitable trust,
Action Alerts PLUS, along with
are all attractive.
Google's Huge Upside
In the "Off the Charts" segment, Cramer went head to head with colleague Dan Fitzpatrick over the chart of
, which Cramer set a price target of $700 on Nov. 9.
According to Fitzpatrick, Google could see $750 a share, calling the chart "the best in the book." Fitzpatrick said that Google's daily chart is seeing higher highs and higher lows, while not showing a single sign of weakness. He noted the company's "on balance volume," a measure of volume on up days versus down days, as showing considerable strength
Cramer agreed with Fitzpatrick's analysis and also raised his price target on Google to $750 a share as well. Cramer said that Google could earn $27 a share next year, and with a 21% long-term growth rate, should trade between 27 and 28 times its earnings.
Cramer said Google is a better company than it was in 2008, the last time it saw $750 a share. He said the company is benefiting from a multi-year bull market in online advertising spending, and is the reigning king of online ads. With online ads accounting for a paltry 12% of all U.S. ad spending, the upside for Google is huge.
In addition to its advertising juggernaut, Cramer said the company also has too many other great businesses, including mobile and video.
In the "Executive Decision" segment, Cramer sat down with Steve Sadove, chairman and CEO of
, to get the latest read on high-end retail in America.
Sadove said that consumers still want luxury in today's economy and are more focused on value, quality and price than ever before. He said that a year ago, the company's flagship New York City location was dead, but this year, the tourists are back.
Sadove explained that last year Saks had a glut of excess inventory and used heavy discounting to clear out that inventory. However this year, he said, sales have returned to a more normal pace. Sadove said that luxury is all about scarcity, getting that hot item before it sells out. And with inventory down 20% to 25% from last year's levels, items are once again in balance with supply and demand.
Sadove also explained that while the company didn't need to raise capital last year and restructure its balance sheet, he felt it was a prudent move that positioned the company for any economy. He said he's now quite comfortable with Saks' finances.
Touring the company's flagship store, Sadove showed Cramer the company's new eighth floor, which houses 100,000 pairs of shoes. Sadove called the show department the largest collection of designer shoes in the world, and noted that shoes are once again a hot commodity.
Sadove said that growth at Saks will come from all fronts, including the Internet, now the company's second largest store, as well as its outlet and full-line locations.
Cramer told a viewer that he'd stick with natural gas, with stocks like
, and would not be a buyer of solar stocks like
Cramer told a second viewer that the way to play the recovering job market is with
and not with
Finally, Cramer told a viewer that
, a stock which he owns for his charitable trust,
Action Alerts PLUS,
are the best stocks to take advantage of cold, winter weather.
Cramer was bullish on
He was bearish on
-- Written by Scott Rutt in Washington D.C.
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At the time of publication, Cramer was long Pepsico, Home Depot.
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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