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When the macro-economic smoke clears, individual stocks can be seen for what they're actually worth, Jim Cramer told his Mad Money viewers Monday. Right now, many stocks are worth a lot more than what they're currently selling for.
Cramer said these two deals beg the question: Why were these stocks valued so low in the first place?
The low-value trend doesn't stop there. Caterpillar(CAT) - Get Report pre-announced horrible numbers, only to see its share rise on the news. Media stocks Walt Disney(DIS) - Get Report and Time Warner (TWC) were left for dead just a few weeks ago, and they've been marching steadily higher ever since. So, too, with Walmart(WMT) - Get Report and McDonald's(MCD) - Get Report , which are in the middle of remarkable turnarounds.
Cramer said all of these stocks never should've been so cheap in the first place, but eventually the markets woke up and saw them for the their true values.
While the rest of the pharmaceutical industry languishes, Johnson & Johnson(JNJ) - Get Reporthas been shining, Cramer told viewers. While the drugs stocks have fallen 9% for the year, J&J has risen 4%.
What is J&J's secret? Cramer said it's CEO Alex Gorsky, who took over at the company four years ago but is finally seeing the fruits of his labor.
Investors may recall that ago, Johnson & Johnson's consumer products division was a mess. The company faced multiple recalls and was ultimately sanctioned and forced to recall 135 million bottles of Tylenol. But now, four years later, the scrutiny of the FDA is subsiding and Johnson & Johnson is once again restarting its New Jersey manufacturing facility.
Beyond its consumer products, J&J now has over 11 drugs worth $1 billion or more. The company also has excellent financial discipline with a AAA-rated balance sheet that includes $18 billion in cash. Cramer said he's also a fan of the company's 2.8% dividend yield, its stock buyback program and its valuation of just 15.6 times earnings.
March Madness Stock Winners
Forget about sports analogies when picking stocks, Cramer told viewers. Invest in good companies and remember that, unlike sports, there can be multiple winners in the stock market.
Case in point: Oracle(ORCL) - Get Report , the enterprise software giants that been transitioning for years from an on-premise technology to new, cloud-based technologies. Everyone assumed when LinkedIn (LNKD) and Tableau Software(DATA) - Get Report imploded last month, bad things must be happening at all of the cloud companies. That thinking immediately took down shares of Salesforce.com(CRM) - Get Report , Adobe Systems(ADBE) - Get Report , SAP(SAP) - Get Report and countless others.
But Cramer reminded viewers that stocks are not a zero-sum game like sports. All of these companies can be winners, and indeed this quarter, they were. All three, and now all four thanks to Oracle, posted strong results, making the problems at LinkedIn and Tableau the anomalies.
In his "Homework" segment, Cramer followed up on a few stocks that stumped him during earlier shows. He said that Tyler Technologies(TYL) - Get Report is an interesting business, but trading at 33 times earnings after recently disappointing on earnings makes it a no-go.
Then there's Stag Industrial(STAG) - Get Report , a retail estate investment trust that focuses on industrial properties. The stock sports a 7% yield. Cramer called it dicey because the company has exposure to only the industrial sector and is selling properties to buy others. He suggested Ventas(VTR) - Get Report or Federal Realty Trust(FRT) - Get Report as better alternatives.
Finally, there was funeral services provider, StoneMor Partners(STON) - Get Report , which sports a hefty 10.4% yield. Cramer said StoneMor now has a negative cash flow, making its dividend suspect. The company also continues to take on debt for acquisitions and now appears over-extended. StoneMor, he said, is a sell.
In the Lightning Round, Cramer was bullish on Time Warner Cable (TWC) , Bristol-Myers Squibb(BMY) - Get Report , Palo Alto Networks(PANW) - Get Report , Fortinet(FTNT) - Get Report , CyberArk Software(CYBR) - Get Report , Goldman Sachs(GS) - Get Report and Radius Health(RDUS) - Get Report .
No Huddle Offense
In his "No Huddle Offense" segment, Cramer opined on the huge premium Sherwin-Williams is willing to pay for rival Valspar.
He said the combination makes perfect sense and is just the latest example of the market undervaluing individual stocks. It's also proof mergers and acquisitions are picking up, a sign of a healthy market overall.
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At the time of publication, Cramer's Action Alerts PLUS had no position in stocks mentioned.