'Mad Money' Spotlight: Cramer Buys Best Buy

Jim Cramer says Best Buy is a good buy -- but says it's best to tune out Radio Shack.
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Jim Cramer announced last night that he is bullish on

Best Buy

(BBY) - Get Report

, but advised investors to turn the dial on rival

Radio Shack

(RSH)

.

Last month, Cramer suggested

buying Radio Shack

on the heels of the mandatory digital conversion. But that trade didn't work, and he now says to sell and cut your losses.

Instead, he says to look to Best Buy, which yesterday teamed up with

TiVo

(TIVO) - Get Report

in a marketing deal.

The two will

form an alliance

where Best Buy will heavily promote TiVo products in its stores and will attempt to bring TiVo's software and search tools to its own brand of electronics.

TiVo will develop a version of its set-top box -- to be sold in Best Buy's 1,100 U.S. stores -- that will let the retailer advertise its products and services to TiVo subscribers on their home televisions.

Financial details of the pact were not disclosed.

Granted, Best Buy has had its fair share of static interference amid the recession. While the elimination of rival

Circuit City

should have propelled Best Buy's market share, in such categories as DVDs, it's losing out to cheaper competitors like

Wal-Mart Stores

(WMT) - Get Report

and

Costco Wholesale

(COST) - Get Report

.

In its first quarter, profit tumbled 15% to $153 million, or 36 cents per share, compared with $179 million, or 43 cents per share, a year earlier. At the time, the company cited sluggish sales as consumers limited big-ticket purchases and Wal-Mart grew its presence in the electronics market.

But the company and investors see brighter times ahead with the appointment of

new CEO Brian Dunn

, who plans to invigorate the business by bolstering market share in local communities and becoming the go-to destination for digital solutions and "connectivity."

Shares of Best Buy closed down 9 cents on Friday to $32.77.

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