RealMoney Radio Recap: Pepsi's Junk Food Fix

Cramer says that unhealthy snacks are killing the Coke rival.
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The anti-trans-fat trend could hurt

PepsiCo

(PEP) - Get Report

, Jim Cramer said on his

"RealMoney" radio show Monday.

Trans fat is a code word for food that is bad for you and could cause obesity and bad health conditions, he said. Rather than being a fast-food problem, it's a snack problem.

And the company with the worst snacks health-wise is Pepsi, Cramer said.

(Editor's note: Snack foods made by PepsiCo's Frito-Lay division, including Doritos, Cheetos and Tostitos, do not contain trans fats.)

Not only did Pepsi's Gatorade product not perform well during its best season, but also raw costs are going up, and the company's competitor

Coca-Cola

(KO) - Get Report

is "rejuvenating itself," Cramer said.

Plus, this anti-trans-fat trend is not a fad, he continued. It is "secular" and "long-lasting."

Market players should be careful with Pepsi, Cramer warned.

"I don't like it when it comes to the business cycle, and I don't like it when it comes to the company's snacks," he said. Pepsi "I no longer endorse."

Disney's

(DIS) - Get Report

been "pummeled" since it reported its quarter, even though it came out with good numbers, said Cramer.

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One theory as to why this is happening is that its prime-time TV costs too much, he said. Cramer said he understands that Disney is No. 1 in the prime-time arena and that the company should be making the most money from that, but costs are up and ad revenue is down.

However, the problem with this theory is that the company also has a great movie business, which should make up for its TV business, he said. Therefore, this can't be the only problem.

A second theory is that Disney's theme parks aren't working. Cramer doesn't buy this because he believes that its theme parks have plenty of room to expand.

"A third theory holds that Disney has had to spend too much to maintain share in ESPN," he said. "But I find the spending to be a short-term issue."

"So why isn't it moving up?" Cramer asked. It's because

Google

(GOOG) - Get Report

is "sapping" all that is good about the media, he said. No one ever needs to watch a commercial with Google.

This doesn't mean that Disney's stock is done. But it is currently defenseless against the Web, and its costs are going up, he said,

A year ago, Cramer said he was pushed to recommend

Eddie Bauer

(EBHI)

off a potential buyout.

However, before getting a bid, the company's stock "got cut in half," he said.

"That's the problem with predicting the private equity bids," Cramer said. "You simply can't make any money trying to anticipate what these people will buy."

Market players should not speculate in companies that have bad fundamentals, he iterated.

"You could have predicted Eddie Bauer would have gotten a bid, but you would not have made any money from it," Cramer said. "Eddie Bauer would have gotten you $9 -- $7 less than when it was pushed to me."

Newspapers Still Pale

Last week, private equity firms priced

HCA's

(HCA) - Get Report

bonds, Cramer said.

And now there are "bids galore" for

Tribune

(TRB)

and

Clear Channel

(CCU) - Get Report

, despite "precipitous declines" in both companies' cash flows, he went on to say.

Cramer said that he doesn't know what will happen with these deals and that he would rather buy a homebuilder than a newspaper right now.

The private equity guys are taking on too much risk, in his opinion.

Cramer's Callers

"

CSX

(CSX) - Get Report

is not done going up," Cramer told a caller.

He called Michael Ward a "terrific CEO" and said the rails are good because they don't compete against one another, and they use much less fuel than trucking companies do.

Norfolk Southern

(NSC) - Get Report

also had a great quarter, Cramer added.

Responding to another caller, he said

Ambev

(ABV)

is a good company, and if he had to own a beverage company, it would be Ambev. But because Cramer doesn't need to own one, he suggested ringing the register on the company.

The problems with PepsiCo are that consumer staples are not the place to be right now, and the company's snack business is not healthy, he told the caller.

"

Brocade

(BRCD)

has done a great job," Cramer told another caller. "It has turned itself around, and it should be bought."

As

Smith & Wesson

(SWHC)

has had a "monster move." Cramer told a caller that market players should not be greedy by hanging on to this stock.

"People should sell it and take the gain, as it is too risky up here," he said.

When a caller asked about

Saks

(SKS)

, Cramer said he doesn't want to recommend it, as he believes it is "too dangerous."

On another note, he said market players should sell

XM Satellite Radio

(XMSR)

and buy

Sirius Satellite Radio

(SIRI) - Get Report

, as he believes that there's is more upside in SIRI's stock.

Transocean

(RIG) - Get Report

is Cramer's pick as a "cheap oil service play" where the fundamentals are "fantastic," he went on to say.

People might also want to consider

Time Warner

(TWX)

, Cramer added, as business there is much better than expected.

And finally, Cramer advised callers not to sell

Diageo

(DEO) - Get Report

because it is not done going up.

Cramer owns Diageo for his charitable trust,

Action Alerts PLUS.

As originally published, this story contained an error. Please see

Corrections and Clarifications.

At the time of publication, Cramer was long Diageo.

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

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