'RealMoney' Radio Recap: Seeming Isn't Believing

Cramer says the selloff appears more grim than it is. Also, the energy sector.
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It's getting a little depressing out there, Jim Cramer said on his

"RealMoney" radio show Tuesday, but he believes that the market is just working off overbought market conditions.

The only stocks that are really working today are the ones that haven't been up at all, he said, and that's because there are no profits to take in those companies.

He said that the selloff looks more dire than it is, citing for example, the bad earnings and subsequent slide for

Toll Brothers

(TOL) - Get Report

.

Cramer believes that the company was uniquely hurt because it's in the high-end luxury-home business, not because the market is fundamentally in trouble.

"I know this selloff seems like more than usual and more debilitating. That it seems like something structural," he said. Cramer's advice is to watch for the stocks that do well during a recession.

"If they fly, then we've got a problem," he said, adding that if a company like

Procter & Gamble

(PG) - Get Report

starts to hit new highs that he might then turn more negative.

He said that there are sectors that he thinks should be picked up while they're weak. Gold will be a winner as a trade or as an investment, he said, adding that with gold down $19 an ounce, the deal seems "almost too juicy to be believed."

Cramer said that he would take a look at

Goldcorp

(GG)

but that he would not go out and put all his money on the table.

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Cramer said he would put a quarter of his position on now, while the stock is off 8% from its highs. He would put another quarter on in the next session and then stagger his buying over the course of several days.

That way, Cramer believes, if there are gold downgrades or prices continue to slip, you'll grab some good deals.

He also said that his favorite group, the oil service stocks, has been "whacked beyond all recognition," but that those stocks are "just giving back last week's gains."

He said that

Nabors

(NBR) - Get Report

is a steal and that he would also be a buyer of

Halliburton

(HAL) - Get Report

, which he owns for his

Action Alerts PLUS charitable trust.

Cramer also likes

GlobalSantaFe

(GSF)

and

Schlumberger

(SLB) - Get Report

.

He added that he would stay away from

Cisco

(CSCO) - Get Report

and

Coca-Cola

(KO) - Get Report

.

The Danger Zone

This week's "Danger Zone" stock, the company Cramer believes you should stay away from, is

Wendy's

(WEN) - Get Report

.

He said that the company is losing franchises and that it has had an "unbelievable unbroken record of the stock going up even as the company's earnings have gone down."

Now that the stock is a point away from its 52-week high, Cramer believes that it's time to get out.

He told a caller that even though he was once bullish on

Blue Nile

(NILE)

, he believes that the company has gotten too big and that if the company had any poor news the stock will fall.

He said that

Oregon Steel Mills

(OS)

was down because it was a takeover name that never got a bid. The company had a great run, he said, and now it's in profit-taking mode.

Cramer said that he wasn't against

Wyeth

(WYE)

but that he believes it is "just so-so."

He likes it more than

Merck

(MRK) - Get Report

,

Bristol-Myers

(BMY) - Get Report

or

Eli Lilly

(LLY) - Get Report

.

However, he said that

Pfizer

(PFE) - Get Report

has a meeting Friday and that they could talk a very bullish game. Cramer said that if he were looking for just a trade, he would go for Pfizer over Wyeth.

The pharmaceuticals need a recession before they'll start "cooking and booking" profits, he said.

Even though the

Federal Reserve

looks set to keep hiking interest rates, Cramer told a caller not to worry about his position in

Accredited Home Lenders

(LEND) - Get Report

.

The company is down from its 52-week high, and he believes that this is a natural pullback. But this is an investment, he said, citing the fact that

Deutsche Bank

(DB) - Get Report

just bought a large position in Accredited Home and that the company has a low price-to-earnings ratio of 7.

Energy

Cramer told another caller that even though

Occidental Petroleum

(OXY) - Get Report

has been having a hard time, it's the cheapest stock in the group and that he would use this weakness to reestablish his position in the stock.

It's a natural pullback, and the story is intact, he said, adding that this is likely the type of vicious selloff that happens to commodity stocks before they recharge.

The sector spotlight featured Cramer's take on the 2006 energy sector.

He said that his opinion of

Exxon Mobil

(XOM) - Get Report

is contrarian and that it is his least favorite oil company.

He said that Exxon never took out its high and that management has recently been uniquely shortsighted about where oil prices will go; and instead of drilling and buying oil, the company has spent its time buying back stock.

He told another listener that he would condone a switch out of

Valero

(VLO) - Get Report

in favor of

ConocoPhillips

(COP) - Get Report

because he believes that Valero's refining margins are done.

Cramer believes that Conoco's stock was knocked down because of its purchase of

Burlington Resources

(BR) - Get Report

, a deal that he likes.

He said that

El Paso

(EP)

, which he says has been terribly run, is in a turnaround period, adding that it's getting its balance sheet back in order, selling off a lot of properties and it's got big reserves.

Cramer said that the company's stock has gone from $5 to $13 and that he believes that it's not done going up. It's under a profit-taking cloud, but the selloff is overdone, he added.

To another caller who is in the "house of pain" with Nabors, Cramer said that investors who can't handle the corrections will be kept out of the oil sector. He said this sector is uniquely suited to his method of trading, and that the key is to buy into weakness and sell into strength.

As a company like Nabors moves higher, Cramer would take some off the table until he was back at a core position. Then Cramer would start buying back the stock again when the company weakened.

Even though the house of pain can be breathtakingly tough, it represents a great opportunity, said Cramer.

He said that he wouldn't buy Burlington Resources, but would just buy Conoco, which looks set to buy Burlington.

Cramer believes that there will be a midcourse correction now but that his forecast for 2006 is strong. He said that it's a buy on the way down because he doesn't think the sector will truly go down anytime soon.

A listener wanted to know if she should increase her position in

Devon Energy

(DVN) - Get Report

.

Cramer wanted to know why she would increase shares, even though he likes Devon. He said that he likes a diversified portfolio and wouldn't have any more than 10% of a portfolio in any one stock.

He added that

BP

(BP) - Get Report

had a dismal quarter, in part because of Hurricane Katrina-related problems, but also because it doesn't have enough oil.

Cramer believes that the company will want to do some buying and that it may see this decline in the sector as a chance at oil and natural gas properties.

Calling Cramer

He wrapped up the show with more phone calls. A listener wanted to know whether to throw some mad money at

Force Protection

, a company that makes mine clearing vehicles.

Even though the military is buying its products, it's not a profitable company, Cramer said. It lost a lot of money this year, and when it finally had a spike in sales and revenue it was only able to break even, he said, adding "I would be very careful."

Another caller said that she had bought

Computer Sciences

(CSC)

when Cramer suggested it as a trade because it was a possible takeover candidate. But she said that she didn't take any off the table after the stock went up.

Cramer said that the company's fundamentals are decent, but that he was sorry that she didn't take advantage of the trade.

He said that while everyone focuses on Carl Icahn and

Time Warner

(TWX)

, the market is overlooking

Disney

(DIS) - Get Report

. He believes that Bob Iger is starting to turn the company around, and even though it's not exciting it could be an interesting stock on a pullback.

He also said that with natural gas is plummeting, now could be the time to buy

Dow Chemical

(DOW) - Get Report

.

At the time of publication, Cramer was long Halliburton, Occidental Petroleum and Procter & Gamble.

James J. 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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