Click here for an archive of Cramer's "Mad Money" Recaps.


Jim Cramer told his "Mad Money" viewers on CNBC Thursday night that he will not be driven away by a market selloff. Indeed, even on a down day, Cramer is always on the lookout for a bull market.

With that out of the way, Cramer headed straight to Chesapeake Energy ( CHK), which has been on fire for the last year. Cramer said that he's been all over this stock because of the CEO's relentless insider buying. But now that the stock is up $6 from the CEO's last big purchase, where are we now with Chesapeake? Does it go up or does it go down from here?

Because Cramer isn't a fortuneteller, he decided to get the company's CEO, Aubrey McClendon, on the phone.

McClendon, who bought 500,000 shares in 2004, said he knows how to spot value when he sees it. And his bullishness was well rewarded Thursday, when the company turned in record numbers after the close. As to where he sees the price of oil going, he said it's definitely not going back to $18 -- and maybe not even $50 a barrel.

But this company is leveraged to natural gas and if natural gas spikes to $9 or $10, it would be huge for Chesapeake. The company is largely unhedged beyond $7. Cramer called the company the best and biggest pure play on natural gas in the market, and he said he would back up the truck on the stock and buy it.

Terex -- for a Trade

In light of the great quarter that Terex ( TEX) reported Wednesday night, Cramer said it was prudent to address those who think it's ridiculous to own Terex -- which is not best of breed in its industry -- instead of Caterpillar ( CAT), which is best of breed.

Cramer made it very clear that his interest in Terex comes down to a trade. He said the stock is right to own for a trade. He said that he has no doubt that Caterpillar will beat Terex over the next three to five years, but for the next three to six months, Cramer thinks Terex works -- for a trade.

At the end of the day, Cramer said he is always willing to make a trade if it works. He believes Terex will work for the next six months.

Even Worst of Breeds Have Their Day

Using that as a seque, Cramer pointed to eight worst-of-breed stocks that could work under the right conditions. They are:

  • Rite Aid (RAD). If we ever catch a flu outbreak -- along the lines of a pandemic -- this stock is for you.
  • Ditto Tenet Healthcare (THC). If enough people get sick, even this stock could do well.
  • Doral Financial (DRL). If the Federal Reserve ever stops raising rates, even this lowly Puerto Rican bank could make you some money.
  • Agco (AG). When the cycle is strong, even these guys can't be denied, Cramer said.
  • AK Steel Holding (AKS). The worst of the steel stocks, Cramer said, even move higher when steel spikes up.
  • Southern Peru Copper (PCU). Cramer called this stock the worst of breed writ large. But even these guys can make money when copper is at astronomical levels.
  • Alon USA (ALJ). Totally cheap, Cramer said. And even it works when the refinery cycle is on fire.
  • Parker Drilling (PKD). It must be some environment for rigs, Cramer said. Even this one goes up.
  • Cramer's point in looking at these worst-of-breed stocks is that some times it makes sense to own certain stocks in certain situations. Even the worst-of-breed have their days. But these are stocks that you play only for a trade. When the cycle is hot, even the worst of breeds can catch a bid.

    Insider Baloney

    Finally, Cramer told investors not to get misled by insider sales. "Insiders sell for a host of reasons: taxes, divorce, lifestyle or just good financial planning," Cramer said. "Yet the media love to focus on it -- so do the short funds -- because it is accessible and so easily compiled. In fact, insider selling documents have inspired a whole silly cottage industry of newsletters, all purporting to get you out of trouble before it happens."

    But does it work? Cramer asked. Does anyone ever ask that?

    "I can tell you that as a manager who has pretty much used every single piece of public data available, the answer is a definitive no," Cramer said. In fact, said Cramer, it is worse.

    "Insider selling data would have kept you out of the hottest tech stocks in the 1990s -- EMC ( EMC) for example -- and the hottest biotech stocks in the last five years," like Genentech ( DNA), Cramer said.

    "Lately, it's been the homebuilders that have hit the radar screen of these cottage industry players. These newsletters are screaming 'sell,' telling you to get the heck out of this group," Cramer continued. But if you had listened to these "pop-offs," you would have left a lot of money on the table.

    Over a two-year period, you would have missed huge runs in Centex ( CTX), which climbed 116%. And you would have missed the move in KB Home ( KBH), which rose 185%. Same goes for Pulte Homes ( PHM), which was up 187% over the last two years. Ditto Lennar ( LEN), which "only" doubled. And then there is Toll Brothers ( TOL), the biggest insider seller holding, which increased by 280%.

    "Yet so many people won't even do this amount of homework; they are so quick to nail these executives," Cramer said. How could it be so wrong? Cramer wondered.

    "I have a theory," he said. "As someone who has spent his whole life advising rich people -- and the people behind these companies are most certainly rich -- consider that the uniform advice anyone gives to these people is, 'Be sure to take something off the table.'"

    Cramer said that he is friendly with or knows everyone behind these stock sales. "I know the advice they got," he said. In some cases, Cramer said, he even gave it to them.

    But "anyone who would react to this stuff by dumping these stocks is just plain uninformed," Cramer continued. "Why point it out? Because I need you to think harder than this before you sell a great stock," Cramer said.

    "If you flip out on this data, you are just playing right into the hands of the hucksters who shill it. Don't be a victim," Cramer concluded.

    'The Lightning Round'

    Bullish

    Cramer was bullish on Intel ( INTC), Motorola ( MOT) "You lucky son of a gun, that stock is going higher," Cramer said), Fortune Brands ( FO), Cisco Systems ( CSCO) ("I think Cisco will be last to move, but move it will," Cramer said), Dick's Sporting Goods ( DKS), National Oilwell Varco ( NOV), Public Service Enterprise ( PEG), Dominion Resources ( D), Stride Rite ( SRR), GlobalSantaFe ( GSF), PetroChina ( PTR), Chemed ( CHE), Wyeth ( WYE), CMGI ( CMGI), XTO Energy ( XTO), IntraLase ( ILSE), Canon ( CAJ), Best Buy ( BBY), Skyworks Solutions ( SWKS), and Con Edison ( ED).

    Bearish

    Cramer was bearish on: St. Mary Land & Exploration ( SM), NutriSystem ( NTRI), Au Optronics ( AUO), OmniVision Technologies ( OVTI), Affymetrix ( AFFX), ViroPharma ( VPHM), Dynamic Materials ( BOOM), Dycom Industries ( DY), Affiliated Computer Services ( ACS), Ansys ( ANSS), Meridian Resources ( TMR), Quanta Services ( PWR), Gentex ( GNTX) and Presstek ( PRST).

    1. Pigs Get Slaughtered 2. It's OK to Pay the Taxes
    3. Don't Buy All at Once 4. Buy Damaged Stocks
    5. Diversify to Control Risk 6. Do Your Homework
    7. Don't Panic 8. Buy Best-of-Breed
    9. Defend Some Stocks 10. Don't Bet on Bad Stocks
    11. Own Fewer Names 12. Cash Is for Winners
    13. No Regrets 14. Expect Corrections
    15. Know Bonds 16. Don't Subsidize Losers
    17. No Room for Hope 18. Be Flexible
    19. Quit When Execs Do 20. Patience Is a Virtue
    21. Be a TV Critic 22. When to Wait 30 Days
    23. Beware the Hype 24. Explain Your Picks
    25. Find the Bull Market
    At the time of publication, Cramer was long Intel and Motorola.

    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 ActionAlertsPLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here. Listen to Cramer's RealMoney Radio show on your computer; just click here. Watch Cramer on "Mad Money" at 6 p.m. ET weeknights on CNBC. Click here to order Cramer's latest book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict."