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Coal Callin'

"Coal is hot, getting hotter. I need you in Peabody ( BTU - Get Report) coal," said Jim Cramer Thursday on his "Mad Money" TV show.

Cramer is a fan of coal because as the prices of natural gas and oil increase, coal, a cheaper alternative for electricity production, takes market share.

Most coal stocks, however, are not good investments because they either have primarily high-sulfur coal, have sold too much future coal production at current prices (which won't allow them to profit as much as the price of coal increases), or they don't have large enough reserves.

However, Peabody has 50 years' worth of proven coal reserves, much of which isn't locked in at current prices, said Cramer. It also has "ultralow" sulfur coal and is a best-of-breed play in the coal sector, Cramer added.

Cramer was bearish on Foundation Coal ( FCL), Consol Energy ( CNX - Get Report), Arch Coal ( ACI) and Massey Energy ( MEE). Cramer said most of FCL's coal was high sulfur, and it doesn't have very much coal.

Consol also has mostly high-sulfur coal, he said, and ACI has low-sulfur coal but can't capture the upside because most its coal is locked in at current prices. Cramer is also uncomfortable with ACI's debt.

Cramer said Massey was OK, but it wasn't best of breed.

A caller asked for names of companies that supply the coal industry. Cramer mentioned Joy Global ( JOYG), Terex ( TEX) and Bucyrus ( BUCY) as good plays.

The Sum of All Parts and JAH Love

Cramer had Marketwatch.com senior columnist Herb Greenberg on the show to ask if he'd changed his bearish tune on Johnson Controls ( JCI - Get Report) now that JCI is buying York International ( YRK). Greenberg said no.

"All they're doing, really, is they're going to further obfuscate what was already going on: a deterioration of earnings quality."

Cramer argued that Johnson Controls had done a good thing by moving to emphasize its more profitable controls business and deemphasize its struggling auto business. "It takes itself out of the 11-to-12 multiple category of Lear ( LEA) and goes to a 20 multiple ... The way you understand that is you pay more for it."

Greenberg countered, "Even after this deal, this is still largely an auto-parts supplier ... over half the company is still auto parts."

Greenberg conceded that if the company did move to shed its struggling auto-parts business, and became more of a controls company, then "Hats off to them."

Cramer also took issue with another stock Greenberg has panned recently: Jarden ( JAH). Cramer is a fan of Jarden because he thinks it will win by default in the small-appliance sector, as two of its main rivals, Applica ( APN) and Salton ( SFP), founder under too much debt.

Greenberg said there is plenty of competition for Jarden. Ultimately, he said, Jarden is simply a "financial deal." He believes that Jarden will try to amass smaller companies and then sell itself. "If the CEO can do it, hats off to him."

The Life of a Dog

Johnson & Johnson ( JNJ) is being forced by the European Union to sell three of its business units in order to receive the EU's blessing of its planned acquisition of Guidant ( GDT).

Cramer said he would buy Edwards Lifesciences ( EW) on the speculation that Edwards might be able to buy some of the businesses "on the cheap."

Cramer cautioned, however, that Edwards is a "dog" of a stock and that the trade would only work if it actually pans out the way he is guessing.

Toll Brothers ( TOL) reported a "stellar" quarter Thursday but saw its stock trade down. Action like that is the "trading death knell," said Cramer, because analysts who like to follow -- not lead -- will "freak out" and are likely to downgrade the stock.

"We're going to catch a downgrade. It's still not too late to sell," Cramer said of Toll.

Lightning Round

Bullish

Cramer was bullish on News Corp. ( NWS - Get Report), Microsoft ( MSFT - Get Report), XM Satellite Radio ( XMSR), Aflac ( AFL - Get Report), Internet Security Systems ( ISSX), Bancolombia ( CIB - Get Report), UnitedHealth Group ( UNH - Get Report), St. Joe ( JOE - Get Report), Cimarex Energy ( XEC - Get Report), El Paso ( EP), Tibco Software ( TIBX), Monster Worldwide ( MNST - Get Report), Hershey ( HSY - Get Report) and Genesis Microchip ( GNSS).

Bearish

Cramer was bearish on Calpine ( CPN), Urban Outfitters ( URBN), Teva Pharmaceutical Industries ( TEVA), Royal Caribbean Cruises ( RCL), Trex ( TWP), RealNetworks ( RNWK), Check Point Software ( CHKP), PetroQuest Energy ( PQUE), FARO Technologies ( FARO), Frontline ( FRO), Serena Software ( SRNA), Cubist Pharmaceuticals ( CBST), Rambus ( RMBS), MCI ( MCIP) and Wal-Mart ( WMT).

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 Cimarex Energy, UnitedHealth Group, Microsoft and St. Joe.

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."