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

Continuing with this week's theme of the top stock picks for 2007, Jim Cramer offered his top three speculative plays on Friday's "Mad Money" TV show.

"The best and long-lasting way of keeping your interest in the market is speculation," he said, adding he regards these stocks as being "sexy."

But before naming his top stocks in the category, Cramer issued a warning. While he believes investors should "give into temptation and speculate," he said they must use protection. First, people should not put any of their retirement money into speculative stocks. Second, when speculating, use a basket, Cramer said.

He advised to take 20% or less of your portfolio money and buy five different speculative stocks with it. Rather than owning a single speculative stock, a basket makes the moneymaking odds more favorable, Cramer said.

"We like taking risks on 'Mad Money,' but there's no reason why you shouldn't spread the risk out," he said.

(This week, Cramer is issuing his annual market forecast. Click here for his top three value picks, which he offered Wednesday, and here for the top three growth stocks he discussed on Thursday.)

Savvy Choice

Taking the "risk factor up a dozen notches," Cramer named Savient Pharmaceuticals ( SVNT) as his No. 3 speculative pick.

Although the stock's been on a "tear," Cramer believes it still has "room to run." In particular, he said, Savient has three great attributes.

The company has "skilled management" and recently launched a testosterone drug, Oxandrin, that helps promote weight gain after surgery. While those first two traits are good, Cramer said the main reason he considers Savient "exciting" is its phase III drug for gout, Puricase.

Three million to five million Americans suffer from gout, and "they're going to take Puricase if they want anything to work for them," he said.

Cramer said Savient shares could easily double if positive phase III data are released in the third quarter.

No. 2 on Cramer's "sizzling" speculative stocks list is Rite Aid ( RAD).

Only 10 analysts cover this stock, and it's not getting support from the Street, he said, adding that he loves it "when a hot stock is unloved."

Cramer believes Rite Aid should be valued higher and urged viewers to get in on the action before the Street figures this one out. He advised people to buy it Monday afternoon.

Not only is the company's deal with Brooks-Eckerd supposed to save Rite Aid $150 million, Cramer said it is the one drugstore that seems to have immunity from the " Wal-Mart ( WMT) disease."

He believes it can't go too much lower without "catching a takeover bid." Moreover, Cramer said this "seemingly innocuous stock" is also a "great inner-city" play.

That said, Cramer welcomed the "architect" of the store's turnaround, CEO Mary Sammons, to the show and asked her how it felt to be the chief executive of his second speculative pick of the year.

Sammons said it felt "great" and that Rite Aid would prove Cramer right.

When asked whether Rite Aid's expected savings of $150 million from its merger with Brooks-Eckerd was a low estimate of what could be saved, Sammons said it was.

The estimate doesn't take into account increased revenue and increased productivity from the stores Rite Aid is acquiring, she said. If a store is too small or in a bad location, Rite Aid's priority is to relocate it, Sammons continued. With each new store, the company tends to generate "strong double-digit gains for five years," she said.

Responding to a question about integration risk, Sammons said there is always risk but that Rite Aid is "well covered on it."

On the Level

Cramer's top speculative stock of the year is Level 3 Communications ( LVLT), a company that owns a broadband network and sells bandwidth.

Although LVLT has spiked more than 35% since Cramer first recommended it in September, that's OK, he said. In fact, he believes the stock has gotten even more attractive since then, scoring a YouTube contract and inking a deal with NBC, allowing the network to get highlights from all other Sunday football games.

Plus, on Thursday, Level 3 completed its acquisition of Broadwing, Cramer said. He called it a "big risk, big reward" speculative stock and said there is "more than an insignificant" chance that it might lose people money.

But he believes that "if you're gonna stay interested in stocks, you gotta take a few risks, and one of those risks is taking LVLT, even at its $6 level."

Lightning Round

Cramer was bullish on Toyota Motor ( TM), Spectra Energy ( SE), Kinder Morgan Energy ( KMP) and Cisco ( CSCO).

Cramer was bearish on Yamana Gold ( AUY), Ultra Petroleum ( UPL), Deere ( DE), EarthLink ( ELNK), Cleveland-Cliffs ( CLF), Amylin Pharmaceuticals ( AMLN), AngioDynamics ( ANGO), Sonus Networks ( SONS) and Shanda Interactive ( SNDA).

For more of Cramer's insights during the Lightning Round, click here .

Opening the Mail

In his "Mad Mail" segment, Cramer gave a mailer Saks ( SKS) as an extra arm weather play, and he told another viewer he wants to own Time Warner ( TWX) even up here at $22.23.

There Goes Swifty!

In his "Sudden Death" round, Cramer was bullish on Hewlett-Packard ( HPQ), which he owns for his charitable trust, Action Alerts PLUS.

He was bearish on Sun Microsystems ( SUNW) and Harrah's Entertainment ( HET).

Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by clicking here.

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At the time of publication, Cramer was long Toyota Motor.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for, Inc., and CNBC, and a director and co-founder of All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or is related to the specific opinions expressed by him on "Mad Money."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.

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