This article was originally published March 23.Click here for an archive of Jim Cramer's Mad Money recaps.
"How can you tell if this rally is for real? You look at its pieces," Jim Cramer told the viewers of the "Mad Money" TV Show Monday. He said that the best way to evaluate any rally is to examine the stocks that are powering it.
Dividend Play"Dividends have never been so important," said Cramer. He said investors should not be lulled by the huge market rallies because it's still too dangerous to buy stocks based on earnings, which nobody can predict. He said the best bet are company with dividends. That's why he recommended Air Products ( APD) as a stock to consider. Air Products boosted its dividend again last week for the 27th consecutive year. And while the dividend yields only 3.2%, Cramer said he's a big fan of the stock, which has fallen from a high of $106 to $55 today. He said the company currently earn 2.2 times the amount needed to cover the dividend. Cramer said he also likes the company based on its fundamentals as opposed to its competitor Airgas ( ARG) reporting a horrible quarter. Air Products sells gases into the semiconductor sector, one of Cramer's favorite groups, along with LCD panel makers, another group gaining momentum. Cramer likes Air Products as a weak dollar play, since 52% of the company's sales come from overseas.
Obama's Rolling"It's time to give President Obama his due," Cramer told viewers. He explained that he can't remain negative on the president when he's doing the right things. Cramer returned to his Obama Index, a basket of stocks he created on inauguration day to evaluate Obama's performance in fixing the economy. That basket, which started at 100, dipped to just 50 on March 6, when Cramer was his most vocal on the president's performance. In the last two weeks however, Cramer's Obama Index has roared back to 96, as Obama has instilled confidence back into the markets. Cramer said Obama is now doing a few things right, including saving us from Congress, and encouraging the Justice Department to bring changes against the guilty instead of letting Congress pull their usual hearings and shenanigans. Cramer said Obama is also proposing to regulate hedge funds, a plan he called "right on." He said hedge funds need to play be the same rules as everyone else. Their earnings, he said, need to taxed as regular income and not at lower capital gains rates. Finally, Cramer said Obama is proposing regulation executive compensation, something he's not in favor of, but admittedly, "we tried it the other way, and it failed." All of these points are a big deal, said Cramer, and that's why he's changing his stance as the conditions, and the Obama Index, change direction.