Cramer's 'Mad Money' Recap: Why Citigroup Is a Buy (Final)

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NEW YORK ( TheStreet) -- Looking for a stock that'll both pad your wallet and help reduce the federal deficit at the same time?

Jim Cramer told the viewers of his "Mad Money" TV show Thursday the stock they need to own is the once hated Citigroup ( C). He gave five reasons why investors need buy into the stock.

1. It's cheap. Cramer said while it may be hard to value Citigroup's assets or earnings potential, he values the $4 stock at 1.5 times its book value, making it worth at least $6 a share.

2. The government is ready to trade. Cramer said the government is set to trade its $5 billion stake in the company on Sept. 10. If Citi were to hit $6 a share by then, the government would make a $20 billion profit on that investment.

3. Citi is a global franchise. Cramer said Citigroup is a play on a global recovery, as it operates in 140 countries around the globe.

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4. Citi is unloading its bad loans. Cramer said after months of struggling, Citi is finally able to unload tons of bad loans that have been crippling its balance sheet.

5. Citi's mangement is stable. Cramer said that he fully supports Citi's management, and believes they can complete the turnaround already in progress.

Why is Citi trading so low in the first place? Cramer said the government's stake in the company diluted the shares substantially, and investors are still skittish about mortgage and credit card risks. Cramer said there's also FDIC chairman Sheila Bair, who's been extremely vocal against the company's progress, to contend with.

But Cramer said the company's global outlook outweighs these risks, and he sees Citi hitting $12 a share, albeit not as fast as rival Bank Of America ( BAC), a stock which Cramer owns for his charitable trust, Action Alerts PLUS, which is more levered to a recovery in housing.

Chilean Powerhouse

For the next stock in his "Foreign Legion" portfolio of international stocks, Cramer returned to South America, this time to Chile, to recommend bottler Embotelladora Andina ( AKO-B), the largest non-alcoholic bottler in that country.

Cramer said Andina is a powerhouse in South America, with monopolistic marketshare in the areas it operates. The company commands 67% share in Chile, 51% in neighboring Argentina, and another 57% in Brazil.

According to Cramer, his investment thesis for Andina is simple: Normally bottling is a very stable and boring business, but with population booms and economic growth in South American cities, Andina is now a growth story.

Cramer said Andina is lightly traded in the U.S., so he advised investors to trading in small increments and to use limit orders so as not to pay up for the stock.

Sad Scandal

In the Thursday "Sell Block" segment, Cramer returned to his mantra in his book Real Money by stating that "accounting irregularities equals sell."

Cramer said when word reached the Street that the financial consultants of Huron Consulting Group ( HURN) were restating three years of earnings and restating guidance after it failed to account for acquisitions correctly, investors should've sold immediately. Cramer said that he hasn't seen accounting problems this bad since Arthur Anderson went belly up after the Enron scandal.

Cramer said it is sadly coincidental that 12 of Huron's founding partners were alumni of the late Arthur Anderson, but it does raise eyebrows that a firm designed to help others avoid accounting problems is having accounting problems.

But Cramer noted a silver lining in the Huron scandal that has made shares of the firm plummet 67% so far. He said that rivals FTI Consulting ( FCN) and Duff & Phelps ( DUF) have both been trading lower in sympathy for the failing Huron, instead of higher as they should.

Cramer noted that even on Duff's conference call executives noted that they are "aggressively pursuing opportunities" relating to Huron.

Cramer said he liked FTI Consulting more, but said that both companies will benefit from a fallen rival, both in manpower and client base.

High Hopes for Natural Gas

Cramer once again spoke with Michael Linn, chairman and CEO of Linn Energy ( LINE), about the future of natural gas industry in the U.S.

Linn explained that at the end of the year, he will be stepping down as CEO of Linn Energy, but will remain on board as executive chairman, helping to continue to steer the company in a profitable direction.

Linn also said he has high hopes for natural gas in this country, and is part of an alliance of natural gas producers lobbying Washington to help bring more natural gas vehicles to the country as a cleaner bridge fuel towards energy independence.

As for Linn Energy, Linn explained that the company is still making acquisitions, giving the company more exposure to oil, which currently has a higher margin. But, he said, natural gas is cyclical, and he expects pricing to rise again soon.

Cramer said "we've got a money maker here" and once again reiterated his buy on a company that's returned 50% since its initial IPO.

Lightning Round

Cramer was bullish on Chesapeake Energy ( CHK), Devon Energy ( DVN), Starent Networks ( STAR), Huntington Bancshares ( HBAN), Alcoa ( AA) and Energy Transfer Partners ( ETP).

-- Written by Scott Rutt in Washington

Check out the latest edition of "Cramer's Take onTop-Searched Stocks" on Stockpickr.

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At the time of publication, Cramer was long Bank of America, Devon Energy.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com 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 TheStreet.com, 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 TheStreet.com is related to the specific opinions expressed by him on "Mad Money."

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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 TheStreet.com. 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 TheStreet.com, 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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