Cramer's 'Mad Money' Recap: Upside Surprises No Mystery (Final)

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NEW YORK ( TheStreet) -- "Strong earnings may have alluded the overpaid Wall Street analysts, but they should be anything but surprising for investors at home," Jim Cramer told the viewers of his "Mad Money" TV show Monday.

He explained why so many "upside surprises" have been occurring this earnings season, and why these "surprises" should be anything but.

So how is it that large institutional investors and hedge fund managers missed the surprise earnings of Caterpillar ( CAT) and Whirlpool ( WHR), along with other companies like Netflix ( NFLX), Deckers Outdoor ( DECK) and Chipotle Mexican Grill ( CMG)?

Cramer said it was easy, the analysts simply didn't update their forecasts.

Cramer explained that anyone at home, or anyone who watches his show, could easily see that consumer spending has been picking up, and that the emerging markets continue to swell. But most Wall Street analysts only update their outlooks once a quarter, he said, largely ignoring all of the recent good news.

Cramer said that for weeks, the executives at Whirlpool have been seeing strength in appliance sales thanks to energy cutting incentives, along with synergies from its Maytag acquisition and strength in Brazil. Yet for the analysts who last updated their outlooks in January, they simply missed it.

"If you're waiting for a bell to go off, you're in the wrong game," Cramer told viewers. He said investors need to listen to what companies are saying now and anticipate the move. If they wait to see the positive results, they'll risk missing most of the action.

Cramer said the patterns are similar for Caterpillar, which said orders are coming back, and for Netflix, which said it's continuing to see strong growth. The pattern also works for Deckers and Chiptole, where years of growth still remain. "These moves should be anything but surprising," he concluded.

Bullish on Oil

With crude oil back over $80 a barrel, Cramer told viewers that the oil drillers are back. He said the Schlumberger ( SLB) conference call was the most bullish industry call he's ever heard.

Cramer explained that on the Schlumberger call, the company's CEO said that oil's return to $80 a barrel is based on real demand, not speculation, and that demand will kick off a whole new drilling cycle as drillers begin drilling in earnest to cash in on higher prices.

Based on this bullish sentiment, Cramer said investors now "must own" an oil driller, as he believes oil is headed back to $100 a barrel over the next 12 months. But which stock to own?

Cramer said he'd be a buyer of Schlumberger, even here at the stock's 52-week high. He said the company's size and expertise allows it to operate all across the globe. "There's a lot to like," he said.

But Cramer gave top honors to the smaller Weatherford ( WFT), a stock which he owns for his charitable trust, Action Alerts PLUS . Weatherford missed earnings estimates by three cents a share when it last reported, but the stock still rose of the news, said Cramer, signaling the bottom has finally occurred.

Cramer said that Weatherford has been preparing for the return of higher oil prices, and is now best suited for higher returns. The company has 14 analysts rating the company a buy, but also 15 rating it a hold, leaving lots of room for upgrades from Wall Street.

Cramer said Weatherford trades at a 25% discount to Schlumberger, despite its higher growth story. He said the stock should easily reach its 52-week high again.

Financial Reform Winners

Investors looking for a winner in the financial reform game should look no further than Intercontinental Exchange ( ICE), Cramer told viewers, but only for a trade.

Cramer explained that one of the big changes of the pending financial reforms currently working their way through Congress is to bring derivatives trading out of the back room and into the open on a public exchange. He said that Intercontinental Exchange, or ICE, will be the big winner if this this happens.

While derivatives trading only accounts for 5% of ICE's earnings, the boost from the pending legislation is not baked into the company's numbers. But Cramer cautioned that perception may be better than reality, which is why he's not endorsing ICE as a long-term investment.

ICE, which has already had a gigantic run, is trading at its 52-week high. Cramer said this may be one case where investors need to buy high and sell higher.

For longer term investors, Cramer said the CME Group ( CME) will likely be the longer-term winner when it comes to reforms. He also gave the nod to NYSE Euronext ( NYX) with its 3.5% yield.

Mad Mail

Cramer told a viewer that he likes TJX Stores ( TJX), in part for its excellent chain of Home Goods home furnishing locations.

Cramer told a second viewer that he would hold Permian Basin Royalty Trust ( PBT), despite recent volatility in its volume.

Finally, Cramer told a viewer that the upside potential in Qwest Communications ( Q) is done, and he'd move on.

Lightning Round

Cramer was bullish on Delcath Systems ( DCTH), Brigham Exploration ( BEXP), Anadarko Petroleum ( APC), Sunoco ( SUN) and Perrigo ( PRGO).

He was bearish on A123 Systems ( AONE), Research In Motion ( RIMM), Tesoro ( TSO) and Mead Johnson Nutrition ( MJN).

Closing Comment

Cramer said he likes the secondary offering from Cenovus ( CVE) and thinks investors need to be in on the deal.

-- Written by Scott Rutt in Washington D.C.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

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

For more of Cramer's insights during the Lightning Round, click here .
At the time of publication, Cramer was long Weatherford.

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."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, TheStreet.com 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 TheStreet.com, 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 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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