Search Jim Cramer's Mad Money trading recommendations using our exclusive Mad Money Stock Screener and watch Jim Cramer's Mad Money Post Game video exclusively on TheStreet.com.


NEW YORK ( TheStreet) -- "In this market, bad news is just another way to say 'buying opportunity,'" Jim Cramer told the viewers of his "Mad Money" " TV show Monday.

He said that over and over again stocks have gotten pummeled on bad news, only to see the buyers swoop in and overwhelm the panicking sellers.

Case in point, Kulicke & Soffa Industries ( KLIC), a semiconductor equipment maker that delivered severely disappointing guidance. Cramer said normally bad news like this would take down the whole semiconductor group, but this time the group rallied, with Applied Materials ( AMAT) ending higher on the news.

Then there's John Deere ( DE), a stock that also delivered negative guidance and garnered several analyst downgrades as a result. Cramer said these downgrades were the cue to buy, as Deere has added $7 a share since the news.

Cramer said there are countless other examples. Kids' apparel retailer Gymboree ( GYMB) was downgraded last week on disappointing same store sales, only to rally hard this week on news the company is going private. JC Penney ( JCP) got hit for $19 a share on disappointing news at the end of August, but has added back $14 a share in the weeks that followed.

And the list continues, said Cramer, from Boeing ( BA) to Nucor ( NUE). The pattern is to get hit on negative news, then skyrocket afterwards.

Cramer said it's time to forget about what the short sellers are up to and focus on the positives. Bad news is a buying opportunity.

Orphan Drug Play

"The orphan drug business is, perhaps unfortunately, a lucrative one," Cramer told viewers as he kicked off a week long series on biotech stocks that look like Genzyme ( GENZ), a company which just received, and rejected, a substantial takeover bid.

Cramer explained that orphan drugs are those designed to treat only a small number of patients, and as such, receive special incentives from the U.S. and EU such as subsidies, increased patent protections and other benefits. He said that one unfortunately downside to this model is that companies are free to charge whatever they wish for their treatments, and in the case of Genzyme, can range between $250,000 to $500,000 a year.

Cramer recommended BioMarin Pharmaceuticals ( BMRN) his first company that could become the next Genzyme. He said BioMarin makes enzyme replacement therapies, similar to that of Genzyme, and those therapies currently fetch around $300,000 a year. BioMarin also has other drugs in its pipeline, and is having an R&D Day on Oct. 19. Cramer said he would consider getting in ahead of that analyst day.

Next up on Cramer's biotech list, Alexion Pharmceuticals ( ALXN), a company he recommended on Aug 14, 2008, and one that's up 43% since that call. Cramer said Alexion's main product, Soliris, treats rare blood diseases, and the company is in trials to treat new conditions with the drug. Alexion is having an analyst day in mid-November, and Cramer said now may be a good time to consider getting in.

Bargain Energy Stock

What's the definition of a bottom? Cramer said in the Cramerican dictionary the entry for "bottom" includes a picture of Chesapeake Energy ( CHK).

Cramer said that Chesapeake has simply gotten too cheap for words, and barely moved on the news it's selling one third of its acreage in the Eagle Ford Shale region to a Chinese oil giant for well above market value. According to Cramer, the deal should have added $7 a share to Chesapeake shares, but instead the market only gave the stock a 25-cent boost.

Why the discrepancy? Cramer said it's because Chesapeake has become hated on Wall Street, thanks in part to its history of over-levering itself and its dependence on high natural gas prices to survive. But Chesapeake is changing, said Cramer, and is more disciplined and is diversifying away from natural gas and into oil. In fact, the company has publicly stated that it's reducing spending on natural gas until prices increase back to $6 per cubic foot.

Cramer said Chesapeake has a lot going for it, including an analyst day on Wednesday. Cramer said he expects to hear about additional deals, as well as the company's plans to transfer its pipeline assets into a master limited partnership.

What's a fair valuation for Chesapeake? Cramer said the company grew its reserves by 59% between 2006 and 2009, yet the enterprise value for the company only grew by 21%. Compare that to rival Devon Energy ( DVN), which grew reserves by 58%, but saw its value increase by 77%. Using these metrics, Cramer said Chesapeake should be worth $73 a share, over double its sub $24 share price at today's close.

Not Done Going Higher

In an "Executive Decision" segment, Cramer spoke with David Steiner, CEO of Waste Management ( WM), a stock that Cramer said is not done going higher.

Steiner admitted that his company is facing some headwinds, such as price constraints and lower volumes, but noted that Waste Management is in the business of extracting the most value from the items they collect, and not necessarily about collecting higher volumes.

Steiner also said that Waste Management is making strategic investments for the future. He said in the short term, those investments are costing the company, but in the longer term they will turn the company into a growth company again.

Among some of the company's recent investments was in the area of medical waste. Steiner said that while Waste Management's competitors can only process medical waste at higher costs, it offers a unique value proposition because the company can recycle some of the waste and thereby lower costs.

When asked about municipal contracts, Steiner said that pricing for those contracts are challenged, but he noted that this is only temporary, and once again, Waste Management creates value for customers by offering a complete package including trash, recycling, eco-waste, medical waste, etc.

Finally, when asked about lowering costs by using natural gas, Steiner said he's a proponent of legislation that would allow for the expensing of capital expenditures. He said if that were the case, his company would definitely ramp up the conversion of its fleet to cleaner, natural gas vehicles.

Lightning Round

Cramer was bullish on Verizon ( VZ), Alcoa ( AA), Wells Fargo ( WFC), Masco ( MAS) and Stanley Works ( SWK).

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

To contact the writer of this article, click here: Scott Rutt.

To follow the writer on Twitter, go to http://twitter.com/scottrutt.

To submit a news tip, send an email to: tips@thestreet.com.

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 not long on any stock mentioned.

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.

If you liked this article you might like

3 Names That Could Jump 25% if Big 'What Ifs' Are Answered

3 Names That Could Jump 25% if Big 'What Ifs' Are Answered

Twitter CEO Jack Dorsey: Our Independence Is an Advantage

Twitter CEO Jack Dorsey: Our Independence Is an Advantage

Verizon Defies FCC Agreement, to Start Locking Phones in Spring

Verizon Defies FCC Agreement, to Start Locking Phones in Spring

Cramer: 10 Stock Surprises

Cramer: 10 Stock Surprises

Twitter's Ongoing Turnaround Fuels Stock Gains -- and M&A Hopes

Twitter's Ongoing Turnaround Fuels Stock Gains -- and M&A Hopes