Cramer's 'Mad Money' Recap: Stay the Course (Final)

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) -- "Stay the course and be ready to buy," Jim Cramer told the viewers of his "Mad Money" TV show Tuesday.

He said the markets in 2011 will be full of rallies and swoons like today, but small sharp pullbacks are not reasons to sell. Rather they're opportunities to buy.

Cramer said the problem with the markets are that the bears are the only ones with conviction. The bulls, he said, are still easily startled, causing sell-offs like were seen midday today. But he said the fundamentals of the worldwide recovery remain intact, which is why midday today was a great chance buy terrific companies at a bargain.

Cramer said he's still a fan of Fluor ( FLR), a leading infrastructure engineering and construction company. He's also still bullish on coal giant Peabody Energy ( BTU) now that a less stringent EPA is headed to Washington. Cramer said he also still likes Schlumberger ( SLB) and Freeport-McMoRan ( FCX), two stocks that were hit today amidst the selling.

Cramer said the sellers of McDonald's ( MCD) are nuts, with the stock down 8% from its highs and yielding 3.3%. Even embattled Bank of America ( BAC), a stock which Cramer owns for his charitable trust, Action Alerts PLUS, is cheap now that mortgage losses are quantifiable.

"Today's action was a preview for 2011," said Cramer. Investors should be prepared to pounce when the bulls lose their cool and turn bearish for the afternoon.

Breaking to the Upside

In the "Off The Charts" segment, Cramer went head to head with colleague John Roque over the chart of the fate of the energy sector, and oil stocks in particular.

According to Roque, a chart of the S&P Energy Index going back to 1999 shows that after getting killed in the 2008 market collapse, the energy stocks have been building a strong base and are finally breaking out past their April 2010 highs. The group is now above its 40-week moving average and is poised to head higher.

Roque said that a chart of the Oil Service HOLDRs ( OIH) ETF sees a similar trend, with this sector also getting hammered in 2008, building a base in 2009 and now breaking out to the upside.

This trend is also confirmed by a relative momentum indicator, a chart showing the relative performance of the energy stocks versus the overall S&P 500. According to Roque, the last four times the oil patch surged, the outperformance was dramatic.

Turning to the fundamentals, Cramer said he agrees with Roque's analysis, saying that while the 2008 energy rally was based on speculators, this time it's based on real demand from not only the U.S., but also the world at large. "This is a long term theme," said Cramer, who noted that demand is slowly outstripping supply.

"Don't over think it," said Cramer, quipping, "This is Economics 101."

Cheap Integrated Oil Trade

"If you're looking for the best way to play rising oil prices, look no further," Cramer told viewers as he recommended Hess Corp ( HES), another Action Alerts PLUS stock.

Cramer said that Hess is the least expensive of all the integrated oil companies, and it's also highly levered to oil and not to the slumbering price of natural gas. In fact, 97% of Hess' capital expenditures for 2011 will be for finding new oil reserves. "Hess is all about oil," said Cramer.

With projects all across the globe, Cramer said Hess is also a turnaround story. He said the company had be known in the industry as "cowboys," focusing only on high-risk, high-reward projects. But lately, Hess has become more responsible in its drilling, sticking to a balanced portfolio of both high risk offshore and safer on shore projects, he added.

Cramer said that Hess trades at a 10% discount to its peers, and while it has a paltry .5% dividend yield, the estimates for just 3.5% production growth in 2011 are too conservative. Cramer expects Hess to see 5% production growth and its shares to hit $90.

Mad Mail

Cramer followed up on NetSuite ( N), a stock that stumped him in an earlier show.

He said that while NetSuite is a second cousin to cloud computing giant Salesforce.com ( CRM), and has good bloodlines and strong earnings, the stock has doubled over the past six months. Cramer said at 117 times earnings, he'd be a seller of NetSuite until the stock pulls back significantly.

Cramer told another viewer that Annaly Capital ( NLY) is not using proceeds from newly issued shares to pay its stellar dividend, it's using them to buy more mortgages and make more money.

He said Annaly is still the best player in that space, ahead of rival Chimera Investment ( CIM).

Lightning Round

Cramer was bullish on RLI Corp ( RLI), Prudential ( PRU), Dendreon ( DNDN), Motricity ( MOTR), Molycorp ( MCP)and NovaGold Resources ( NG).

He was bearish on Diana Shipping ( DSX)and KBR ( KBR).

No Huddle Offense

In the "No Huddle Offense" segment, Cramer told viewers to take advantage of the recent weakness in gold. He said with paper currencies being worth less and less, and big demand from China, India and the rest of the world continuing, the pause in the gold bull rally is just one more opportunity to buy the precious metal at a great price.

--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, clickhere .

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

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.

More from Jim Cramer

Video: One-on-One With Pluralsight's CEO Following Its Successful IPO

Video: One-on-One With Pluralsight's CEO Following Its Successful IPO

Using Technical Analysis to Profit: Cramer's 'Mad Money' Recap (Friday 5/18/18)

Using Technical Analysis to Profit: Cramer's 'Mad Money' Recap (Friday 5/18/18)

Cramer and His Team Stick to Their Disciplines -- Even When It's Disappointing

Cramer and His Team Stick to Their Disciplines -- Even When It's Disappointing

Cramer Equates Investing to Blackjack -- and so the Market Becomes the House.

Cramer Equates Investing to Blackjack -- and so the Market Becomes the House.

Cramer's Team is Being Patient with the Financials -- Though They May Add More

Cramer's Team is Being Patient with the Financials -- Though They May Add More