Cramer's 'Mad Money' Recap: Stocks Too Cheap (Final)

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NEW YORK ( TheStreet) -- "This market is too cheap," Jim Cramer announced to the viewers of his "Mad Money" TV show Monday, as he told them that companies simply are worth more than their stocks are selling for.

He said the "wisdom" of the crowd has chronically mis-valued stocks, and the evidence is showing up all around us.

No. 1. Takeovers. Cramer said the uptick in mergers and acquisitions, if not about consolidation in an industry, has been about companies being undervalued. He said even after big moves in the stock prices, companies are still confident they can pay big premiums and make money.

No. 2. Sellers Remorse. Cramer said after F5 Networks ( FFIV) reported a "disappointing" quarter, its stock dipped 26%. But a week later, the sellers have realized their mistake, sending the stock up some 20 points.

No. 3. Downgrades Don't Stick. Last week Chipotle Mexican Grill ( CMG) received a downgrade by an analyst, but the stock barely flinched, and has been rising ever since.

No. 4. Adding Value By Splitting Up. Cramer said stocks like Chesapeake Energy ( CHK) have been adding value by selling assets, which is why he still thinks Chesapeake's parts are worth twice that of the whole company.

No. 5. Market Forgetfulness. Remember a few weeks ago when Apple ( AAPL), a stock which Cramer owns for his charitable trust, Action Alerts PLUS, was down big on Steve Jobs' medical leave? Today Apple took out its 52-week high.

6. Revaluations. Cramer said on the news of a single blowout quarter, Acme Packet ( APKT) has risen 27%, as the market revalues that company against much higher earnings.

For all these reasons, Cramer said stocks remain far too cheap, which is why he's remains a bull.

Tasty Healthy Foods

In the "Executive Decision" segment, Cramer sat down with Irvin Simon, chairman, president and CEO of Hain Celestial Group ( HAIN), a company making healthy foods that taste great. Hain shares are up 61% since Cramer first got behind the stock last April 6.

Simon said Hain has done a great job in reinventing its Celestial Tea brand, and has introduced a host of new teas and has a lot more distribution than it ever had before. In other areas, like yogurts, Hain is also making strides to offer good nutrition that tastes good.

Among the bright spots for Hain are schools, which Simon said are calling on a weekly basis to replace their traditionally fatty snacks with healthier alternatives. China is also growing for Hain, with the company's baby food now in 110 cities in China and commanding a 10% market share in Hong Kong.

Simon also noted the changing food guidelines, which not only require new food labels, but also overall are pushing for more grains and healthier foods. Even the food pyramid that we all grew up with has changed, said Simon, and Hain is there with the foods we all should be eating.

Cramer said Hain is still a great investing opportunity and could double from current levels.

Multiples No Concern

Sometimes if you wait, you miss it, Cramer told viewers. And that's certainly the case with yoga apparel maker Lululemon ( LULU). Cramer said while investors may worry that the company's 42 times earnings multiple is too high, the stock continues to rocket still higher.

Cramer first got behind Lulu in September, and since then shares are up 81%. He again recommended the stock in December, and shares are up 15% in just the last two months.

When analyzing a stock like Lulu, Cramer said investors need to ignore the traditional price earnings multiple and instead look at the company's addressable market. How big can this company grow? In the case of Lulu, a lot. Cramer said this company is still in its infancy, with only 134 stores across the U.S. But Lulu is growing at a rate of 29%.

Cramer said with a $4 billion market cap, Lulu is still just one tenth the size of Nike ( NIKE), yet Lulu is "shaping up" to become Nike for women. He said if investors wait, they're going to miss it.

Cramer said Lulu has everything he wants in a growth stock. Great earnings, solid management, and products that could easily expand from their current Yoga focus into running and other sports and leisure applications.

"Don't let the multiple scare you," said Cramer, who likened Lulu to Coach's ( COH) 81 multiple in 2001. Over the next 10 years, shares of Coach rose 15% a year on average.

Stocks Redo

In a new "Homework" segment, Cramer followed up on a few stocks that stumped him in earlier shows.

When asked about Yahoo! ( YHOO) right after they reported, Cramer said he needed to look into the company's earnings.

But since then, Cramer said he not only found a lack of growth but also a lack of strategy. He said the Chinese Baidu ( BIDU), or even AOL ( AOL) would be better ways to play.

Cramer said that Hyperdynamics ( HDY), an oil exploration stock, is too risky, but BDC Partners ( BGCP), a company that benefits from new financial regulations has serious momentum.

Cramer said it looks like he missed the move in Amyris ( AMRS), but with QR Energy ( QRE), that stock is only beginning its run higher.

Lightning Round

Cramer was bullish on Vale ( VALE), Tiffany & Co ( TIF), Motricity ( MOTR), Cirrus Logic ( CRUS), ARM Holdings ( ARMH), Las Vegas Sands ( LVS), Delcath Systems ( DCTH) and Cummins ( CMI).

He was bearish on Paccar ( PCAR).

Fed's Policies Working

In his "No Huddle Offense" segment, Cramer opined on the chatter that Federal Reserve chairman Ben Bernanke's policies are causing inflation.

Cramer said Bernanke's actions have kept countless companies alive, has allowed stocks to regain their luster, permitted companies to fix their balance sheets and allowed everyone to refinance their problems at great rates. He said Bernanke has also been the only grown-up in Washington, working to help the economy as Congress and Obama have done little.

Cramer said the rise in commodity prices are not Bernanke's fault. Rather, they're based on world-wide demand. If the U.S. wasn't so focused on ethanol, said Cramer, grain prices would be lower. And if Congress would endorse natural gas for trucks, oil prices would be lower.

Bernanke deserves praise, said Cramer, and his policies shouldn't be stopped until jobs are being created.

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

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At the time of publication, Cramer was long Apple.

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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