NEW YORK ( TheStreet) -- "When it comes to stocks, management matters," Jim Cramer told the viewers of his "Mad Money" TV show Tuesday, as he took some time out to give credit where credit was due. He said investors should praise CEOs who have the ability to make bold moves and make the stocks they own even better. Cramer said the markets are littered with great CEOs, like Chunk Bunch at PPG ( PPG), who took a company levered to autos and made it an emerging market player, or Sandy Cutler, who transformed Eaton ( RTN) into a leading energy conservation company. He said Dave Cote at Honeywell ( HON) should be praised, as should Michael Ward who heads up CSX ( CSX). Far too often however, the markets do not recognize visionary CEOs, said Cramer. The markets doubted Cummins ( CMI), a stock which Cramer owns for his charitable trust,
Off the ChartsCramer went head to head with colleague Dan Dicker over the chart of U.S. Oil Fund ( USO), an ETF Cramer coined "the ETF of mass destruction." When comparing the U.S. Oil Fund to the price of West Texas Intermediate Crude (WTI), Dicker noted that while the price of oil is up 33% over the past year, the U.S. Oil Fund delivered a scant 10% gain, Cramer said. Cramer explained that this ETF simply doesn't do what investors think it does. The fund invests in short-term futures contracts that must be rolled over month after month, significantly biting into profits. But Cramer said the U.S. Oil Fund does even more damage, as its huge short-term interest in oil only serves to drive the price of oil itself even higher. He said this ETF should simply be banned and taken off the market. According to Cramer, investors looking for a better investment should consider the Energy Select Sector SPDR ( XLE). This fund is up 33% over the past year, matching the price of oil. There's also the Oil Service HOLDRs ( OIH) ETF, which is up just over 20% on the year. Beyond the ETFs, Cramer said he still likes individual oil stocks like Hess ( HES) and Weatherford ( WFT), two Action Alerts PLUS names, along with Conoco-Phillips ( COP), Continental Resources ( CLR) and Whiting Petroleum ( WLL). Cramer said he's also still bullish on both Halliburton ( HAL) and Schlumberger ( SLB).
Calculating the Risk Reward"Always know your risk reward," Cramer told viewers as he compared two stocks in the data center space, VMware ( VMW) and EMC ( EMC), an Action Alerts PLUS stock. Cramer said while novice investors look at a stock and ask how much money they can make, professional investors ask how much money could they can lose. Cramer said investors always need to consider their downside, and determine how much pain they're willing to take. In the data center space, VMware's virtualization software is a hot commodity. But the stock is also a volatile one, surging $12 a share on its recent earnings and falling $12 on unrelated news at a rival company. VMware is growing at 24% a year, but trades at 48 times earnings. EMC, on the other hand, trades at just 15 times earnings and grows at 15% year, despite the fact the company owns 80% of VMware. "These are not similar stocks," said Cramer, who noted that shares of EMC, while still a solid grower, is not nearly as volatile. Since the 2008 market bottom, VMware is up a whopping 380% while EMC is up a more modest 185%. Which is better? Cramer said that will depend on investors' tolerance for risk, which is why his charitable trust sold VMware in favor of EMC.