Cramer's 'Mad Money' Recap: The X Factor (Final)

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NEW YORK ( TheStreet) -- "The X factor is not just for reality TV," Jim Cramer told the viewers of his "Mad Money"TV show Tuesday. He said when it comes to stocks, some companies have "it" and others simply don't.

What's the X factor? Cramer said it's that little something special that makes investors want to pay up for some stocks, but not others. Something cool that cannot quite be explained. Cramer said X factor companies not only have great earnings and growth but also have that little something extra as well.

Take ( AMZN). Cramer said Amazon rallied 1.6% today to a new high on no news to speak of. He said other companies, like Panera Bread ( PNRA) and Chipotle Mexican Grill ( CMG) have the X factor, that's why they trade at 34 and 44 times earnings respectively.

Companies like Microsoft ( MSFT) and Research In Motion ( RIMM), no X factor, said Cramer. Meanwhile, electric car battery maker Polypore ( PPO), has the X factor.

Then there's watch and accessory retailer Fossil ( FOSL), a stock that's up over 140% since Cramer first got behind the stock at just $44 a share. Fossil delivered a dazzling quarter with earnings up 62%, a 20-cent-a-share beat. Shares of Fossil rallied 12 points in a single day as analysts had to do a wholesale revision on their expectations.

Cramer said Fossil clearly has the X factor, with robust growth all over the globe in not only watches, but also its jewelry and leather products as well. Fossil is cool, said Cramer, and the world knows it even if Wall Street doesn't.

Cramer said that other stocks, like Deckers Outdoor ( DECK) and recently Dominos Pizza ( DPZ), also have the X factor, which is why he still likes both of these names as well.

Investing in Coal

In the "Off The Charts" segment, Cramer went head to head with colleague John Carter over the future of coal, still the cheapest way to provide electricity to the world's growing middle class. Cramer said unlike the markets for silver and oil, which are highly speculative, the coal market is driven by actual supply and demand and is far more stable than that of its peers.

Carter used the weekly chart of the Market Vectors Coal ETF ( KOL) for his analysis and noted that after rallying in 2010, coal has been trading sideways, consolidating, and most recently has sold off to its support level.

Using Elliot Wave Theory, Carter identified bullish trends in both the Elliot B and Elliot C waves and also noted the "squeeze" chart also pointed to the coal stocks taking off soon. Carter said he'd be a buyer of the coal ETF, using September call options.

But Cramer said he doesn't like the coal ETF, which includes coal stocks from around the globe. He said if investors want to play the coal market, they need Peabody Energy ( BTU), the largest coal player in the business and the one most levered to the expanding Asian markets for coal.

Cramer said coal is a fantastic long-term theme and Peabody is in the best position to export their coal to the growing global demand.

Electric Battery Headwinds

In the "Executive Decision" segment, Cramer spoke with David Vieau, president and CEO of A123 Systems ( AONE), which makes batteries for electric cars and trucks. A123 just delivered a 51-cent-a-share loss for its most recent quarter, five cents a share worse than expected, on a 26% fall in revenues. Shares of A123 are now trading around $6 a share after a successful IPO last year that saw shares soar to $25.

Vieau said that A123 is on the path to building enough Lithium Ion battery capacity to get costs down so it can produce a mass market item. He said the company has invested heavily to build the largest battery factory in North America and now has a tremendous asset at the ready. "We've been putting a lot of money in play," said Vieau, "but a lot of that is now behind us."

Vieau said that the A123 battery's unique chemistry offers better safety and durability for electric vehicles. He also noted that there is nothing hazardous in A123 batteries, and many of their components can be recycled.

When asked about the need for future financing and government loans, Vieau said the company just completed a $254 million secondary offering of stock to help it reach profitability. He said while some promised government loans in 2013 and 2014 may be in jeopardy due to budget cuts, A123 will have much stronger cash flow by then and will have other financing options available to it.

Cramer said with shares of A123 now significantly lower than its IPO and much of the investment already having already been made, now might be the time to speculate on the coming of electric vehicles

Health and Wellness Trends

In a second exclusive "Executive Decision" segment, Cramer spoke with Doug Tough, chairman and CEO of International Flavors & Fragrances ( IFF), which just delivered a nine-cent-a-share earnings beat on a 9.2% increase in revenues.

Tough said that IFF is seeing tremendous growth in both emerging markets as well as in its established markets. He said while IFF may only be a modest part of customers' product portfolios, it is a crucial one, which is why IFF have been able to raise prices to offset rising commodity costs.

Tough also said that IFF saw the trend towards health and wellness coming and stepped up research and development on creating products that taste great but are also better for consumers.

He said the company has a large group of PhD's working on mirroring the great taste of salt and sugar without the health implications. IFF is also partnering with companies around the globe to further its innovations. "We don't have all of the great ideas," noted Tough, "but we partner with those that do."

Tough also cited IFF's fragrance business as another bright spot for the company. He said IFF is winning new business all over the globe and great fragrances often become long revenue streams for the company.

Cramer said IFF is on an explosive growth path and the company still represents great value, even at its 52-week high.

Lightning Round

Cramer was bullish on Visa ( V).

He was bearish on Citigroup ( C) and Companhia Siderurgica Nacional ( SID).

Closing Comments

In his "No Huddle Offense" segment, Cramer asked the question, "What were they thinking?" in reference to Microsoft's $8.5 billion deal for Internet telephony giant Skype. He said at best, this deal is a joke. "How does Microsoft expect to make money where Ebay ( EBAY) and even the company's founders couldn't."

Cramer said this deal is just another big-cap technology company having a mid-life crisis. He said just like Intel's ( INTC) bid for security company McAfee, the deal just doesn't make sense. At least McAfee was profitable, he said.

Skype does have a lot of eyeballs, noted Cramer, and while that may be great for an eye care company, it doesn't nothing for Microsoft. He said Microsoft should have bought Netflix ( NFLX), a company that has great growth and is even profitable.

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

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At the time of publication, Cramer was not long any stock mentioned.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for, Inc., and CNBC, and a director and co-founder of All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of 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, 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 is related to the specific opinions expressed by him on "Mad Money."

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