Cramer's 'Mad Money' Recap: Opportunity Knocks (Final)

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NEW YORK ( TheStreet) -- "If you haven't sold your stocks yet, don't bother," Jim Cramer said his "Mad Money" TV show Tuesday, as he told them that the bottom may be a lot closer than they realize.

Cramer said its very tempting to sell the industrial stocks, names like Freeport-McMoRan ( FCX), Honeywell ( HON) and Caterpillar ( CAT), a stock which he owns for his charitable trust, Action Alerts PLUS. But Cramer said the time to sell these names has past, and the time to be opportunistic is now upon us.

Cramer said the urge to sell these stocks after such great losses would be impulsive and emotional decisions, not the type he advocates on "Mad Money." He said based on his 30 years of trading experience, after being down so much, it's time to start buying into these names using wide scales on the way down.

So why so bullish? Look at the tape, said Cramer. When Procter & Gamble ( PG) reported what was arguably the worst quarter in the S&P 500, shares rose from $60 to $67 and never looked back. Yet when Caterpillar reported one of the best quarters in the average, it sank like a stone from $116 to just $102. "Do you really think there's a lot of upside left in Procter," asked Cramer?

Cramer said while some companies, like Hewlett-Packard ( HPQ), Research In Motion ( RIMM) and Cisco ( CSCO) are broken companies, companies like Caterpillar and Cummins ( CMI) both said things were improving. And that's why, with commodity prices falling and the global economy on the mend, the bottom in the industrials may be just around the corner, he said.

Master of Rebranding

Continuing with his "Mad Money" restaurant guide, Cramer sampled the national chains of Darden Restaurants ( DRI), which owns the Olive Garden and Red Lobster, Dineequity ( DIN), purveyors of IHOP and Applebees and Brinker Int'l ( EAT), best known as Chili's.

Cramer said with these huge national brands, we don't care about unit growth, but rather which company can turn around its aging brands to become more relevant and which ones can control costs best.

Cramer said Dineequity recently began a massive rebranding and remodeling of Applebees, and has shown three quarters of positive same store sales growth. But the company's IHOP brand is still lagging, down 2.7%, taking it out of the running for the top spot. Cramer said Dineequity is intriguing however, as all of its locations are franchised, taking cost inflation out of the picture.

Then there's Brinker, a company that pays a 2.2% dividend yield, but also one that's only just begun a remodel of Chili's, making it too soon to tell whether this chain can become a five-star destination in Cramer's book.

That leaves Darden, Cramer's long-time favorite restaurant stock. Cramer said Darden is a master of rebranding, and it's remodeling on Red Lobster is showing great results, just as Olive Garden's last remodel did.

He said the company is also on track to remodel its Longhorn Steakhouse chain into a more upscale location as well. On the cost front, Cramer said Darden has excellent cost discipline. The company also sports a 2.6% dividend yield, has a strong balance sheet and a stock buyback to boot.

Remodeling Trend

There's nothing better than a good turnaround story, Cramer told viewers. And when it comes to retail, a good remodel can make all the difference. Cramer highlighted three companies doing just that.

Cramer said Kohl's ( KSS), an Action Alerts PLUS name, has become a terrific executioner, and is remodeling 100 of its 1100 stores at a cost of $275 million. That makes most of Kohl's stores now opened or remodeled in the past five years. What's the result? a 7% bump in sales for every remodeled location.

Kohl's has also enjoyed a 47% increase in its ecommerce sales and is increasing its private label items to bump up margins even further. Kohl's is using its new found cash to buy back stock and to begin paying a dividend in June. Shares of Kohl's trade at just 12 times earnings despite having a 13% growth rate.

Cramer also gave the nod to Walgreens ( WAG), the drugstore chain that's lowering operating costs and creating a better shopping experience by converting 1500 of its locations to a new format. Walgreens has seen a 5.5% bump its its sales after the remodel. Shares of Walgreens ar eup 30% since Cramer recommended them on Oct 8, 2010 but, he said, the stock has a lot more room to run.

Finally, Cramer mentioned AutoZone ( AZO), the nation's leading auto parts dealer that's making headway in commercial auto parts thanks to its newly remodeled locations. AutoZone is now growing its commercial business by 22% in its most recent quarter. Cramer told viewers to wait for the company to report before buying in, as shares are already up 53% so far this year.

Falling Bank Stocks

In the "Off The Charts" segment, Cramer went head to head with colleague John Roque over the charts of the banking stocks, a group that may seem cheap but is proving to be value traps that are only getting cheaper.

Roque looked at a weekly chart of Goldman Sachs ( GS) and noted that the stock have broken through its 40-week moving average. He said if the stock falls below its support level of $130 then the next stop is likely to be $100 a share.

Turning to another chart, this time of Goldman's relative performance compared to the S&P 500, Roque said that Goldman is underperforming the markets, down 16% compared to the S&P which is up 5% for the year. He said the same chart can be seen with just about every bank stock.

Cramer said with employment and housing still slumping and an endless barrage of government regulations and scrutiny, the bank stocks will likely be stuck in the mud for quite some time. He said these stocks simply can't win without some upside momentum, so that means waiting on the sidelines for now.

Lightning Round

Cramer was bullish on Chicago Mercantile Exchange ( CME), Solar Capital ( SLRC), Sallie Mae ( SLM), Dell ( DELL) and Apple ( AAPL).

He was bearish on Citigroup ( C).

Housing Fix Needed

In his "No Huddle Offense" segment, Cramer opined on the news that the New York State Attorney General is investigating the mortgage mess. Cramer said he's all about putting the bad guys behind bars, but perhaps too much energy is going into prosecuting the offenders and not enough energy is being paid to resolving the issues.

Cramer said what the housing markets need is a resolution, and that means that people need to leave the homes they can't afford, then banks must take the hit and the houses must be sold. "We need a plan to get these homes on the market," said Cramer, through a definitive plan that's agreed to by all.

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

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For more of Cramer's insights during the Lightning Round, clickhere .

At the time of publication, Cramer was long Caterpillar, Kohls.

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.

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