Cramer's 'Mad Money' Recap: Overseas Exposure Keys Rally (Final)

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NEW YORK ( TheStreet) -- "The U.S. stock market is different from the U.S. economy," Jim Cramer told his his "Mad Money" TV show viewers on Thursday, going on to explain that it's this disconnect that explains why equities can continue to rally even if the recovery stateside continues to flounder.

"This lesson is the same as it's been for the last 6,000 points," he said.

He argued that since the majority of large-cap U.S. companies on average only book 30% to 40% of their sales from the U.S., it's a mistake to expect their performance to move in lockstep with domestic economic data. He said selling companies like United Technologies ( UTX) or Norfolk Southern ( NSC) because initial jobless claims were poor is the wrong move.

The economic picture abroad is improving, according to Cramer, who noted that central bankers in other countries have been talking about impending victories over inflation.

He then laid out the three keys to a continued rally in equities, saying the market needs to see China stop tightening its monetary policy, Japan come back online, and the Greece crisis be resolved.

On the homefront, Cramer acknowledged that getting a deal done on the debt ceiling was important, but he also said there's growing evidence that inflation will be held in check, such as the recent decline in oil prices since the surprise strategic reserve release, and declines in grain and cotton prices.

He added that exports can't be the whole answer for the market, noting that a bounce in housing was needed as well, but he maintained the importance of understanding the role the global economy plays in how U.S. companies fare, stating that China's central bank is actually more important to the recovery in America than the Federal Reserve.

"The essence of this rally is the overseas bounty and the ability of these companies to take advantage of it," he said, referring again to the multi-national, large-cap names. Cramer said he sees big money flowing into the industrials next,

He also said investor consternation has been an impediment for some to participating in this rally, so he was happy to see the Fed's $600 billion bond-buying program come to a close on Thursday.

Cramer also mentioned Joy Global ( JOYG), and PPG Industries ( PPG) as two companies that understand America has become a "miserable place to do business" and were acting accordingly.

"International exposure is key," was Cramer's mantra as the segment drew to a close.

Robust Pipeline

In the "Executive Decision" segment of the show, Cramer spoke to Bob Hugin, chairman and CEO of Celgene ( CELG).

Cramer said health care should be a great place to look for growth stocks but it's tough because many of the established companies are facing patent problems, while the small biotechs are like lottery tickets on the FDA approval process.

He then brought up Celgene, which he described as a best of both worlds-kind of drug company with established products on the market, led by Revlimid, a treatment for multiple myeloma, as well as robust pipeline of new drugs.

He also threw out this datapoint, that over the past 15 years, Celgene has been the second best performer in S&P 500 without taking into account dividends. The stock is up 8,936% over that time, he said.

Cramer started out the interview asking Hugin to explain Celgene's approach as a science company developing medical treatments. Hugin said the company is on the verge of capitalizing on a decade of very focused R&D.

Cramer then asked about 2012, which is viewed by analysts as full of catalysts for the company. Hugin said Celgene currently has 25 pivotal or phase III trials going on right now, and that a year from now, the company will have a much more formidable solid tumor franchise, in addition to its oncology drugs.

Hugin mentioned Abraxane as developmental drug that has multi-billion dollar potential, and said he feels Celgene has three or four drugs in the pipeline that could perform on the same level.

Cramer also wanted more information about Celgene's international plans. Hugin said Japan could be very big for Celgene, and that they are hoping to expand in China as well with Revlimid and other drugs.

As for acquisitions, Hugin said the company would be opportunistic. He said Celgene has already accelerated its buyback program and could continue to do so in the future.

"The data that comes out in the next 18 months could be really transformational for us," Hugin said.

New Product Hype

Cramer then switched gears to field a viewer question about Kraft Foods ( KFT), and its new MiO water flavor additive product. The viewer wanted to know if the success of the product could translate to a bump in Kraft shares.

Cramer said the quick answer to the question was a quote from the Wizard of Oz: "No way, no how."

He then boiled down the query to: What does it take for a new product move the needle for a company? He explained that most products don't translate earnings unless the company is very small, using Hansen Natural ( HANS), and its successful launch of Monster brand energy drinks as an example.

He moved on to say the problem is that companies put out too many press releases now that make everything sound like a big deal, so investors need to sift through the noise and recognize what really is a big deal.

Investors need to work hard to divine what will actually translate to earnings, Cramer said, noting that there is nothing game-changing about MiO for Kraft because launching new products is one of the main things the company does, that every year it's getting a certain percentage of its sales from new products. In 2010, for example, 9% of Kraft's sales came from products launched in the past three years.

Cramer returned to the example of Hansen Natural to help investors learn to recognize a game-changing new product because it overtook the whole company and was part of a new category of drinks. Cramer's bottom line was that investors need to be skeptical of new products, and getting caught up in the spin.

He also cited Green Mountain Coffee Roasters ( GMCR) and its Keurig single-serve home coffee brewing system, and the impact of expanding into Macau for a company like Las Vegas Sands ( LVS) as examples of the kind of news that's big enough to move the needle.

2 Stocks to Avoid

Cramer opened up the next segment talking about Research In Motion ( RIMM), and Nokia ( NOK), identifying them as stocks that shouldn't be touched with the proverbial 10-foot pole.

He noted that he's been bearish on both names for a while now, saying he said to bail on Research In Motion a year ago and to get out of Nokia in July 2009. The stocks are down 46% and 52% since those calls.

Cramer said there are still "way too many believers" in these companies, calling out the analysts who are still bullish on these names.

On Research In Motion, Cramer recounted how the company lowered its first-quarter guidance back in April yet maintained its full-year guidance at that time, which should have been a red flag for analysts. Fast forward to the company cutting its guidance just a few weeks later, and eight analysts downgraded the stock.

Even worse, Cramer said, are the analysts who are somehow still bullish, even though the Blackberry maker is clearing losing out in its competition with Apple ( AAPL). He specifically mentioned BMO Capital's stance on the stock as the firm says it's positive on RIM but don't expect the stock to outperform for three or four quarters.

"He doesn't expect it to outperform but he still thinks it's a buy," Cramer said incredulously.

He said what's happening now with RIM is reminiscent of what happened with Nokia, which has sunk for a reason as its market share fell. He noted that when Nokia warned in May its earnings would below what was forecast, it got hit with a laughable 10 downgrades after the stock fell more than 15%.

"Good work guys." he said.

Cramer believes both companies are broken and investors need to be cautious about getting caught in a value trap when the truth is the business itself is in long-term decline.

Lightning Round

Cramer was bullish on International Paper ( IP), ManTech International ( MANT), Sandridge Energy ( SD), Fusion-io ( FIO), and Royal Dutch Shell ( RDS-A).

He was bearish on LinkedIn ( LNKD), Halliburton ( HAL), and Boston Scientific ( BSX).

Closing Comments

Cramer then got political in his final segment, addressing appearances in Pennsylvania on Thursday by Republican presidential hopeful Mitt Romney as well as President Barack Obama.

He said the places the pair were visiting -- Philadelphia and Allentown -- were off base, and that they should be heading to Susquehanna County, "where the natural gas is, where the jobs could be."

Cramer said he thinks both men are likely unaware of the potential for the natural gas industry to create jobs in the state, and cited an academic study that estimated the Keystone state could see 200,000 jobs produced as part of the "shale gas revolution."

Cramer wrote off Obama steering clear of the issue to ideology, but said he has "no idea" what Romney's problem is. He said the actions of both men illustrate "a larger, more disturbing picture," which is reluctance to embrace natural gas, a "domestic and cleaner fuel that could create hundreds of thousands of jobs."

Calling Obama's energy policy "impractical," Cramer criticized the president's favorable view towards solar, noting First Solar ( FSLR) was just granted $4.5 billion in loan guarantees. "Try powering a car or truck with solar," Cramer said.

As for natgas stocks, Cramer said investors need to have "one foot out the door" on most of them until he starts seeing candidates giving speeches in front of the wells, symbolically embracing the industry. "Then I'll be more of a believer," he said.

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 not long any equities mentioned.

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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