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NEW YORK ( TheStreet) --

"Apple is a living, breathing example of why capitalism is worth cheering about," Jim Cramer told his "Mad Money" TV show viewers Wednesday, "and it puts our government to shame."

He said our government can learn a lot of things from Apple and proceeded to compare Apple ( AAPL), a stock which he owns for his charitable trust, Action Alerts PLUS , to the U.S. government in a number of key areas.

First, there's debt. He said that while our nation is deeply in debt, Apple has none. Moreover, the company has an incredible $76 billion in cash on its books. Cramer said he's not worried, as are some, that this money is not being put to good use. He said Apple's cash hoard gives it a position of power, and the ability to pounce on opportunities as they arise.

Then there's leadership. Cramer said that while many believed Apple was a one-man show, it's clear now that Apple has an established, nurturing culture of leadership and innovation that will last for years to come. Our government, on the other hand, knows only partisanship and anger, said Cramer.

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Looking at trade, Cramer said that it's clear that Apple is taking market share, leaving rivals like Nokia ( NOK) and Research In Motion ( RIMM), which are just shadows of their former selves. Contrast that to our government, which uses protectionist tariffs and trade barriers to protect a multitude of industries from foreign competition, he said.

Finally, Cramer compared the outlook for both. He said that Apple's conference call was filled with new things to come: a new operating system, a new cloud service, a new iPhone coming soon, etc. He said the company is filled with hope and opportunity. Meanwhile, many believe the U.S. has seen its best days, and that the next generation may not be as well off as this one.

Cramer said it's hard to think of Apple as just a stock, but since it is, it deserves a price target of $500 a share.

Budget Fears Casualty

Sometimes stocks go down for the wrong reasons, Cramer told viewers. Case in point, HealthSouth ( HLS), a provider of in-patient rehabilitation centers that's received a 15% haircut thanks to fears the budget talks in Washington will reduce Medicare payments.

Cramer said while it's true that HealthSouth does receive 70% of its revenues from Medicare, the truth is that rehab centers already went through a major restructuring. He said the HealthSouth of today operates at 2004 levels, thanks to aggressive cost-cutting and restructuring.

That makes HealthSouth attractive, said Cramer, as this operator of 97 in-patient facilities currently generates $400 million in free cash flow and is valued at just $2 billion, a sweet spot for takeover suitors. Shares of HealthSouth currently trade at 17.6 times earnings and the company has a 12.8% growth rate.

But even without a takeover, Cramer said he'd be a buyer of HealthSouth, as many of its competitors are either non-profits or are losing money, making HealthSouth a potential acquirer as well.

Chipotle Story Still Resonates

In the "Executive Decision" segment, Cramer spoke with Jack Hartung, CFO of Chipotle Mexican Grill ( CMG), a stock that's up 130% since Cramer first got behind it in June 2010, but also one that's been under pressure after a four-cent-a-share earnings miss in its most recent quarter.

Cramer said that Chipotle's earnings were on the light side and the company's margins were squeezed as a result of legal costs associated with an undocumented worker probe and rising food prices, two things that will be resolving themselves in the current quarter. Cramer noted that same-store sales were up 10% and the company opened 39 new locations in the quarter.

Hartung agreed with Cramer's assessment, saying that the revenue side of Chipotle is very healthy, but the company is experiencing some short-term challenges with costs. He said overall, customers appreciate Chipotle's fast, friendly service, and the company expects that it can serve upwards of 300 customers an hour at its locations, which means increased sales in the future.

Hartung also explained that Chipotle is not so much focused on growth as it's focused on culture and its business model. He said Chipotle aims to delight every customer, and is constantly looking for great locations and development great leaders to run those locations. He said the company's economics are the best it's ever ever been.

When asked about Chipotle's "food with integrity" model, Hartung explained that Chipotle purchases only the highest quality ingredients and ones that are produced in a sustainable way. He said Chipotle's customers appreciate that quality and become more loyal as a result. Hartung said over time, more and more people are caring about where their food comes from, and that bodes will for Chipotle.

Cramer said he's a believer in the Chipotle story, and those that sold the stock down after its earnings release are already losing money.


In a special "Quiz Cramer" segment, Cramer fielded questions from his live audience. When asked about whether the Federal Reserve will begin QE3, Cramer said what's important is that the Fed is committed to keeping the economy out of recession. Everything else, he said, will take care of itself.

When asked what to do with cash in a retirement portfolio, Cramer said that the viewer must build income. He recommended investing in a master limited partnership, like Kinder Morgan Energy Partners ( KMP), which is likely safer than bonds with a much higher yield.

Finally, when a younger viewer asked whether Microsoft's ( MSFT) Xbox business could affect he stock, Cramer said that only corporate sales of Windows matters to Microsoft, and its Xbox business is just too small to "move the needle."

Lightning Round

Cramer was bullish on Commercial Metals ( CMC) and Netflix ( NFLX).

He was bearish on Rackspace Hosting ( RAX), Silvercorp Metals ( SVM), Corrections Corp of America ( CXW), Chicago Mercantile Exchange ( CME) and Adobe Systems ( ADBE).

Closing Comments

In his "No Huddle Offense" segment, Cramer once again opined on technology stocks. He said while a rising tide lifts all tech boats, when that tide recedes, these stocks become cannibals and only the strong will survive.

Cramer told investors not to be dissuaded when the earnings of Apple, Google ( GOOG), EMC ( EMC) and ( AMZN) send all of the tech stocks higher.

In his "No Huddle Offense" segment, Cramer once again opined on the technology stocks. He said while a rising tide lifts all tech boats, when that tide recedes, these stocks become cannibals and only the strong will survive.

Cramer told investors not to be dissuaded when the earnings of Apple, Google ( GOOG), EMC ( EMC) and ( AMZN) send all of the tech stocks higher. He said the best way to play Apple is not with a derivative play but with Apple.

Cramer said the problem with tech is that as the leaders win, like Apple is with its iPhone and iPad, others must lose. He said when the market pulls back next, all the rest of tech will be quickly washed out to sea.

--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, 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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