Cramer's 'Mad Money' Recap: A Good Old Rally (Final)

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NEW YORK ( TheStreet) -- "It was like the old days today," Jim Cramer told his "Mad Money" TV show viewers Tuesday.

He said what companies said today actually mattered, and for the first time in a long time "investing was fun."

Cramer said that all it took was a quiet day in Europe, with no news out of Washington, and the positive comments from individual companies started to shine through the malaise. In particular, the bullish sentiment came from a trucking industry conference stating that business improved from July to August and into Sept. Transportation, it seems, is seeing both volume and pricing strong, and as a leading indicator, this is very good news, he said.

But Cramer noted that this news is not only good for FedEx ( FDX) and UPS ( UPS), a stock which he owns for his charitable trust, Action Alerts PLUS, but also for engine maker Cummins ( CMI), another Action Alerts PLUS name. Cramer said the trucking companies are putting their money where their mouths are, buying new trucks to support demand.

Cramer said the bull market in trucks can be extended to John Deere ( DE), also an Action Alerts PLUS holding, and even Joy Global ( JOYG).

Cramer said good news in trucking means good news for companies that ship things as well, companies like International Paper ( IP), Airgas ( ARG), Target ( TGT), Bed Bath and Beyond ( BBBY) and Ross Stores ( ROST).

There's also a seasonal bull market emerging in tech, said Cramer, despite a negative outlook from Cisco ( CSCO). Cramer said chip makers and equipment makers across the board were also seeing signs of strength today.

European Bank Woes

In a "Know Your Enemy" segment, Cramer outlined in plain English what's going on in Europe and why everyone is so worried. He said when it comes to the European banks, there is the possibility of a Lehman Brothers-style failure and a non-Lehman failure. The former would be a disaster, but the latter is far less worse and indeed, even manageable.

Cramer used the French bank Societe Generale, and its slow side toward oblivion, as an example. He explained that in the U.S., banks borrow against depositors' money and their own debt and loan that money out to businesses and individuals. But in Europe, banks also borrow against sovereign debt from countries like Greece and Italy, which seemingly now cannot repay their debts. This fact, coupled with more lax rules in Europe on how far banks can leverage themselves and the lack for stress tests for banks has left many, like Societe Generale, vastly underfunded.

Cramer said this will lead to one of two scenarios. The first, non-Lehman style collapse means that banks will have to be bought, merged or semi-nationalized, think AIG ( AIG). In this case, no one really gets hurt and the banks feel the brunt of the pain for the next several years while they recover from their mistakes.

The second scenario, ala Lehman, means bankruptcy, wiping out monies owed to countless funds, hedge funds and agencies. Cramer said hedge funds know this, which is why they're likely desperately unwinding their derivative positions with Societe Generale, trying to escape possible annihilation. The problem however, is that these liquidations mean the banks must take the other side of these trades, increasing their need for capital and choking them to death.

Cramer said since no one in Europe in talking, and those that are can't be trusted to tell the truth, no one knows just how bad things are with the European banks. And that he said, is why our markets gyrate on a daily basis based on every whisper from Societe Generale and every other European entity.

Off the Charts

In this chart segment, Cramer went head to head with colleague Tim Collins over the chart of the iShares Philadelphia Semiconductor Index ( SOXX), or SOX, to see if now's the time to buy into the chip making sector.

Looking at a chart comparing the performance of the SOX to that of the overall NASDAQ, Collins noted that the SOX has been underperforming the market since March, not once breaking out with any strength, until now. He said the move is still early, but a recent breakout is being confirmed by its relative strength indicator and by the stochastics.

Collins noted that the last two times the charts were so bullish for the SOX, it massively outperformed the markets in the months that followed. After trading sideways since Aug, the SOX has completed a reverse head-and-shoulders pattern, indicating a pop to the 430 to 450 level for the index.

Cramer said he agrees with Collins that now is the time to buy into the semiconductors, but rather than buy into an index, Cramer said he likes owning individual stocks, the best of the best. He reiterated his buy recommendations on both NVIDIA ( NDIVIA) and also ARK Holdings ( ARMH), two stocks recently featured on "Mad Money."

SandRidge Energy Update

In the "Executive Decision" segment, Cramer spoke with Tom Ward, CEO of SandRidge Energy ( SD), which has declined 28% after it reported last month.

Ward explained that despite things outside of the company's control, SandRidge had a very good quarter and is still on target to triple its production growth over the next three years. He said the company doesn't give quarterly, only yearly, guidance and that analysts simply aren't keeping up with the company's progress.

When asked about how the company plans to pay for its growth, Ward said that SandRidge has already raised $1.9 billion of non-debt financing so far and only needs an additional $1 billion over the next 18 months to complete its plans.

He said the company has many options open to it, including issuing another royalty trust or entering into a joint venture. Given the company's current level of growth, Ward said "it's impossible for us to be a $7 stock."

Finally, when asked about the falling price of oil, Ward noted that SandRidge has hedged over 45 million barrels of oil over $90 a barrel over the past three years and continues to lock in higher oil prices as it continues to expand.

Cramer said that SandRidge has made a lot of money for shareholders in the past and is likely to do it again soon.

Lightning Round

Cramer was bullish on SXC Health Solutions ( SXCI), Express Scripts ( ESRX), Transocean ( RIG), Schlumberger ( SLB), Halliburton ( HAL), Baker Hughes ( BHI), Clean Energy Fuels ( CLNE), Westport Innovations ( WPRT), Chesapeake Energy ( CHK) and Juniper Networks ( JNPR).

Cramer was bearish on Ford Motor ( F) and Infinera Corp ( INFN).

Best Buy Missteps

In his "No Huddle Offense" segment, Cramer opined on Best Buy ( BBY), which once again missed its numbers, further confirming how the company has lost its way. Cramer said with shares off 31% for the year, he's renaming the company "Best Browse," referring to the trend of using Best Buy stores as a showroom for cheaper online purchases.

Making matters worse, Cramer said Best Buy is now the poster child for the stupidity of stock buyback programs. Back in 2008, the company had 413 million shares outstanding at $45 a share. Today that share count is down to 373 million shares at just $23 a share.

Cramer said Best Buy is squandering its cash on buybacks rather than reinventing itself or investing in fixing its problems. Worse still, management seems enamored with itself and its buyback decisions, touting them as a "commitment to shareholder value." Cramer said Best Buy can only prop up its shares for so long and could risk running out of cash altogether and going the way of Circuit City.

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

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At the time of publication, Cramer was long UPS, Cummins, John Deere.

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."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, 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, 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 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, 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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