Cramer's 'Mad Money' Recap: Capitalizing on Market Panic (Final)

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NEW YORK ( TheStreet) -- "Panic is not a strategy," Jim Cramer reminded his "Mad Money" TV show viewers Monday, as he repeated one of his mantras that "no one ever made a dime from panicking."

Cramer said three days ago, when the market cratered, investors were panicking in droves, selling anything and everything. Yet Cramer reminded viewers that there is almost always a better time to sell. Even in bad markets, he said, there will be periods of calm when the markets firm and get a little boost.

Such was the case over the past two weeks. Cramer said that two weeks ago, when Treasury Secretary Tim Geithner reassured the markets that a worst-case in Europe was off the table, the markets didn't believe him. Then last week, when the Federal Reserve cited "significant" downside risks to the economy, the bottom fell out. But today, rumors that the leaders in Europe are considering a TARP-style rescue package for their banks seems to make everything better.

Cramer said that manmade crises always have manmade solutions, and this time it no exception. He said that the markets are always a self-correcting mechanism, which is why selling in the middle of the panic is never the right decision. Cramer told viewers to keep a shopping list of stocks they're ready to buy, and use big sell-offs to get the prices they're looking for.

Among Cramer's list of stocks to consider were FedEx ( FDX) and Norfolk Southern ( NSC), two stocks that got crushed last week through no fault of their own. Cramer also liked DuPont ( DD), a stock which he owns for his charitable trust, Action Alerts PLUS , as well as Johnson & Johnson ( JNJ), Boeing ( BA) and McDonald's ( MCD), all high yielders.

Also making the list were International Paper ( IP) and Clorox ( CLX).

Cramer told viewers to remember this big up day the next time the market craters. He said while no one ever made a dime from panicking, many have made fortunes by taking advantage of those who do.

Seeking Higher Prices

In the "Executive Decision" segment, Cramer once again talked with Harold Hamm, chairman and CEO of Continental Resources ( CLR), a stock that's fallen seven points since Cramer visited the company in North Dakota last month. Shares of Continental trade just three points off their 52-week low, at 14.6 times earnings.

Hamm explained that the disconnect in pricing between Brent crude prices and West Texas prices is due to a lack of pipeline capacity in Texas that's hampering supply. That's why Continental sends 75% of its oil to places other than Texas, where it can take advantage of higher prices. Hamm said since places like the Bakken shale ship most of its oil via rail, it's easy to plan ahead and send the oil to where the best prices will be.

Hamm also said that Continental shares are a bargain at current levels, which is why the company recently purchased 100,000 of its own shares and is look to do so again soon. He said that Continental was able to hedge a lot of its oil at very good prices, so fears that falling oil prices will hurt the company are unfounded.

When asked about oil prices overall, Hamm said he's not seeing demand fall off, as many have called from in China and other emerging markets. He said prices are likely to moderate some, with Brent prices falling and West Texas prices rising, but overall, Hamm said the markets are still having trouble meeting global demand.

Cramer reiterated his buy recommendation for Continental Resources, saying that the stock still remains far too cheap given its market opportunities.

Privatized Prisons

Investors looking for great, recession-proof stocks should consider the long-term trend on privatized prisons, Cramer told viewers, as he featured Corrections Corp of America ( CXW) and Geo Group ( GEO), two of the larger private prison operators in the U.S.

Cramer explained that currently, only 10% of U.S. prisons are privately owned, but the trend is picking up steam as private prisons are a great way for states and the federal government to make money and save money at the same time. Ohio, for instance, just sold one of its prisons for $72 million, while in Florida, the state is privatizing 22 prisons this year alone, saving $22 million a year in the process.

Cramer said he likes both Corrections Corp, based in California, and Geo Group, based in Florida, as both have been delivering earnings growth, even during the downturn. Private companies, it seems, are able to not only build new prisons faster than their government counterparts, but also operate them more cheaply, great news for a prison system that's running at 179% of capacity.

Corrections Corp currently operated 90,000 beds at 61 facilities and trades at 14.9 times earnings with a 10% growth rate. Geo Group operates 80,000 beds at 116 facilities and trades at 11.1 times earnings with a 12% growth rate. Cramer said either one is a great choice, but since prices trend to jump on big contract wins, he gives the edge to Geo Group, which is likely to win the 22 facilities up for bid in Florida, its home state.

Positive Cancer Trug Tests

In a second "Executive Decision" segment, Cramer sat down with Daniel Junius, president and CEO of ImmunoGen ( IMGN), whose stock is up 63% since Cramer first highlighted the company in November 2009.

ImmunoGen recently received positive results for phase 2 testing of its T-DM1 targeted breast cancer treatment. Junius said that even in phase 1 testing he saw compelling results for the drug and he's very excited to now have phase two and even phase three studies now in progress.

Junius did admit however, the the Federal Food and Drug Administration is in a tough spot when approving new treatments. He said that T-DM1 was before the FDA a year ago and the agency declined to consider it based on study methodology. Junius said ImmunoGen and its partners hope to have the drug before the FDA again in 2012, with subsequent studies completing in 2014.

When asked whether T-DM1 is too expensive or could be used for other cancers, Junius said that he's not worried about the drug's cost, as it replaces an already expensive round of chemotherapy for patients. As for other indications for the drug, he said that there is some interest in possibly using T-DM1 for gastric cancers as well, but no commitments have been made.

Junius ended by saying that some studies are currently open to new patients.

Cramer continued his recommendation of ImmunoGen, saying the company continues to make great progress in the fight against cancer.

Lightning Round

Cramer was bullish on Henry Schein ( HSIC), Vodafone Group ( VOD), DuPont ( DD), Carbo Ceramics ( CRR), Core Labs ( CLB) and Exelon ( EXC).

He was bearish on Arch Coal ( ACI), World Wrestling Entertainment ( WWE) and Citigroup ( C).

Diversified Portfolio

In his "No Huddle Offense" segment, Cramer once again pitched diversification for investors' portfolios. He said investors need a mix of recession stocks, best of breed names and high yielders in order to weather this market.

Cramer said a portfolio that included Procter & Gamble ( PG) and Johnson & Johnson, along with Eaton ( ETN) and DuPont, and AT&T ( T) and Kinder Morgan Energy Partners ( KMP) would give investors just what they're looking for.

Closing Comments

Cramer said he's not worried about reports that Apple ( AAPL), a stock which he owns for his charitable trust, Action Alerts PLUS , is canceling some iPad orders. Cramer said investors shouldn't rely on a single analyst and he's not changing his opinion on Apple.

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

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At the time of publication, Cramer was long DuPont, Apple.

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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