Cramer's 'Mad Money' Recap: Market Negativity Ebbs (Final)

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NEW YORK ( TheStreet) -- "We're running out of reasons to hate stocks, " Jim Cramer told his "Mad Money" TV show viewers Monday, after another strong rally on Wall Street.

Cramer said the facts haven't changed, they simply weren't as bad as people forecast.

Cramer explained that all of the negativity on Wall Street only made sense if the economy was following the 2008 scenario into a steep recession. But with a Lehman Brothers-style collapse in Europe increasingly being taken off the table, the reasons to hate stocks are diminishing.

The markets have been helped by a number of factors, said Cramer, including the news that the euro nations are now willing to nationalize their weakest banks and are willing to work together to bail out others.

Here at home, Cramer noted that our economy has been aided by a 75- cent drop in the price of gasoline, which led to a stronger-than-expected back to school shopping season. Even hiring and rail car volumes are beginning to look up.

Cramer said there are still some negatives in the markets, like the price manipulation of oil, and the fact that the banks still have serious headwinds to combat. He still advised selling any and all banks stocks that may still linger in investors' portfolios.

That said, Cramer noted that the cyclicals and the oil stocks are now ripe for the picking, especially the ones with dividends that pay investors to wait for the recovery to fully materialize.

"2008 is not the right scenario," Cramer concluded, "and after today, that should be obvious to everyone."

Deere Looks Attractive

It's time to buy some Deere & Company ( DE), Cramer told viewers, as he featured the stock owned by his charitable trust, Action Alerts PLUS . Cramer said that Deere is not only a cheap stock, but one with a short and long-term catalyst to boot.

John Deere is largest maker of agriculture equipment on earth and despite strong earnings and raised guidance, shares have still traded down 16% on the year and at a 30% discount to the company's historical price earnings multiple. Cramer said he's start a small position at current levels, and buy even more on any pullback.

In the short term, Cramer said he expects Wednesday's crop report from the Department of Agriculture to be a positive for the stock, while in the longer term, he likes the global trend that calls for a 70% increase in food production by 2050 to feed the world's estimated 9.1 billion inhabitants.

Not only will there be a lot more people, said Cramer, but those people will be eating more grains and more meat, which also requires more grains. He said the only way to feed everyone will be with more output per acre of farm land, and that requires more Deere.

Cramer said he also likes the internals of Deere's stock, as the company is taking market share, expanding international sales and has a stock buyback and a 2.3% dividend. Shares of Deere are trading at just 10.2 times earnings, despite a historical average of 14.9 times earnings.

Best of Breed

Now that Fortune Brands has been broken up into three companies, Cramer said that Beam ( BEAM), Fortune's former liquor unit, is the one to buy.

Cramer explained that the old Fortune Brands, which made everything from golf equipment to kitchen cabinets to premium liquor, never really made much sense under one roof, but now that Beam is a best of breed, stand alone pure-play on liquor, it's the only division that matters.

Unlike all other spirits companies, Cramer said Beam is the only one that's not family-owned or mired with complex voting issues that would prevent a takeover. He said Beam would be an excellent fit for a company like Diageo ( DEO), which also specializes in quality liquors.

Beam is also a company that works well no matter what the economy, said Cramer, as evidenced by the company's August volumes, which rose by 11.9%, far higher than the industry average of 4.7%.

Cramer said that Beam has a "magic formula" which includes investing in its brands and marketing, while at the same time innovating on new products. Nearly 25% of Beam's growth stems from new products, he noted.

Beam also has pricing power, said Cramer, and the company pays a respectable 1.6% dividend as well. He said that Beam does trade at a premium multiple, but considering all the company has going for it, it deserves that multiple.

Juicy Dividend Play

"Don't let today's rally lure you into being too aggressive," Cramer cautioned viewers, as he once again made the case for high-yielding dividend stocks as part of every investors' portfolio. He featured MarkWest Energy ( MWE), a master limited partnership with a juicy 6.2% dividend yield, as one such great investment.

WarkWest is our country's top provider of natural gas gathering, transporting, processing and storage. Unlike many exploration and production companies, MarkWest is also has less exposure to the price of the commodity it processes. The company is the top player in the Marcellus shale region of Pennsylvania, but also has its hands in shale plays all across our country.

Cramer said that MarkWest's recent secondary offering of stock makes a perfect entry point, as shares are currently trading below that price price. He said the company now has all of the capital it needs for growth, and thus boosting its distribution to shareholders.

MarkWest has a generous history of rewarding shareholders, said Cramer, with distributions increasing by 190% since the company's IPO. All told, MarkWest has returned 912%, including reinvested distributions, since it's IPO.

Lightning Round

Cramer was bullish on Amazon.com ( AMZN), Vector Group ( VGR), Philip Morris International ( PM), Kinder Morgan Management ( KMR), Altria ( MO), McCormick ( MKC), Frontier Communications ( FTR), Pitney Bowes ( PBI) and Annaly Capital ( NLY).

Cramer was bearish on Inergy LP ( NRGY).

Closing Comments

In his "No Huddle Offense" segment, Cramer said without a double-dip recession, the oil stocks are the place to be this earnings season.

Cramer said the oil stocks have been trading on the premise that a European recession will be bad enough to take down the world's economy, but that notion seems preposterous.

He said the oil service group is now the most out of whack with the fundamentals, with stocks like Continental Resources ( CLR) down 28%, EOG Resources ( EOG) off 35% and even Halliburton ( HAL) down by 40%.

"This is not 2008," he reminded viewers, which makes this group one of the most attractive sectors out there.

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

To contact the writer of this article, click here: Scott Rutt.

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At the time of publication, Cramer was long Deere.

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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