Cramer's 'Mad Money' Recap: Earnings Trump Europe (Final)

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NEW YORK ( TheStreet) -- "Stocks aren't playing with the bear anymore," Jim Cramer announced to his "Mad Money" TV show viewers Monday.

He told them that this quarter's earnings have been a gamechanger for the markets and Europe simply doesn't have the fire power to keep U.S. markets down any longer.

Cramer said that investors are finally coming to the realization that most companies simply don't have any exposure to the eurozone and those that do are having strong earnings that are actually making a difference.

He said that even Juniper Networks ( JNPR), a stock which he owns for his charitable trust, Action Alerts PLUS , and does have European business is rallying off its lows.

Cramer said in just about every sector, from financials like Goldman Sachs ( GS) and JPMorgan Chase ( JPM) to apparel with VF Corp ( VFC) to the oil patch with Schlumberger ( SLB) and Halliburton ( HAL) are showing strength despite continued uncertainties in Europe.

Was all of the Euro madness overblown? Cramer said no. He said investors are right to worry and are right to take profits on big up days. "It would be crazy to dismiss Europe," he said, but it turns out that the strategy of "kick the can down the down" is giving banks and countries time to prepare for the worst and is slowing letting the air out of the balloon.

Cramer remained bullish on retail, which has no European exposure. He likes Macy's ( M), Ross Stores ( ROST) and Home Depot ( HD). Cramer was also hot on IBM ( IBM), Cummins ( CMI) and Alcoa ( AA), three more Action Alerts PLUS names.

Global Economy Gaining Strength

In the "Executive Decision" segment, Cramer once again spoke with Sandy Cutler, chairman and CEO of Eaton ( ETN), an Action Alerts PLUS holding that delivered inline earnings that caused shares to sink at the open, only to rebound 4.5% by day's end.

Cutler said that while China's economy has been a worry for most companies, he feels the country is engineering a soft landing for itself and will see a recovery in 2012. Back in the U.S., Cutler noted that exports and manufacturing are showing signs of strength, as is non-residential construction. He said that after a long slide, Eaton's truck segment is also rebounding, setting record revenue numbers even though truck production is still near its lows.

When asked about falling commodity prices, Cutler said that September saw a 25% decline in some of the company's commodities and prices are finally coming into line. The good news, however, is that commodity cost deflation is not currently part of the company's estimates.

Turning toward Europe, Cutler said that most companies seem to have a plan A and a plan B when it comes to Europe, but it looks like the worst case may not happen, meaning that companies can focus on their plan A's in 2012.

Finally, Cutler noted that Eaton has paid a dividend ever since 1923 and has a strong balance sheet and cash position to continue that legacy. The company also bought back 7 million shares of its own stock as it felt shares were undervalued.

Cramer agreed that Eaton is still a very inexpensive stock, with growth and a great dividend yield.

Company vs. Stock

"Just because a company has great long-term prospects, it doesn't mean it's time to buy," Cramer told viewers as he highlighted Dick's Sporting Goods ( DKS), a battleground stock that was upgraded to $42 a share by one Wall Street firm after two others downgraded it earlier this month.

Cramer said he agrees with the upgrade's analysis of the company, as Dick's Sporting Goods is accelerating its growth from 455 store to almost 900 stores, making it a true national retailer of sporting goods and outdoor apparel.

He said the company has a winning model, investing $2.2 million in new locations, only to realize a 45% cash on cash return by the end of the stores' second year of operation. The company's downstream vendors, like Nike ( NKE), are also indicating that demand is strong.

But is this the right time to buy the stock? Cramer said absolutely not. He said the stock has already run from $30 to $39 a share, putting it at 17.4 times earnings. That puts it on par with a company like Deckers Outdoor ( DECK), a company with much faster growth. Dick's Sporting Goods is also up against tougher comparisons, noted Cramer, and the company has no real catalyst to propel it higher from these levels.

So while Dick's the company may be on fire, Dick's the stock is not.

Solid Growth Prospects

In a second "Executive Decision" segment, Cramer sat down with David Brain, president and CEO of Entertainment Properties Trust ( EPR), a stock that stumped him in an earlier show. Cramer explained that Entertainment Properties owns 161 properties in 33 states centering mainly on movie theaters and surrounding retail centers. The company yields 6.5%.

Brain said that his company's portfolio of properties has been working very well over the company's 14 years. He said recent concerns over the company's decision to expand into vineyards and wineries have proven to be a mistake, one that they are working to correct, but in the core business, movie theaters, there has only been one vacancy in 14 years. The company's surrounding retail properties are at 95% occupancy.

Brain also discussed his company's move into charter schools, a high-growth area that's seeing 12% growth. When asked about how state budget cuts will affect that growth, Brian said that most cuts come to higher education and charter schools have been largely unaffected. He called charter schools an excellent opportunity for Entertainment Properties to grow.

Cramer agreed with Brain's analysis, saying that the company's dividend was safe and its growth prospects very solid.

Lightning Round

Cramer was bullish on Caterpillar ( CAT) and Prudential ( PRU).

He was bearish on BlackRock ( BLK) and City Telecom HK ( CTEL).

Closing Comments

In his "No Huddle Offense" segment, Cramer said that ideologies are killers in the investing business. He said that those who believe Europe will destroy the western financial world, or that the economy is stalled from too much regulation, or there simply isn't any demand left in the world's economy all have a political agenda that clouds their judgement.

Cramer said he only cares about making money, about picking stocks. "I'm a stock picker, not a senator," he said. The slow pace of Europe's crisis has only helped to give the world time to prepare, and those that have been blinded by it only missed the seasonal bottom in tech, the rally in retail and the recovery in industrial stocks like Eaton, he said.

--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 Juniper Networks, IBM, Cummins, Eaton and Alcoa.

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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