Cramer's 'Mad Money' Recap: Market Craves Certainty (Final)

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NEW YORK ( TheStreet) -- When it comes to the upcoming presidential election, "the markets need certainty," Jim Cramer told his "Mad Money"TV show viewers Wednesday.

He said that in the end, it doesn't matter who wins, but until the markets have certainty, they'll likely continue to like stocks one day and hate them the next.

Cramer said he's often asked which candidate would be best for the markets, but in the end it's certainty that makes markets rally. He said that with the economy picking up steam, it appears that Obama would be hard pressed not to get a second term. But then again, if the economy falters on continued European worries, it's possible that Mitt Romney would prevail.

Cramer noted that if Obama wins, investors would need to continue to steer clear of the banks and take profits in any health care names they own. He said investors would also need to be careful with any fossil fuel stocks as well, as they remain on the president's hit list. Cramer said he would favor the dollar stores and would still embrace gold on an Obama win.

However if the Republicans prevail, Cramer said the investing options would become greater. He said that oil and gas stocks would be the big winner, as would the banks and anything that's cyclical since Republicans would likely aid in more GDP growth than Obama.

But Cramer said the real win for stocks and the economy would be any serious reigning in of our out-of-control entitlement spending. He said if that problem is ever fixed, the market's multiple would skyrocket.

Until then, Cramer concluded, the markets just need certainty. Until they get it, investors will continue to buy and sell stocks based on the latest news and poll results.

Anticipated Break-Up

For the next installment of his "Diamonds of the Dow" series, Cramer recommended Kraft Foods ( KFT), the household name that rose 17.6% last year and sports a 3.1% dividend yield.

Cramer said while Kraft delivered strong results last quarter, the real value lies in its plans to split itself into two companies by the end of this year. As it's currently configured, Kraft is simply too big and diverse for investors to wrap their arms around, said Cramer.

The stock grows too slowly for the growth investors to get excited and the company isn't in the wheelhouse of the value investors either, leaving it in a stock no-man's-land, he explained.

But that all changed last year when Kraft announced that it's splitting into a fast-growing global snack foods business and a slower-growing domestic grocery business. On the surface, investors would think that food is food, but that's not the case, said Cramer.

He explained that grocery items and snack foods have totally different distribution models, different margins and most importantly, different growth prospects. The real value, he said, will be unlocked after these two entities are separated.

Cramer said he expects shares of Kraft to be propelled higher throughout this year as anticipation of the break-up builds. Until then, the company will continue to pay its juicy 3.1% dividend, making the deal even sweeter.

Playoff Battle

Continuing with his "Stock Super Bowl" series, it was play-off night for the top two performing Nasdaq stocks, Ross Stores ( ROST) and Alexion Pharmaceuticals ( ALXN), to see which company will square off against Cramer's Dow Jones Industrial Average winner, Cabot Oil & Gas ( COG), from last night's show.

Cramer said that on the surface it may seem difficult to compare an orphan drug maker with a discount retailer, but some metrics span every sector. His first match-up was the companies' PEG ratios, which compare their multiples vs. their growth rates. Ross Stores may seem like the cheaper play at just 14.9 times earnings, but when factoring in growth, it's a draw, said Cramer. Alexion's PEG ratio is 1.2 while Ross Stores had a PEG ratio of 1.4.

Cramer's next category was takeover potential. Here he said Alexion has the edge, as there simply aren't that many acquirers for Ross. In biotech, however, the possibilities are endless, he said.

Next, Cramer looked at surprise catalysts for these two contenders. He said that Ross Stores is able to take market share and has some exciting new store concepts, but that's nothing that investors aren't already expecting. Alexion on the other hand, has not only new drugs in its pipeline, but is also developing new indications for many of its existing drugs as well. Advantage Alexion, said Cramer.

Finally, on the defensive side, Cramer looked at dividends, where Ross Stores came out the clear winner with its 1.8% yield. Alexion is a growth stock, said Cramer, and all of its profits will go right back into research and development.

Tallying up the results, Cramer said that Alexion came out ahead by a hair, with a score of eight points to Ross' seven points. He said that Alexion will take on Cabot Oil & Gas in the stock Super Bowl on Friday's show.

Am I Diversified?

Cramer spoke with callers to see if their portfolios have what it takes. The first caller's portfolio included NV Energy ( NVE), AT&T ( T), CSX ( CSX), Eli Lilly ( LLY) and Armour Residential REIT ( ARR).

Cramer said he's not a fan of Armour, but otherwise this portfolio is properly diversified.

The second caller's top holdings included Duke Energy ( DUK), Pfizer ( PFE), Annaly Capital ( NLY), Altria ( MO) and Verizon ( VZ).

Cramer said this portfolio was hard to beat.

The third caller had Apple ( AAPL), MasterCard ( MA), Ralph Lauren ( RL), Schlumberger ( SLB) and Home Depot ( HD).

Cramer said this portfolio was "good to go."

The fourth caller's top stocks were JP Morgan Chase ( JPM), Qualcomm ( QCOM), DuPont ( DD), Clorox ( CLX) and Alpha Natural Resources ( ANR).

Cramer said this portfolio was also well played.

Lightning Round

Cramer was bullish on American Campus Communities ( ACC), Halliburton ( HAL), Verizon ( VZ), AT&T ( T), EOG Resources ( EOG), Intel ( INTC) and Qualcomm ( QCOM).

Cramer was bearish on Valero Energy ( VLO) and Advanced Micro Devices ( AMD).

Sucker's Game

In his "No Huddle Offense" segment, Cramer said "enough already" with the questions regarding Yahoo! ( YHOO) and Research in Motion ( RIMM). These companies just don't matter anymore, he said.

Cramer explained that both Yahoo! and Research in Motion are no longer trading on their fundamentals, they're trading on takeover rumors. This is a sucker's game, he explained. Cramer said companies that are losing customers don't get bought and neither do those where the estimates are too high. Both of these companies, said Cramer, are losing market share and have estimates that are still far too high.

When it comes to cell phones, Cramer said that Apple ( AAPL), a stock which he owns for his charitable trust, Action Alerts PLUS, is the only way to go. When it comes to the Web, Cramer said it's Google ( GOOG) all the way.

--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 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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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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