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-UpFor 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 BattleContinuing 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.