Cramer's 'Mad Money' Recap: Customer-Driven Market (Final)

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NEW YORK ( TheStreet) -- "We are in a customer-driven market," Jim Cramer told his "Mad Money" TV show viewers on Wednesday.

He told investors that if they follow the customers, they'll know exactly how a company or sector is performing in this market.

Case in point, housing. Cramer explained that with rents rising and employment improving, more and more people are buying homes. And that's precisely why he likes the housing-related stocks like Masco ( MAS), featured yesterday, along with companies like Home Depot ( HD).

We're also building more cars in this country, said Cramer, and while that's not good news for the automakers themselves, it is great news for Honeywell ( HON), which makes turbochargers, and others like Johnson Controls ( JCI), a stock which Cramer owns for his charitable trust, Action Alerts PLUS.

The big cyclical stocks are also leading the markets, said Cramer, thanks to renewed strength in China.

So what's not working? Well for one, oil and gas stocks, thanks to plummeting natural gas prices here in the U.S. Companies that sell to health care, mainly hospitals, are also weak, as are those that sell into telco, think Ciena ( CIEN).

Cramer said that any company that sells technology into the enterprise seems to be slowing as well. Then there are the banks, a group where the stocks are red-hot, but the growth isn't. With so many firms selling assets and divisions and others still laying off workers, Cramer said he's not sure how this group will be able to sustain their share prices for long.

Real-Time Software

In the "Executive Decision" segment, Cramer spoke with Vivek Ranadive, chairman and CEO of Tibco Software ( TIBX), an enterprise software vendor whose shares have pulled back 15% in recent weeks while other tech companies have soared.

Ranadive described Tibco as a 21st century software company. He said while other companies are focuses on getting information into databases, Tibco is focuses on using information in real-time. He said the company delivered one of its best quarters ever in the financial services area and was able to grow all seven of its vertical markets.

Ranadive said that unlike software from other vendors, Tibco software works right out of the box and doesn't require months of implementation. He said companies like Macy's ( M) use Tibco to make customers offers in real-time, while they're still in the store, rather than six months later. For online retailers like Amazon.com ( AMZN), Ranadive said Tibco helps that system predict the "you- might-also-like" list of item recommendations.

In the life sciences arena, Ranadive said that Tibco can help biotechs predict when batches of drugs are likely to go bad so they can correct problems before losing product. He said the software can also help predict diseases in certain ethnic groups and help with preventative care.

Cramer said Tibco remains a great company, despite its lagging share price. He continued his recommendation.

Targeting the Home

For the next installment of his "Fixer Upper Stocks," Cramer highlighted the newly-minted Fortune Brands Home & Security ( FBHS), the home-products division of the old Fortune Brands.

Cramer said unlike the old Fortune Brands, which made everything from faucets to whiskey to golf balls, the new Fortune Brands is all about everything for the home. The company is 100% levered to home-building and remodeling, with 20% of sales stemming from new contraction and 35% from remodeling. The remainder of sales stems from brands like MasterLock, which makes locks and other security items.

With the average age of a U.S. home pushing 40 years, Cramer said that Fortune Brands has a solid, profitable business even without a boom in new home construction. But with high operating leverage, as new home construction builds, profits will soar for the company, thanks in part to aggressive cost cutting and supply chain reorganization.

Fortune Brands also has a small but growing international business which makes up 17% of sales, as the company pushes into China and other lucrative emerging markets.

Cramer said that Fortune shares are just off their 52-week highs and trade at 22.6 times earnings. That might seem expensive, he said, until you consider the company's 22% long-term growth rate. That said, Cramer recommended waiting for a pullback in the share price before buying in. "Don't chase this one," he concluded.

Am I Diversified?

In the "Am I Diversified" segment, Cramer spoke with callers to see if their portfolios have what it takes for today's markets. The first caller's portfolio included Auto Zone ( AZO), Decker's Outdoor ( DECK), Kinder Morgan Energy Partners ( KMP), Bank Of America ( BAC) and Verizon ( VZ).

Cramer said he liked this portfolio and it was properly diversified.

The second caller's top holdings included Visa ( V), Caterpillar ( CAT), UPS ( UPS), Google ( GOOG) and Amgen ( AMGN).

Cramer said this was an interesting high-growth portfolio and it too was diversified.

The third caller had Broadcom ( BRCM), Chesapeake Energy ( CHK), Decker's Outdoor ( DECK), Wynn Resorts ( WYNN) and Siemens ( SI) for the top five stocks.

Cramer also blessed this portfolio as being properly diversified.

The fourth caller's top stocks were Procter & Gamble ( PG), Conoco-Phillips ( COP), Black Hills ( BKH), Home Depot ( HD) and Pfizer ( PFE).

Cramer said this portfolio made it four-for-four when it comes to great diversification.

Lightning Round

Cramer was bullish on Federal Realty Investment Trust ( FRT), Tanger Factory Outlet Centers ( SKT), First Niagara Financial ( FNFG), Fortinet ( FTNT), Rio Tinto ( RIO), Freeport-McMoRan ( FCX) and Linn Energy ( LINE).

Cramer was bearish on Kimco Realty ( KIM), Groupon ( GRPN), Human Genome Sciences ( HGSI)and First Solar ( FSLR).

Old Tech Fades

In his "No Huddle Offense" segment, Cramer said the personal computer is no longer where the action is any more, and the band of PC makers and components has broken up and moved on.

How else could you explain shares of Microsoft ( MSFT) barely moving after an announcement of slowing PC sales? Cramer said Microsoft is moving itself away from PCs and into gaming with Xbox, smartphones with Nokia ( NOK) and into video with its acquisition of Skype.

Other traditional PC plays, like Intel ( INTC), are moving away from PCs as well, said Cramer. In the case of Intel, its moving into other processors, while PC makers like Dell ( DELL) is expanding into software and services.

News of slowing PCs used to be able to take down all of tech, said Cramer, but that era has now past.

--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 Johnson Controls.

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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