Cramer's 'Mad Money' Recap: Signs of Housing Turnaround (Final)

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NEW YORK ( TheStreet) -- "Owning a home could be making comeback," Jim Cramer announced to his "Mad Money" TV show viewers Monday. He said the impact of housing is now palpable in the markets and it's likely to stay that way for years to come.

Cramer explained that while lingering problems in Europe and rising gasoline prices are a still a concern for the markets, consumer spending is what has been driving the markets as of late.

He said consumers are dining out more often, as evidenced by Darden Restaurants ( DRI) strong earnings. Cramer said consumers are driving to destinations like Walt Disney ( DIS), as noted by today's Goldman Sachs ( GS) upgrade of the company. But most importantly, consumers are spending on their homes.

Cramer said that the home improvement is on fire, propelling Lowes ( LOW) to blow away the estimates. Pending home sales for January were also on the rise, as for the first time in five years, spending money on a home might not be a losing proposition.

Playing the recovery in house shouldn't be done via the home builders however, cautioned Cramer, it should be done by all of the ancillary plays, stocks like Lowes and rival Home Depot ( HD), also with Stanley Black & Decker ( SWK), a stock which Cramer owns for his charitable trust, Action Alerts PLUS .

Cramer also gave the nod to other home-related plays like Whirlpool ( WHR) and Pier 1 Imports ( PIR), along with mortgage centric banks like Wells Fargo ( WFC) and even Bank of America ( BAC).

Restructing Post Mortem

When an iconic company announces a major restructuring, investors need to ask "what went wrong," Cramer told viewers, as he examined the plight of the iconic consumer packaged goods company, Procter & Gamble ( PG).

Despite increasing revenues by 5% over the past few years, Procter has been unable to boost earnings per share growth, causing the company to announce a major restructuring effort that will trim over 5,600 jobs and take $1 billion out of the company's marketing efforts. But will these efforts be enough to turn the consumer giant around? Cramer said probably not.

Cramer explained that the Procter of today is no longer the best of breed giant it once was. He said there is no culture of cost-cutting at the company, calling into question whether it can deliver on its promises.

But the real issue for Procter is that of the entire consumer packaged goods sector, which has been in a tailspin as birth rates in the U.S. fall and the group sees increased competition from private label products along with higher commodity prices.

In a perfect world, Procter would simply raise prices to offset rising costs, said Cramer, but with so many shoppers sticking with private label alternatives, raising prices is no longer an option. He said the same sentiments can be found on the conference calls of Kimberly-Clark ( KMB), Clorox ( CLX) and even General Mills ( GIS).

Cramer also called into question Procter's decision to trim its marketing efforts. Marketing differentiation is one of the few things branded products have going for them, he said, cutting back those efforts could have serious consequences.

Cramer said that's why he's buying Kellogg's ( K) for his Action Alerts PLUS portfolio. He said Kellogg's acquisition of Pringles, from Procter, is exactly what a company should be doing to reinvigorate its growth. In the case of Kellogg's, Cramer said the estimates are too low, the exact opposite of the estimates for Procter.

5 Oil Trades

Investors looking to play the rising price of crude oil have lots of companies from which to choose, Cramer told viewers, as he ran down five oil stocks, starting with the most secure and ending with the most risky. He told investors to match up their own personal risk profile with the stock that's most right for them.

First, on the safe side, Cramer recommended Conoco-Phillips ( COP), an Action Alerts PLUS holding that sports a 3.4% yield. Cramer said this shareholder-friendly company is breaking itself up to unlock value and has big catalysts on the horizon.

Second, Cramer suggested Schlumberger ( SLB), another Action Alerts PLUS name. He said this oil service company derives 80% of its revenues from outside the U.S. and is a bargain at just 14 times earnings with a 30% growth rate.

Cramer's third recommendation was EOG Resources ( EOG), the top producer in both the Bakken and Eagle Ford oil shale regions. He said this company has bullish prospects and is growing its production and reserves.

Fourth, Cramer recommended National Oilwell Varco ( NOV), a company with 70% market share in the drilling equipment business. He said this company needs oil prices to be high and stay high in order to thrive. He said it is not for the squeamish investor, but is still a great company with a promising future.

Finally, as a speculative play, Cramer suggested Magnum Hunter ( MHR), a literal drilling machine that's increased production by 455% and boosted its proven reserves by 44% in just its most recent quarter.

Winning Strategy

In the "Executive Decision" segment, Cramer sat down with David Wenner, president and CEO of B&G Foods ( BGS), one of the few consumer foods companies that Cramer said are worth owning.

Wenner said that B&G is very comfortable with its dividend exposure due to the fact that the company always does acquisitions that are accretive to earnings. He said his company specializes in buying under-invested brands, like Mrs Dash, which has not seen any new products over the past three years. Wenner said that with brands like Mrs Dash, B&G can launch new products, expand distribution and grow.

When asked about commodity costs, Wenner explained that B&G does not have as much exposure as other food companies. He said that commodity costs rose 1.5% last year and will grow another 2% this year, but the company has already offset those costs with price increases. Wenner noted that for many of B&G's brands, like Cream of Wheat, there are loyal followings of customers, which make price increases less of a factor.

Also providing B&G with a tailwind is the company's aggressive move into the dollar store segment. Wenner said that B&G didn't necessarily notice the trend before the competition, but given the company's smaller size, it was able to move more quickly into the segment with much success.

Wenner also discussed how B&G does much of the research in-house. He also said the company uses economies of scale when buying its packaging, which also offsets rising costs in that area of its business.

Cramer said that B&G continues to be a winner for both consumers and shareholders. He continued his recommendation.

Lightning Round

Cramer was bullish on Panera Bread ( PNRA), Chipotle Mexican Grill ( CMG), Yum! Brands ( YUM), Kinder Morgan Energy Partners ( KMP) and Beckman Coulter ( BEC).

Cramer was bearish on Bravo Brio Restaurant ( BBRG), Fidelity National Financial ( FNF), Frontier Communications ( FTR), Strayer Education ( STRA) and HollyFrontier ( HFC).

Dividend Debate

In his "No Huddle Offense" segment, Cramer highlighted the differences between Apple ( AAPL), an Action Alerts PLUS holding, and Berkshire Hathaway ( BRKB), explaining why Apple should not pay a dividend, but Berkshire should.

Cramer said there's far too much chatter about Apple and what the company "should be doing" regarding a dividend or a stock split. Cramer said frankly "I don't care about a dividend," since Apple is a growth stock and is adding value for shareholders simply by continuing with what it's doing.

Berkshire, on the other hand, has little earnings momentum, said Cramer, and is more of a value stock than a growth stock at this point. Thus Cramer said disagrees with Buffett's decision to focus on the company's book value rather than paying its shareholders a dividend while they wait for growth to pick up once again.

--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 Stanley Black & Decker, Kelloggs, Conoco-Phillips, Schlumberger, 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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