Cramer's 'Mad Money' Recap: Forgiving Market (Final)

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NEW YORK ( TheStreet) -- "The bad news doesn't matter, it's how we react to in that matters," Jim Cramer told his "Mad Money" TV show viewers Thursday.

Cramer said that in 2011 all bad news was punished, but in 2012, all is forgiven. And that simple change, he said, makes all the difference.

Cramer said the reactions to news of individual stocks is what defines a market. He said it would seem obvious that if a company reports good news, its shares should go higher, but in 2011 that was simply not the case. Back then, good news didn't matter and stocks sank lower no matter how good the news. In today's market however, all of that has changed.

Cramer cited Gap Stores ( GPS), which reported a big turn in same-tore sales. THat news sent the stock up big, even though it had already run up in anticipation of the release. Even a company like Liz Claiborne ( LIZ), which reported a miss on both earnings and revenues, still saw its shares rise.

The trend doesn't stop at retail, noted Cramer. He said that Finisar ( FNSR) rebounded after offering investors a bleak outlook to finish in the bull camp by the end of the day. Investors used the momentary weakness in Wynn Resorts ( WYNN) as a buying opportunity, sending those shares up 3% by the close.

While some skeptics cite multiple expansion as evidence of a bubble in the markets, Cramer said that multiple expansion based on positive news and rising earnings is not a bubble, it's the fuel for a sustainable rally. He said times like these make investing actually enjoyable again, as investors can predict good news and be instantly rewarded for doing so.

Global Appetite for Coal

In the "Executive Decision" segment, Cramer once again welcomed Mike Sutherlin, president and CEO of mining equipment maker Joy Global ( JOY), a stock that's returned an impressive 400% gain since Cramer first recommended it in March 2009. Shares of Joy Global came under fire after analysts largely perceived the company's earnings as a disappointment.

Sutherlin explained that Joy Global's legacy's businesses actually delivered fantastic results this quarter, with revenues up 20% on record operating margins. He said the company did have some issues surrounding its two recent acquisitions however, but he remains positive on both of them. "That's a near-term issue only," said Sutherlin.

Turning to the larger issue of the U.S. abandoning coal-based power plants, Sutherlin admitted that there is indeed a structural shift away from coal towards cleaner, cheaper natural gas-fired plants. However he said that the transition is limited to the number of new gas-fired plants that can be built to replace the aging coal plant system. "That transition is a long-term trend," he concluded, one that will not affect Joy Global's mining equipment business anytime soon.

In fact, with China and India currently constructing coal-fired power plants equivalent to one-third of the total U.S. generating capacity, Sutherlin said any decline in the U.S. coal market is more than made up for by those emerging markets. He said there just isn't enough generating capacity to meet demand in these countries and they're building as fast as they can to catch up.

Cramer agreed, saying that Joy Global's earnings aren't about slowing U.S. demand for coal, but rather the insatiable appetite for coal in the rest of the world. He remained bullish on the stock.

Untouchable Group

In the Thursday "Sell Block" segment, Cramer took the advice of fellow CNBC colleague Herb Greenberg and put the entire for-profit education sector into solitary confinement. He reminded viewers that just because a stock goes down, it doesn't necessarily mean its cheaper.

Cramer explained that Greenberg raised concerns that the entire business model of for-profit colleges like Apollo Group ( APOL), Career Education ( CECO) and Strayer Education ( STRA) may indeed be broken, prompting a "major reset" of stock prices across the board. After doing additional research, Cramer said his conclusions confirmed Greenberg's fears.

Cramer said the for-profit schools have three major headwinds going against them. First, the labor market is getting better, which means fewer recently-unemployed potential students for these schools to recruit.

Second, the competitive landscape is getting a lot tougher, with more and more traditional non-profit schools ramping up their own online and off-campus degree programs. Finally, the regulatory environment surrounding for-profit schools is getting tougher, with new rules ramping up over the next four years.

The for-profit schools are already no stranger to questions about their aggressive sale tactics and limited benefits. Cramer said with the economy and the competition now going against them, it seems unlikely that these schools will be able to match their past performance, even without regulators keeping a close eye on their method.

"The risks far outweigh the potential rewards," Cramer concluded, which is why this entire group is untouchable until further notice.

Hefty Dividend Play

In his second "Executive Decision" segment, Cramer sat down with Howard Lutnick, chairman and CEO of BGC Partners ( BGCP), a speculative $7 financial stock that offers a hefty 9.7% dividend yield.

Lutnick explained that BGC is in the wholesale brokerage business, which means that it helps other people make their trades. He said that BGC doesn't own the things it buys and sells, it simply makes money on the volume of things that are trades. "We work for everyone else," Lutnick concluded.

When asked to expand on what exactly BGC trades, Lutnick said that his company loves when the U.S. government prints more bonds, because there is then more that needs to be traded. He also said that BGC loves the crisis in Europe, as the instability there also creates a ton of trading volume for the company to be a part of. What scares Lutnick? "Boring fridays in August," he said, days when nobody is trading.

Turning to the company's sizable dividend, Lutnick is confident that BGC's dividend is safe. He explained that 37% of the company's stock is owned by its employees, and paying that hefty dividend keeps the employees happy and that company growing.

Cramer said he's a fan of the BGC model and would be a buyer of this little known stock with the great dividend.

Lightning Round

In the Lightning Round, Cramer was bullish on Harley Davidson ( HOG), Magna International ( MGA), JDS Uniphase ( JDSU), Lions Gate Entertainment ( LGF), Exelon ( EXC) and Teradata ( TDC).

Cramer was bearish on IPG Photonics ( IPGP) and Veolia Environnement ( VE).

Closing Comments

In his "No Huddle Offense" segment, Cramer said it's time to stop selling the banks, as there might finally be some hope on the horizon for this beleaguered sector.Cramer said he saw a number of positive things happen in the banking group today, causing the sector to show some real firepower for the first time in many years.

First, JPMorgan Chase ( JPM), a stock which Cramer owns for his charitable trust, Action Alerts PLUS , received an upgrade thanks to the company controlling expenses.

Next, Cramer said that Bank of America ( BAC) announced some new fees for customers and didn't immediately receive national outrage.

Finally, Cramer said that Goldman Sachs ( GS) received notice of a civil investigation and instead of the stock plummeting, it actually rallied.

Couple these three data points to improving commercial loan growth and some positive housing data and Cramer said even the regional banks like SunTrust Bank ( STI), another Action Alerts PLUS name, and First Horizon ( FHN), become attractive.

--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 JPMorgan Chase, Sun Trust Bank

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."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, 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, 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 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, 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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