'Mad Money' Recap: Next Week's Game Plan (Final)

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NEW YORK ( TheStreet) -- Jim Cramer expects good things to happen in next week's trading.

He told his "Mad Money" TV show viewers Friday that they should be patient and stay constructive, using market declines to buy in and not bail out of stocks. Cramer said while his game plan for next week's trading hinges on Friday's latest labor report, there are still a few interesting stocks to watch out for.

On Monday, Cramer said he'll be listening to Arcos Dorados ( ARCO) for a read on whether the stalled McDonald's ( MCD) might be worth buying soon. He'll also be listening to the ConocoPhillips ( COP) investor update. Cramer said this stock, which he owns for his charitable trust, Action Alerts PLUS, will be splitting into two companies and investors need to pay attention.

For Tuesday, Cramer said that Dick's Sporting Goods ( DKS) and Vail Resorts ( MTN) will provide a read on the sporting goods and consumer discretionary markets. He'll use Dick's call to see if there are other sports apparel stocks worth buying and see if Vail is slowing from higher gasoline prices.

Wednesday brings Brown-Forman ( BF.B), Ciena ( CIEN) and a Honeywell ( HON) investor conference. Cramer said he's bullish on Brown Forman and would pickup some Beam ( BEAM) and Diageo ( DEO) ahead of the release. He'd also buy Honeywell ahead of the conference. Ciena is in one of the worst industries out there, said Cramer, and he's not a buyer.

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Then on Thursday, Cramer said he's still bullish on both Ulta Salon ( ULTA) and Heckmann ( HEK). He said there's a good quarter lurking for Ulta and he's a buyer of Heckmann for the long haul.

Finally on Friday there's the almighty labor report, the one number that will affect both the November elections as well as the short-term sentiment of the market.

Huge Short Interest

Some stocks just cannot be owned no matter how hot the sector it's in, Cramer told viewers. Such is the case with women's handbag and accessory maker Vera Bradley ( VRA). Cramer said while there's a huge bull market in women's accessories, Vera simply doesn't measure up to some higher-end rivals like Michael Kors ( KORS) or Coach ( COH).

Cramer explained that the stock of Vera Bradley has become a battleground. On the one hand, the company excels in store growth, as it plans to expand its store count by 29% this year. But on the other hand, the company has been falling short in same-store sales growth, which trails that of Kors or Coach.

But Cramer said the real problem with Vera is not with the company itself, but rather with its shareholders. He said of the company's 19-million share float, a colossal 10.9 million of those shares are sold short. With so many investors betting against Vera, Cramer said the company's fundamentals no longer matter. What matters now is how much pain or gain can that mountain of short-sellers take. "That's something I can't determine," admitted Cramer.

At issue for the shorts is the fact that Vera introduces three to four new styles every quarter, meaning the company is forced to discount any unsold inventory from the previous quarter, sometimes heavily. Cramer said with Vera shares trading at 22 times earnings, matching that of its growth rate, owning the stock is simply not worth the risk. Cramer advised picking up some Coach instead, as that stock trades for roughly the same price.

Much More Than GPS

For today's installment of his "What The Heck" segment, Cramer turned to the curious case of GPS-maker Garmin ( GRMN), which has rallied 44% over the past five months, despite many investors feeling that stand-alone GPS units are a thing of the past with so many smartphones now including the technology.

Upon closer examination, Cramer discovered that it's the bears who are wrong about Garmin, as the company long-ago diversified away from its cash-cow automotive GPS business into several fast-growing, lucrative markets. He said that Garmin's 31-cent-a-share earnings beat last month was not a fluke, but a harbinger of things to come.

it turns out that Garmin derives half of its revenues, and 75% of its operating profits, from segments outside of automotive. The company's fitness segment, which makes watches and devices for runners and bikers, saw sales up 17% last quarter, and the company expects 20% growth for the group in 2012. Additionally, Garmin's division handling marine and aviation applications are also seeing strong growth. The company even has dog training and tracking devices.

Cramer said that GPS's for your car are in Garmin's past, not its future. The company has a hefty $12.79 a share of cash on its books and trades at a scant 12 times earnings with a 12% growth rate. Cramer also noted the company's 3.4% yield as an added bonus.

"This is one rally that makes sense," Cramer concluded.

Mad Mail

Cramer followed up on Breitburn Energy ( BBEP), which stumped him in an earlier show. He said that this company's natural gas exposure is worrisome and he'd stick with pipeline players Kinder Morgan Energy Partners ( KMP) and Energy Transfer Partners ( ETP).

Cramer also followed up on supercomputer maker Cray ( CRAY), a stock he said was speculative with lumpy sales. He called the company "incredibly risky" and preferred EMC ( EMC) instead.

When asked about Sabesp ADS ( SBS), a water and sewer company serving Latin America, Cramer said he missed the move and needs a "serious pullback" to consider buying in.

Finally, when asked about Renren ( RENN), Cramer gave his standard answer to all Chinese stocks. He said he would only own Baidu.com ( BIDU).

Lightning Round

Cramer was bullish on Abiomed ( ABMD), Citigroup ( C), International Paper ( IP), Boardwalk Partners ( BWP) and Travelers Companies ( TRV).

Cramer was bearish on Lincoln National ( LNC) and Applied Materials ( AMAT).

'No Free Passes'

In his "No Huddle Offense" segment, Cramer said recalled one of his most prized lessons on Wall Street, one that stemmed from the late CNBC host Mark Haines, and said simply "no free passes." Cramer recounted how Haines, back in the heyday of the dot-com boom, didn't give in to the relentless enthusiasm of the day and instead asked the CEOs of newly-minted companies the tough questions, especially if those CEOs were not yet making any profits.

That's why, when sitting next to the CEO of the Yelp ( YELP) earlier today, Cramer said he was obliged to follow in Haines' footsteps. He said while many investors are excited for the Yelp IPO, the fact remains that this decade-old company has no profits, nor any track record of making money for its shareholders or paying a dividend.

If profit is the goal, said Cramer, than owning the stock of Yelp is just too risky for this unproven company. "No free passes," he concluded.

--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 ConocoPhillips.

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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