'Mad Money' Recap: Bull in China Shop (Final)

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NEW YORK ( TheStreet) -- Jim Cramer pondered the relevance of China to the U.S. markets as he led off his "Mad Money" TV show Monday.

He told viewers that while the health of the Chinese economy is a factor for U.S. stocks, the recent weakness is a blessing in disguise, giving some of our overblown stocks a chance to rest and recharge.

Cramer said he's not worried about the health of the Chinese economy. He said that the country is doing what it can to spur growth in construction and consumption, and many U.S. traders saw the weakness coming and have already rebalanced their portfolios.

Furthermore, Cramer said that while China is important, U.S. markets are strong enough now that they no longer have to follow the Chinese in lock-step. "If oil calms down, the Chinese can engineer a soft landing," he said.

So which stocks will be most affected by China? Cramer said the materials stocks, like Alcoa ( AA), will continue to be weak, as will the oil stocks, led by National Oilwell Varco ( NOV), a stock that's cratered 8% in the past two weeks.

But on the plus side, Cramer said opportunities are being created in the defensive stocks, names like Heinz ( HNZ) and also the drug stocks. Cramer said he likes Bed Bath and Beyond ( BBBY) and Pepsico ( PEP) on weakness.

Regarding the tech sector, Cramer said this group likely won't rally without the help of Apple ( AAPL), a stock which he owns for his charitable trust, Action Alerts PLUS. But with Apple scheduling a product announcement on Wednesday, even the tech sector should be ready to rally again by mid-week.

Innovative Touch

"Forget about information technology stocks," Cramer told viewers. He said that today's hot technology names are all about innovation, but they're not necessarily involved with microchips or the Internet.

Cramer said when people think of DuPont ( DD), they see a big industrial conglomerate, but in reality, DuPont is the world's second largest chemical company has its hands in everything from agriculture to personal safety products. While many think of DuPont as only paint products, the company makes products like Teflon and Corian in the kitchen, Kevlar in bullet-proof vests and Tyvek to keep your house warm.

Cramer said that DuPont, another Action Alerts PLUS holding, is mainly focused in three areas: feeding the world, reducing fossil fuel usage and personal safety. He said the company's agriculture division is development everything from drought-proof soy bean seeds to pest-resistent corn. The company will introduce 154 new corn products this year alone.

DuPont's performance chemicals business is also on fire, with the company expanding production in everything from paint to plastics to sunscreen and even pigment for the white filling in Oreo cookies. DuPont also has emerging market exposure, with the company opening innovation centers across the globe, including in China, India and Brazil.

Cramer said that DuPont shares trade at a scant 11 times earnings, which isn't even keeping pace with the average S&P 500 multiple of 14 times earnings. He said this innovative company, whose shares have risen 200% over the past three years, deserves a multiple that far outpaces the average company.

Fashion for Less

For today's installment of his "What The Heck" series, Cramer dove into the curious case of Ascena Retail Group ( ASNA), the all-but-forgotten retail stock that shocked analysts with a 16-cent-a-share earnings beat on a 14% rise in revenues with a raise in guidance to boot. Shares of Ascena are up 38% so far this year and over 53% since Cramer last spoke to the company's CEO just six months ago.

Cramer reminded viewers that Ascena is the new name of Dress Barn, the discount retailer that now includes the Maurice's and Justice chains of stores as well. He said the company's name change has made it drop off the radar for most investors, but after today' surprising earnings results, investors will quickly remember this worthy retailer.

Ascena is a player in the "fashion for less" category of retailers, competing with the likes of TJX Stores ( TJX) and Ross Stores ( ROST). But what makes Ascena unique is the company's Maurice's and Justice chains, which appeal exclusively to 20-somethings and tween girls.

Justice in particular has now become a lifestyle brand between teens and tweens, said Cramer, putting the company as the No. 3 player in the space just behind the juggernauts of Wal-mart ( WMT) and Target ( TGT).

Trading at just 13 times earnings with a 15% growth rate, shares of Ascena are a steal and are worthy of a place in every investor's portfolio, he said.

Tech Spending Strong

In the "Executive Decision" segment, Cramer spoke with Robert Dutkowsky, CEO of Tech Data ( TECD), the IT superstore for companies across the globe.

Dutkowsky said that Tech Data just had the best fourth quarter in 11 years, with strength across the board. He said his company continues to be bullish about tech spending in Europe, noting that while southern Europe is weaker, northern Europe, including the UK and the nordic countries, continues to be strong and offsets that weakness.

Dutkowsky also noted that Tech Data's diversification in its product lines, everything from high-end servers to printer cartridges, also helps the company stay strong even in challenging environments.

In addition, Tech Data has also de-emphasized commodity products, such as memory chips, which has helped to smooth out its earnings. The company now focuses on the hottest areas of technology, such as data centers and cloud computing.

Among Tech Data's other strengths is its balance sheet. The company maintains a strong cash position and strong cash flows, something which has allowed it to buy back stock and fund 14 small acquisitions. Dutkowsky said Tech Data will continue to make selective acquisitions and buy back stock as appropriate.

Cramer said there are two takeaways from Tech Data. First, technology spending is still strong and second, this is one cheap stock.

Lightning Round

Cramer was bullish on McDonald's ( MCD), Freeport-McMoRan ( FCX) and Philip Morris International ( PM).

Cramer was bearish on Arcos Dorados ( ARCO), Teck Cominco ( TCK) and iShares Silver Trust ( SLV).

Natural Gas Revolution

In his "No Huddle Offense" segment, Cramer proclaimed that the natural gas revolution is here, thanks in part to the General Motors ( GM) announcement of a natural gas powered Chevy pickup. He said that GM "gets it" and realized that while electric vehicles are still uneconomical, natural gas vehicles save $2 a gallon when compared to soaring diesel prices and pay for themselves in just a few years.

Cramer continued to be bullish on Westport Innovations ( WPRT), Navistar ( NAV) and Clean Energy Fuels ( CLNE), noting that it only took diesel fuel seven years to go from obscurity to mass-market and natural gas is now on track to do the same.

--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 Apple, Dupont.

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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