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

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NEW YORK ( TheStreet) -- With markets down 3% from their highs, Jim Cramer told his "Mad Money" TV show viewers on Tuesday that it's all right to take some profits, trim back some positions and wait for signs that the markets are improving before buying in.

He said that the markets have changed for the worse since last week and investors need to adjust accordingly.

Cramer said he had no idea last week that tensions with Iran could worsen, Greece could inch even closer to default and China could slow down even more, but indeed, all three of these events have happened.

Cramer said he's now more skeptical of a peaceful solution between Iran and Israel, and that could send oil prices to all-time highs and dent corporate earnings. He said the markets aren't equipped for a full-on gas crisis.

Then there's Greece, an issue we thought was put to rest, but is once again back on the table. Cramer called the situation "pathetic" and said investors need to watch gold prices, via the SPDR Gold Shares ( GLD), and the Currency Shares Euro Trust ( FXE), to quantify the effects of the lingering debt crisis on U.S. stocks.

Finally, there's China. Cramer said he still thinks China's economy is slowing, not crashing, but with emerging markets across the board feeling headwinds, investors need to keep a close eye abroad.

All of these things should just cause a market pause, or even a modest reversal, said Cramer, but if any of the three take a turn for the worse, then stocks will quickly become more expensive than we previously thought. That's why he advised raising cash and waiting for a better entry point.

How to Ride the Jobs Report

Investors who believe Friday's employment report will be a good one need to load up on uniform supplier Cintas ( CTAS) on any weakness, Cramer told viewers. He said as U.S. employment grows, Cintas will be the company that benefits most.

Cramer explained that Cintas has 37% market share in the uniform rental business, with 90% of sales stemming from right here in the U.S. thanks to its 900,000 customers. He said as hiring improves, it creates a virtuous circle where hiring leads to more consumption, which leads to even more hiring.

This cycle bodes well for Cintas, which makes even more money as its volumes increase. Cramer said the Cintas today is lean and mean, thanks to streamlined operations that's paying dividends in higher operating margins.

Cintas last delivered a nine-cent-a-share earnings beat on a 7.9% pop in revenues. Cramer said the company is also shareholder friendly, with a 1.4% dividend yield that's been raised every year for the past 29 years. Cintas also sports a stock buyback program that Cramer said could help the company blow away the numbers again next quarter. Trading at just 15 times earnings with a 13.3% growth rate, Cramer said that Cintas is cheap on every metric and he would be a buyer on any weakness, including today's 2% decline.

Recipe for Success

In the "Executive Decision" segment, Cramer went on location to speak with Ron Shaich, founder and executive chairman of Panera Bread ( PNRA), at the company's first location on the island of Manhattan in New York City. Shares of Panera are up 220% since Cramer first featured the company in July 2008.

Shaich told Cramer that Panera's new Manhattan location is no different than anywhere else, and still provides great food in an engaging environment. The only thing that is different, is the cafe's size, which includes seating for over 150 guests, and the fact that food is delivered directly to customers' tables.

When asked whether rising gas prices are affecting sales, Shaich noted that same-store sales were up 8.9% for January and Panera usually does well in times of rising gas prices because customers tend to stay closer to home, which is right where Panera locates its restaurants.

Turning to Panera's "secret sauce" for success, Shaich said that Panera customers have wanted the same thing for 20 years, good food in a great environment. To that end, he said the company isn't changing, only evolving, to include new items like roasted turkey, salmon and an Thai chicken salad. "It's not about new and different at Panera," said Shaich, its about evolving.

When asked about the company's recent purchase of a franchisee, Shaich told investors to think of the transaction merely as a financial transaction. He said the company is always looking for the best way to deploy its cash, whether through acquisitions or stock buybacks. Shaich mentioned that in this most recent case, a franchisee wanted to retire after a 15-year run and the company was able to buy the franchise at an attractive multiple.

Finally, Shaich mentioned the success of Panera's loyalty program. He said with nearly 10 million members, 40% to 45% of all transactions are now done through the loyalty program, giving the company excellent insight into their customers, which allows them to market tens individually to better meet a customer's needs.

Cramer continued his recommendation of Panera Bread.

Reversing Course

In the "Off The Charts" segment, Cramer went head to head with colleague Caroline Boroden over the fate of the natural gas stocks as the price of natural gas, the commodity, continues to decline to record lows.

Cramer explained that in evaluating the natural gas stocks, Boroden looked at the totally unrelated stock of department store chain Dillards ( DDS) to establish a pattern that the natural gas stocks now seem to be following.

Boroden noted that after making a series of lower lows, Dillards broke out of its downtrend in late-January, making a higher high, then a higher low, before breaking out 40% to the upside.

Boroden then recognized a similar pattern in both Chesapeake Energy ( CHK) and Encana ( ECA), both of which also had a series of lower lows, followed by strength beginning in late-January, where a higher high was followed by a higher low.

While both Boroden and Cramer agreed that a 40% move to the upside is unlikely for either Chesapeake or Encana, they acknowledged that both stocks that setting up a bullish pattern that, if the strength continues, could mean that these stocks have finally bottomed after a gruesome year of horrific losses.

Lightning Round

Cramer was bullish on Jabil Circuit ( JBL), Broadcom ( BRCM) and Yum! Brands ( YUM).

Cramer was bearish on Infinera ( INFN), KIT Digital ( KITD), Flextronics ( FLEX) and Deutsche Bank AG ( DB).

Deja Vu

In his "No Huddle Offense" segment, Cramer proclaimed "it's happening again," as investors are once again buying into sexy dot-com IPOs, only to get crushed in the aftermarket. He said investors who bought into companies like the newly-minted Yelp ( YELP) are just wasting their money, as there is no way to value companies without profits.

Cramer said some dot-coms, like Zynga ( ZNGA), actually made money for shareholders after its IPO, but countless others have crashed from their first day pops to at or below their offering price. Cramer said he wouldn't be doing his job if he didn't constant reiterate for investors to get in on the IPO itself or stay far, far away.

--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 not long any stock mentioned.

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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