Cramer's 'Mad Money' Recap: Markets Prove Naysayers Wrong (Final)

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(Story updated to add Cramer's Lightning Round picks, comments on trading the banking sector and concluding comments on Apple derivative trades.)

NEW YORK ( TheStreet) -- Sometimes it isn't what has happened that drivers the markets, but rather what hasn't happened.

Those were Jim Cramer's sentiments as he told his "Mad Money" TV show viewers that perhaps its time to drop the cynicism about the market's recent rally and acknowledge everything that's actually gone right.

Cramer took viewers down memory lane, back to late summer and early fall of last year. Back then, the markets were a buzz with out of control government spending that sipped off the first-ever S&P downgrade of U.S. government debt.

The fear was that interest rates would skyrocket. But in reality, interest rates didn't rise, said Cramer, the moment of the downgrade was actually a good time to buy, not sell, U.S. bonds.

The markets were also worried about a European bond collapse last year, Cramer recalled. The key metric was the Italian bonds: Would they reach 7% and send the contingent into recession? In retrospect, no. Cramer said here again, those that bet against the naysayers make a boatload of money as the leadership of the European Central Bank changed and interest rates were slashed, offering relief to all.

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The worries of 2010 were aplenty, said Cramer, and also included worries over the fallout from the MF Global bankruptcy, the continued housing decline and a hard economic landing for China.

But time after time, things seems to work out better than expected, said Cramer. There wasn't a lot of fallout from MF Global, housing continued its gentle decline and China managed a soft landing.

Cramer concluded by saying that its easy to get caught up in the cynicism, but sometimes its prudent to take a look back and see exactly where all of that pessimism has gotten us. In this case, significantly higher than where we were just six months ago.

Next Week's Game Plan

Cramer went over the stocks he'll be watching in next week's trading.

On Monday, Cramer said he'll be listening to the Adobe ( ADBE) earnings, as he still thinks this will the be great software story for 2012. Cramer called Adobe "a keeper" even though the stock is up 20% from his October recommendation.

For Tuesday, Tiffany ( TIF), Cintas ( CTAS) and Oracle ( ORCL) will be reporting. Cramer was bearish on Tiffany and Oracle, but said that Cintas is a buy, even at its 52-week high.

Then on Wednesday, General Mills ( GIS) reports, along with Discover Financial ( DFS).

Cramer said he likes Kraft ( KFT), a stock which he owns for his charitable trust, Action Alerts PLUS, over General Mills and would be a buyer of MasterCard ( MA) over Discover.

Thursday brings a host of earnings from Dollar General ( DG), FedEx ( FDX), Lululemon Athletica ( LULU), Accenture ( ACN) and Nike ( NKE).

Cramer was bullish on Dollar General, Lululemon and Accenture. He said FedEx will likely get hit on its earnings, which would be a good time to buy, and investors should pay attention to Nike's future orders, not its earnings, when deciding to buy into that growth name.

Finally on Friday, Cramer said it's Darden Restaurants ( DRI) and KB Homes ( KBH) as the stocks to watch.

Cramer advised taking profits in Darden ahead of the quarter and avoiding KB Homes altogether. Investors looking for housing-related stocks should look at Home Depot ( HD), Lowes ( LOW) and Stanley Black & Decker ( SWK), another Action Alerts PLUS name.

In the IPO market, Cramer said he'd try and score some shares of ExactTarget and sell them after the opening pop.

Sorting Out Conflicting Recommendations

When analysts disagree, investors win, Cramer told viewers, as he dove into conflicting recommendations for Urban Outfitters ( URBN), a beloved retailer that saw its shares rise 3500% from 2002 to 2010, only to lose its way in 2011.

Cramer explained that last week, after reporting disappointing results and announcing higher spending, an analyst at Morgan Stanley ( MS) rated the stock "overweight," while another at Citigroup ( C) confirmed its "sell" rating. So who's right?

Cramer said the bull case hinged on improving merchandise leading to fewer markdowns, along with a new pricing strategy focused on more lower-priced options. The report also cited improving inventory management and a resumption of the company's store expansion over the next four years.

But the bear case said the company's proposed turnaround is unlikely to happen, and if it does, will take a while to materialize. The analyst said Urban Outfitters will be unlikely to make still inflated expectations without an increase in gross margins, and markdowns still remain a persistent problem at the company.

Cramer said he's siding with the bears on this one. He said investors can't assume the company's turnaround will happen and it would be irresponsible to just take management's word on it. Cramer said Urban remains in "show-me" mode and only when the company has proven that it can deliver on its promises should investors consider getting back in.

Regional Bank Trades

Investors looking to play the revival in the bank stocks have multiple way to win, Cramer told viewers. Investors could go with the obvious choice and pickup some JPMorgan Chase ( JPM), an Action Alerts PLUS holding, or they could go with some solid regional banks, preferably those based in Ohio.

Cramer explained that the Ohio-based regional banks are in the sweet-spot, benefiting from not only an overall pick up in the economy and housing prices, but also specifically from a pickup in auto sales, oil and natural gas drilling and commercial construction.

His recommendations included Huntington Bancorp ( HBAN), Fifth Third Bank ( FITB) and KeyCorp ( KEY).

Cramer said that Huntington has 600 branches throughout the Midwest and delivered a better-than-expected quarter that included a $183 million stock buyback. The company also sports a 2.4% dividend yield and is playing both offense and defense to turn its business around.

KeyCorp is also a strong regional player with 1,029 brands in 24 states. Cramer said this bank also passed the latest round of government stress tests and boosted its dividend by 66% along with a $340 million buyback. KeyCorp trades at a discount to its tangible book value, making it a less risky trade.

Finally there's Fifth Third. This bank has 1,300 branches, but is lagging its peers. Cramer said this is an excellent catch-up stock. The bank is about to resubmit its plans to the Federal Reserve and is seeking to get approval to raise its dividend as well.

Lightning Round

Cramer was bullish on Whole Foods Markets ( WFM), Altria ( MO), Philip Morris International ( PM), Edwards Lifesciences ( EW), Skullcandy ( SKUL), Lions Gate Entertainment ( LGF) and Salesforce.com ( CRM).

Cramer was bearish on SuperValu ( SVU), HollyFrontier ( HFC), Vector Group ( VGR) and Manhattan Associates ( MANH).

Apple Derivative Plays

In his "No Huddle Offense" segment, Cramer opined on which component makers inside the new Apple ( AAPL) iPad are worth owning, and which ones aren't. Apple is currently an Action Alerts PLUS holding.

Cramer said the obvious picks are Broadcom ( BRCM) and Qualcomm ( QCOM). Cramer owns Broadcom for his trust and said the company is cheaper than Qualcomm, although he's not opposed to owning Qualcomm as well.

Cramer said that Skyworks Solutions ( SWKS) has parts in the new iPad, but not the current iPhone, which may give the company a catalyst later this year. He was bearish, however, on Cirrus Logic ( CRUS) and Triquent Semiconductor ( TQNT), two companies that live or die on Apple's decisions.

Finally, there's Texas Instruments ( TXN), a company that makes money from the iPad, but also has exposure to Nokia ( NOK) and others and is simply too large to benefit much from its Apple business.

--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 Discover Financial, JPMorgan Chase, Apple, Broadcom.

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."

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