Cramer's 'Mad Money' Recap: Market Rotation On (Final)

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(Story updated to add Cramer's Lightning Round picks, his interview with the head of First Horizon National and his concluding remarks.)

NEW YORK ( TheStreet) -- Today's markets are like a big volleyball game, Jim Cramer told his "Mad Money" TV show viewers Thursday.

He explained that when bad news hits one sector, the money simply rotates into another, as the bulls simply cannot be stopped. Cramer said this rotation action is a fairly new phenomenon. Last year when the market received bad news, investors headed for the hills. But so far this year, bad news has been sending investors into different sectors instead of heading for the exits.

Case in point, today's continued worries over a slowdown in China. Cramer said once again, any stock levered to China got hit and hit hard. Whether it was machinery companies like Caterpillar ( CAT) or the rails or the mining stocks, if a company had even an inkling of Chinese exposure, its shares traded lower.

But at the same time investors were hitting the sell button on China, they were also buying tech stocks, noted Cramer. He said stocks like IBM ( IBM) and Intel ( INTC) traded higher and some like Western Digitial ( WDC) were even near their 52-week highs.

The buying spilled over into other sectors as well, like high-end apparel and restaurants and even into the dollar stores like Dollar Tree ( DLTR) and Family Dollar ( FDO).

Cramer said while hedge fund managers fret over China and the falling price of oil, he would be a buyer of oil stocks, since the world still cannot find enough of the precious commodity and there' no way America will wean itself from foreign oil without embracing its own domestic natural gas.

"This rotation is not over," Cramer concluded, as he told viewers to take advantage of the opportunities the markets are creating.

Brighter Oil Outlook

In the "Executive Decision" segment, Cramer sat down with Chip Johnson, president and CEO of Carrizo Oil & Gas ( CRZO), whose stock was hammered down 5% today, despite a increase by the company in its oil production by 300% over the past year.

Johnson responded to a recent report that valued the Carizzo's assets in the Eagle Ford shale region of the country higher than the current value of the entire company by saying that it will soon become obvious to investors that Carrizo is becoming a very lucrative oil company.

He said that Carrizo has discovered that putting its wells closer together is not diminishing output and is effectively doubling the company's assets. Johnson said by the end of 2012, nearly 80% of Carrizo's revenues will be coming from oil instead of natural gas.

When asked about America's sluggish transition to its own natural gas for surface vehicles, Johnson said the transition has started with the waste industry in particular leading the way. He said heavy- and medium-duty trucks should be using our own natural gas and Johnson was reluctant to say that the U.S. will ever export the fuel.

When asked whether Carrizo needed any additional cash to fund its operations, Johnson noted that even at current production rates, the company can cover its capital expenditures and will be cash flow positive by next year. Carrizo plans on increasing production 250% between 2011 and 2012.

Finally, when asked to opine on the Keystone XL pipeline debacle in Washington, Johnson said he's all for logistics and anything that makes it easier to move oil across our country. He said the lower portion of the Keystone project should've been a given three years ago, as the hotly-debated northern section would be useless without it.

Cramer continued his recommendation of Carrizo.

Stock Picker's Market

"This is still a stock picker's market," Cramer declared to viewers, as he taught them how to evaluate a group of stocks to determine which one is the best of breed. Tonight's sector, the online travel space.

Cramer compared ( PCLN), Expedia ( EXPE), Orbitz Worldwide ( OWW), Travelzoo ( TZOO) and the newly-minted Trip Advisor ( TRIP). Cramer said while all of these companies help travelers find the best deals online, the companies and their stocks are miles apart.

The leader of the group, by a mile, is Priceline, said Cramer. This stock is already up 50% for the year and reached a new all-time high today. Priceline goes where the growth is, said Cramer, and it has the best execution of the bunch. The company derives only 22% of its revenues from the U.S., with the rest stemming from the lucrative and fast-growing overseas markets. The stock is also cheap, trading at 18.5 times earnings with a 23% growth rate.

Expedia plays "second fiddle" to Priceline, noted Cramer, although this company still gets 60% of its business from the U.S. and is still expanding its platform to service new markets. Cramer called Expedia pathetic given how well Priceline has been able to dominate the market.

While Expedia is bad, Cramer said that Orbitz is even worse. Not only does this company get 75% of its revenues from the U.S., but 35% of its revenues are tied to cut-throat airline fares instead of lucrative hotel and package deals. Cramer called Orbitz "untouchable."

Then there's Travelzoo, a stock just off its 52-week lows. Travelzoo followed Groupon ( GRPN) into the daily deal market only to realize that space is not as hot as it thought. Cramer called this company a momentum stock that's lost its way and warned investors to "stay away."

Finally there's Trip Advisor. Cramer said he needs to see more evidence that this recent IPO knows what its doing before he can recommend it.

Outlook Improving

In his second "Executive Decision" segment, Cramer once again with Bryan Jordan, chairman, president and CEO of First Horizon National ( FHN), a well-run regional bank that's seen shares rise 15% since Cramer last spoke with Jordan on Jan. 20.

Jordan said that things are looking better for First Horizon and the bank is beginning to benefit from a pickup in employment and will also benefit in the future from rising interest rates. He said much of First Horizon's loan portfolio has floating interest rates, so any steeping of the yield curve will be a benefit.

When asked about the bank's continued exposure to government loan repurchases, Jordan explained that bad mortgages are still a headwind for the company, but they feel the worst is behind them. He reminded viewers that First Horizon exited the mortgage business in August 2008, so bad loan repurchases will diminish as the government agencies work through their backlogs.

Finally when asked about returning cash to shareholders, Jordan said that the Federal Reserve has capped the amount First Horizon can offer in its dividend, but the company continues to augment that with its stock repurchase program.

Cramer continued his recommendation of First Horizon.

Lightning Round

Cramer was bullish on Amarin ( AMRN), SandRidge Energy ( SD), United Rentals ( URI), Petrohawk Energy ( HK) and Pacific Drilling ( PACD).

Cramer was bearish on NYSE Euronext ( NYX) and Fuel Systems Solutions ( FSYS).

Closing Comments

Cramer commended Goldman Sachs ( GS) for the firm's decision to purge any employee who referred to clients as "muppets" from their ranks.

Cramer said while he thought the recent New York Times op-ed piece calling out Goldman's behavior was a "cheap shot," he also felt the firm's initial, arrogant response to the allegations was not a good move. He said Goldman thought it was above the competition, but added that it's "never too late to do the right thing."

--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, 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."

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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 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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