Cramer's 'Mad Money' Recap: Beware of the Wrong Cues (Final)

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener and watch Jim Cramer's "Mad Money" Post Game video exclusively on TheStreet.com.


NEW YORK ( TheStreet) -- Shoot first, ask questions later. That's a sure-fire way to lose money, Jim Cramer told his "Mad Money" TV show Tuesday. Cramer reminded viewers that taking their cues from the wrong stocks can lead to major losses.

Case in point, the home builders. When KB Homes ( KBH) reported a gloomy outlook last week, the entire rally in the home and home-related stocks was thrown into jeopardy. Cramer said everything, from the home builders to Sherwin-Williams ( SHW) and Home Depot ( HD), sank on the news.

But then today, homebuilder Lennar ( LEN) blew away its earnings, signaling that KB Homes' problems were its alone and not that of the entire industry. Taking cues from KB Homes, said Cramer, was a mistake.

The same strategy is playing out in multiple sectors, noted Cramer. Investors sold off the restaurant stocks when McDonald's ( MCD) stumbled last week, yet today fast growers Chipotle Mexican Grill ( CMG) and Panera Bread ( PNRA) hit 52-week highs. Shipper FedEx ( FDX) took down shares of UPS ( UPS) and John Deere ( DE) took down the fertilizer stocks.

In all of these situations, the prudent call was to buy, said Cramer, which is why Baker Hughes ( BHI) has created opportunities to buy Schlumberger ( SLB) and Ensco ( ESV), a stock which Cramer owns for his charitable trust, Action Alerts PLUS. And it's also why Family Dollar ( FDO) will likely cause weakness in rival Dollar General's ( DG) secondary offering of shares. Cramer said both of these stocks are buy, buy, buys.

Executive Decision

In the "Executive Decision" segment, Cramer once again welcomed Manny Chirico, chairman and CEO of PVH Corp ( PVH), a stock that's risen 130% since Cramer first got behind the company in Jan 2008. PVH recently delivered an 8-cents-a-share earnings beat on better-than-expected revenue.

Chirico said that PVH is well positioned for 2012 and the company is seeing stronger-than-expected gross margins and lots of momentum in many of its brands. He said that what he dubbed "affordable luxury," items in the $40 to $70 price range, are in the sweet-spot of what American consumers are looking for. Chirico also noted that with gasoline over $4 a gallon, PVH is starting to see some pressures in its more moderately priced brands.

Turning to sales overseas, Chirico said despite weakness in Europe, PVH still expects to see sale increase 8% to 10% in 2012, although he said that he can only provide guidance on the fundamentals and cannot predict how currency fluctuations may impact the company.

China was also a positive note for PVH, said Chirico. He said both the Tommy Hilfiger and Calvin Klein brands could become worth $1 billion in that country within the next four to five years.

Cramer remained bullish on PVH, adding that investors who sold on the early headlines of "disappointments" after the earnings were released were very, very wrong about this well-run apparel maker.

In the second "Executive Decision" segment, Cramer spoke with Don Knauss, chairman and CEO of Clorox ( CLX), one of the companies being highlighted as part of CNBC's "Hiring Our Heros" initiative to help U.S. veterans find work after deployment.

Knauss said that veterans have all of the qualities a company could want in an employee, including discipline and maturity, teamwork and focus and a mindset to get things done. He said that employers get "a heck of a deal" when they hire someone out of the military.

So when asked why the unemployment rate for vets is so high, Knauss said it boils down to two issues: Awareness and access. He said that many companies simply don't know all of the skills that vets can offer and they don't know where to find them. At Clorox, Knauss noted, the company has found an excellent fit in both its research and development arm as well as in logistics, two areas in particular where veterans excel.

Turning to the business of Clorox, Knauss said that the company's dividend remains a priority for them, and he expects the 34-year tradition of dividend raises to continue. He noted that Clorox has doubled its dividend over the past five years. When asked about input costs, Knuass said that while natural gas prices remain low, the costs of natural gas resins, used in bottles, has not fallen that much so far.

Finally, Knauss talked about new ideas and innovations that have been coming from an increased focus on customer needs. He touted the new Brita water bottle that includes a filter for customers on the go as one such innovation that stemmed from customer suggestions. Knauss said the new bottle replaces up to 150 bottles of traditional bottled water.

Cramer remained bullish on Clorox.

Mad Tweets

In the "Mad Tweets" segment, Cramer responded to questions sent via Twitter to @JimCramer.When asked how higher oil prices will impact transportation stocks, Cramer turned to colleague Tim Collins for a technical view.

According to Collins' research, which looks at the Dow Jones Transportation Average, the transports since February have been repeating the pattern they created between November and December of last year. That pattern included a rally toward a ceiling of resistance, a pullback toward a floor of support, followed by a second, smaller rally and pullback before a rocket to the upside.

Collins noted that if the Dow Transports can rally above 5,375 from its current level of 5,276, then it's likely the group will rocket 13% higher to a level nearing 5,775.

Cramer said Collins' theory was plausible, especially given how the markets have continued to rally despite raging prices at the pump.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer said he's mystified as to why yesterday's market rally was being attributed to comments made by Federal Reserve Chairman Ben Bernanke.

Cramer said nothing's changed about the Fed's views on the markets, but everything has changed within the market itself. He said that market mechanics was to blame for yesterday's rally, not the Fed.

Cramer reminded viewers that the end of a quarter is near, and that means the under-invested and poorly performing money managers are making their last-minute moves to bolster their results. Monday was the perfect day to go "all in" on stocks to help make their case to their shareholders and investors, he said.

Lightning Round

In the Lightning Round, Cramer was bullish on Baxter International ( BAX).

Cramer was bearish on LeapFrog ( LF), Exelixis ( EXEL), Oracle ( ORCL) and Kohl's ( KSS).

--Written by Scott Rutt in Washington, D.C.

To contact the writer of this article, click here: Scott Rutt.

Follow TheStreet on Twitter and become a fan on Facebook.

To submit a news tip, send an email to: tips@thestreet.com.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

Click here to sign up for Jim's Daily Booyah to get the Mad Money recap delivered to your inbox.

For more of Cramer's insights during the Lightning Round, clickhere .

At the time of publication, Cramer was long ESV.

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.

More from Jim Cramer

The Fed Should Wait and See: Cramer's 'Mad Money' Recap (Thursday 12/13/18)

The Fed Should Wait and See: Cramer's 'Mad Money' Recap (Thursday 12/13/18)

Join Jim Cramer's Club During Our '12 Days of Holiday Deals' Sale and Save 66%!

Join Jim Cramer's Club During Our '12 Days of Holiday Deals' Sale and Save 66%!

Ask Cramer: When Is the Right Time to Buy GE?

Ask Cramer: When Is the Right Time to Buy GE?

General Electric Can Be 'Taken Off the Critical List,' Says Jim Cramer

General Electric Can Be 'Taken Off the Critical List,' Says Jim Cramer

Jim Cramer Breaks Down What the General Electric Upgrade Means for the Markets

Jim Cramer Breaks Down What the General Electric Upgrade Means for the Markets