Cramer's 'Mad Money' Recap: Rally Made in U.S.A. (Final)

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NEW YORK ( TheStreet) -- It's important to know who is the driving the markets and who's just along for the ride, Jim Cramer told his "Mad Money" TV show viewers Monday. He said investors who think that Europe is still driving force behind the markets need to think again.

Cramer said there's been a fundamental shift in market geography since last year, when Europe was in the driver's seat with China riding shotgun. Back then, the U.S. was asleep in the back seat, he noted, but that all changed as 2012 began. Now, he said, the U.S. markets are behind the wheel and it's Europe that's alone in the back seat.

Why should this matter to investors? Cramer said it explains today's trading action, which seemed off to a positive start after Saturday's positive Chinese manufacturing data signaled that the country's so-called economic "hard landing" would be off the table. But then news from Europe, which takes its cues from its weakest members, threatened to undo any rally and lead us to a weaker open.

But in the end, as 10 a.m. rolled around, Cramer said it was strong U.S. economic data that set the tone for the markets. And with the U.S. economy taking center stage, that bodes well for U.S stocks, including retail, housing, technology, autos and restaurants, he concluded. Only the commodity related stocks, like mining and minerals, along with copper and metals, will hinge on news from China, said Cramer.

As for Europe, it looks like that beleaguered continent is off the front page, at least for the time being.

Sun Comes Out for Annie's

Don't be scared off by newly minted IPOs, Cramer told viewers, especially those with huge first-day rallies. He explained that sometimes, an IPO's high share price is actually warranted.

Cramer has gone on record many times telling investors that they should always avoid buying IPOs in the aftermarket. He often highlights deals that are good investments only if investors can get in on the IPO shares themselves. Cramer always recommends selling those same shares immediately after they pop on their first day of trading.

Such was the case with Annie's ( BNNY), the makers of healthy, organic foods that came public last Wednesday. Cramer said he initially panned the IPO, giving his usual "take the money and run" advice. But after taking some time to analyze the company, Cramer said that Annie's is one of only a few companies actually worth holding for the long run.

Cramer said his initial assessment of Annie's was a "snap judgment," and investors should think of the company as a younger sibling to Hain Celestial ( HAIN), the organic food juggernaut. He explained that Hain trades at 25 times earnings with a 13% growth rate, but Annie's is currently trading at just 23 times earnings, despite the fact that it's likely to be growing around 22% if it follows last year's trends.

Cramer said the Annie's IPO, which debuted at just $18 a share, was designed to be too low, so it's initial pop to $31 was justified. But even at its current levels around $34 a share, the stock is still inexpensive if it can maintain its growth targets. He said that Annie's will be the target of the Wall Street promotion machine just as soon as the company's quiet period expires in the middle of next month.

Executive Decision

In the "Executive Decision" segment, Cramer sat down with Richard Gelfond, CEO of big-screen theater purveyor IMAX ( IMAX), a company Cramer said may finally be poised for substantial growth.

Gelfond said that IMAX has been growing 30% a year for the past three years and now has a backlog of 250 theaters. He called the company's recent growth "meteoric," noting that IMAX only has 225 theaters in China, a country with enormous growth potential.

When asked about the company's business in more detail, Gelfond noted that IMAX is able to transport moviegoers in a way that traditional theaters just can't; that bodes well in a tough economy or when gasoline prices may prohibit a real-life cross-country vacation. IMAX is now able to easily switch between 2D and 3D movies, and Gelfond noted that a movie doesn't need to be 3D in order to be great "as long as it's IMAX."

IMAX is also becoming a more stable company, said Gelfond. The ups and downs of movie releases are becoming less and less of a factor, he said, as IMAX builds a stronger and stronger network of recurring revenues from its theaters. Gelfond also said that IMAX is committed to its theaters in museums around the world. Those theaters, which use older film technology, are being upgraded to digital, said Gelfond, which will reduce the cost of a $35,000 film release to just $150 for a digital release.

Cramer said that he was a fan of IMAX, especially given the company's growth prospects and the fact that its earnings are no longer dependent on Hollywood's next blockbuster release.

In the second "Executive Decision" segment, Cramer spoke with Jim Whitehurst, president and CEO of Red Hat ( RHT), the software maker that saw its shares jump 20% when it reported a surprise 31% increase in its billings. Shares of Red Hat are now up 47% so far this year and 56% since Cramer last spoke with Whitehurst last October.

Whitehurst explained the 20% jump in Red Hat shares by saying that Wall Street analysts continue to underestimate the company's business model. He said that Red Hat has a different business model than other software makers, one that's far superior and more profitable on a cash-flow basis. Wall Street continues to forecast decelerating earnings, noted Whitehurst, yet Red Hat continues to accelerate.

Whitehurst also explained that while his company is hard at work developing new versions of its software, many existing customers continue to depend on older versions for their organizations. He noted that investment banks and trading platforms like those at NYSE Euronext ( NYX) are designed to run for "dozens of years" and Red Hat continues to support those systems.

Red Hat is also about new products, said Whitehurst, thanks to its acquisition of Gluster, an audio and video storage platform that helps power Pandora ( P) and other media streaming services.

Cramer said while shares of Red Hat are red hot at the moment, someday soon there will be a big down day in the markets, which will create the perfect time to buy in.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer opined on Avon Products' ( AVP) decision to decline a takeover bid that valued the company 20% higher than where it was currently trading.

Cramer said Avon was right to decline the deal, as it merely valued the company to where it should have been had the Avon's board of directors given former-CEO Andrea Jung the boot years ago instead of only in last December. Jung, a denizen of Cramer's "Wall of Shame" list of the worst CEOs, was a serial underperformer, said Cramer, and deserved to be ousted a long time ago. He said that under new management, Avon should be able to reclaim a lot of its lost value and may someday be strong enough to buy its proposed suitor, instead of the other way around.

In the Lightning Round, Cramer was bullish on Magna International ( MGA), Anadarko Petroleum ( APC), Cerner ( CERN), Google ( GOOG) and Cisco Systems ( CSCO).

Cramer was bearish on Titan International ( TWI), Sears Holdings ( SHLD), Allscripts Healthcare ( MDRX) and Alliance Resource Partners ( ARLP).

--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's Action Alerts PLUS had no positions in stocks 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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