Cramer's 'Mad Money' Recap: Apple $1,000 Not Half-Baked (Final)

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NEW YORK ( TheStreet) -- Rational or irrational? That's the trillion-dollar question when it comes to Piper Jaffray's prediction that Apple ( AAPL) could see its shares top $1,000. Jim Cramer told his "Mad Money" TV show viewers Tuesday that it's perfectly rational for investors to doubt this bold target, but after they do the math, $1,000 a share may not seem all that illogical.

Cramer said that analyzing Apple, a stock he owns for his charitable trust Action Alerts PLUS , is just like analyzing any other stock. One must first determine how much the company will earn as earnings, then multiply that number by how much the markets are willing to pay for those earnings.

According to Piper Jaffray, Apple will earn $51 a share by 2013 and up to $80 a share by 2015, a solid assessment, said Cramer, given the company's dominance in smart phones, tablets and computers. But are investors really willing to pay $1,000 a share for those earnings? Cramer said this is where the research gets interesting.

According to Piper Jaffray's research, Apple will be shaving hundreds of millions of dollars worth of market cap from its rivals over the next two years. Yet when analyzing the company to achieve its $1,000 price target, the Piper analyst still values Apple's earnings at just 12 times, less than that of the competition it will continue to crush.

Cramer said that Apple, of course, deserves a multiple far greater than that of the competition. But shares have historically always been valued as the underdog, he noted, so Piper Jaffary just extended that trend into its analysis. And that's why, he said, thinking of Apple as a $1,000 stock is not "irrationally exuberant" as some have claimed, but likely a foregone conclusion.

Off the Charts

In the "Off the Charts" segment, Cramer went head to head with colleague L.A. Little over the charts of some tech giants including Cisco Systems ( CSCO), Oracle ( ORCL), Intel ( INTC) and Microsoft ( MSFT).

Little used a trading cube to first analyze the short-, mid- and long-term trends of the four companies. He found that only Intel and Microsoft had bullish trends in all three areas. Cisco displayed a bullish short-term pattern, but not a longer one; meanwhile, Oracle displayed the opposite.

Homing in on Intel and Microsoft, Little next noted that Intel has seen resistance at the $30-a-share level, but using a measured move analysis from 2007, he determined that Intel's next move is likely to be $35 a share, or a 25% gain.

Microsoft displayed a similar pattern when using the measured move analysis, noted Little. He predicted this stock could see $47 a share during its next run higher.

Cramer said he's a believer in both of these old-line tech names. He said that Intel pays a great dividend and has a healthy balance sheet, but Microsoft remains the sleeper of the group and has the most to gain. Cramer said he'll revisit both of these names later in the week.

Nike in Great Shape

"Stop punishing Nike ( NKE)," Cramer pleaded to investors, after shares of the athletic apparel giant faltered when it reported earnings, almost two weeks ago. He said the quarter that was largely viewed as disappointing was actual just misunderstood.

Nike reported a 3-cent-a-share earnings beat on revenue that rose 15%. Yet investors scoffed at the company's weaker gross margins, which fell 2%, and inventories, which were on the rise.

But Cramer said he's not worried about gross margins, as they mainly come from an evolving product mix. He is also not concerned about inventories, since Nike's growth is outpacing that of its inventory build. Instead, Cramer said, there's only one metric that matters when it comes to Nike, and that's its future orders, which were up 15% worldwide.

Nike is in great shape, said Cramer, especially given the upcoming catalysts of a lucrative $350 million NFL uniform contract and the summer Olympics to be held in London. Nike is also top dog in the athletic apparel market, with a marketing budget alone that rivals the enterprise values of its closest competitors.

Cramer also touted Nike's new product initiatives, which include everything from high-tech wristbands to, of course, new high-tech sneakers. The company is also aggressively expanding in emerging markets. With near $6 a share of cash on its books, Nike trades at just 17 times earnings with a 13% growth rate. Cheap by any standard, concluded Cramer.

Executive Decision

In the "Executive Decision" segment, Cramer sat down with David Hoster, president and CEO of EastGroup Properties ( EGP), an industrial real estate investment trust that lives at the heart of the American economy.

Hoster described his company as being in the distribution part of the economy. He also noted that EastGroup has mainly midsize warehouses with multiple tenants and caters to smaller customers. He said these smaller customers tend to distribute to and support larger metropolitan areas, so when those areas are hard hit economically, EastGroup feels it. That has been the case over the past few years, said Hoster, who noted that his business was hit harder than expected by the collapse in the housing market.

But with the economy recovering, Hoster said that there has been a tremendous pickup in activity throughout the sunbelt. He said that rents will likely still decline slightly until 2013, but occupancy is definitely increasing and the company has more than enough cash to pay its nearly 4% yield.

Cramer said with U.S. treasuries still paying far less than 4%, EastGroup remains a great investment and a way to play the continued recovery of the U.S. economy.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer reminded viewers that when it comes to picking stocks, price matters. Such is the case with Annie's ( BNNY), a stock he recommended on yesterday's show.

Shares of Annie's rose over 12% in today's trading, prompting Cramer to remind viewers that Annie's at $34 a share is not the same as Annie's at $39 a share. He told viewers that they always must use limit orders to avoid paying up or chasing a stock higher. Cramer also reminded them that part of investing is patience and waiting for a pullback before buying in.

Cramer said he still loves the organic food business, Annie's in particular; however, now that the stock has run too far, too fast, it would be irresponsible to not advise using caution at these higher levels.

Lightning Round

In the Lightning Round, Cramer was bullish on Sunrise Senior Living ( SRZ), Lions Gate Entertainment ( LGF), Time Warner ( TWX) and Discovery Holdings ( DISCA).

Cramer was bearish on Molycorp ( MCP), Alon USA ( ALJ), Bank of America ( BAC), Viacom ( VIAB) and Newfield Exploration ( NFX).

--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 was long AAPL.

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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