Cramer's 'Mad Money' Recap: Go for Growth (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) -- Nobody likes a losing streak, Jim Cramer told his "Mad Money" TV show viewers Tuesday, but even after a fifth day of declines, Cramer said it's still not time to throw in the towel.

Cramer said he's not ignoring the many negatives in the markets. Unemployment is still weak, business confidence is low, Chinese imports are on the decline and the Italian bond market is a mess. All good points, noted Cramer, but also ones that are already factored into the markets. It's also true, he acknowledged, that the markets have had an incredible run since September and are due for a pullback.

But what's not factored into the markets, said Cramer, are earnings and earnings surprises like those delivered by Alcoa ( AA). Plus there are also a number of contradictions in the market that are creating opportunities, if investors know where to look.

Cramer said that the bears are big on rising fuel costs, but the oil stocks are signaling oil in decline. That creates opportunity, he said. The markets are also sending all stocks lower, he noted, which creates opportunities for the sectors that don't deserve that punishment. Cramer said he simply cannot be bearish on restaurants or retail when oil prices are likely to retreat, nor can he be bearish on high-growth stocks or on companies that prosper when their fuel costs are falling.

Cramer concluded by saying that five losing games does not make a season, nor does five losing days make the market.

Off the Charts

In the "Off the Charts" segment, Cramer went head to head with colleague Tim Collins over the health of the overall market as seen through a technician's eyes.

Collins used a recent chart of the S&P 500 to note that the index took a turn for the worse today after it fell below a key level of 1370. He said after that point, sector after sector began to get crushed as the selling intensified.

But what of the market leaders, like tech, retail and the home builders? Collins noted that the S&P Homebuilder ETF ( XHB) looked as if it was going to test its 50-day moving average once again and bounce higher, but after today's action, the chart has now turned ugly. Collins noted similar patterns with the S&P Retail ETF ( XRT), SPDR Financial ETF ( XLF) and the SPDR Technology ETF ( XLK), all of which showed a shimmer of hope until today's selling gained steam.

Cramer said that in volatile markets, technical analysis is only for the nimble, as these metrics can turn of a dime as they did today. He instead recommends that investors stick with the fundamentals of individual high-growth stocks and use a longer time horizon.

Cheap Chipotle

"Investing in quality growth stocks is still in style," Cramer reminded viewers, as he once again highlighted Chipotle Mexican Grill ( CMG) as one such company that investors should consider for their portfolios. Even after today's selloff, shares of Chipotle are only 2% off their 52-week high.

Using the 10-point scale he introduced yesterday , Cramer noted that Chipotle has excellent visibility and multiple years of growth ahead of it. The company posted strong same-store sales, up 11%, and management feels their U.S. store count could eventually grow from 1,230 units to more than 4,000 before becoming saturated. Chipotle also has international growth prospects and its Asian noodle restaurant concept on the back burner.

Are Chipotle's end markets big enough to support its growth? Absolutely, said Cramer. Is the company competitive? You bet. Chipotle also sports a strong balance sheet, a best-in-show management team and it doesn't need economic growth in order to prosper. Making things even better, Chipotle customers don't mind paying for quality, which means its margins can easily be maintained over time.

Cramer noted that while Chipotle doesn't pay a dividend, it is investing into its business, which is what growth investors should be looking for. Shares trade at a lofty 28 times earnings, but Cramer said that's not too high, given the company's 22% growth rate, which gives it a PEG ratio of just 1.72.

Cramer told viewers not to chase Chipotle shares higher and to instead wait for a market pullback, like today, and buy in on the cheap over time.

Executive Decision

In the "Executive Decision" segment, Cramer spoke with John Schiller, chairman and CEO of Energy XXI ( EXXI), a little-known oil driller that is proving there's still a lot of money to be made drilling for oil.

Schiller said the economics of the oil business have changed with oil prices near record levels. That's why oil fields purchased from Exxon-Mobil ( XOM) just a few years ago are now windfalls for Energy XXI. Years ago, drilling in these fields barely moved the needle for Exxon, Schiller said, but with oil prices almost double what they were, the same fields are now some of the most lucrative in the Gulf.

Schiller also noted that Energy XXI is able to sell its oil at prices above the Brent crude price, thanks to the quality of the oil they produce. He said the company averages $125 a barrel at the well head.

So what does Energy XXI plan to do with the $100 million it has in the bank? Schiller said the company always considers returning cash to shareholders, but with so many opportunities to grow, much of that money is being redeployed into more drilling.

Finally, when asked where he sees oil prices going, Schiller said that while demand may slow a bit in the short term, the fact remains that there simply isn't enough supply to fuel the world's needs. Schiller said he sees oil trading between $115 and $140 a barrel longer term.

Cramer said that Energy XXI, while not a household name, is one oil driller that should be on every investor's radar.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer opined on the sudden departure of Best Buy's ( BBY) CEO.

Cramer reminded viewers that he's been negative on Best Buy for ages, and agrees with many who feel that the company may not survive its battle with online retailers who can sell their commodity items for less money and often without sales tax. Cramer also agreed that Best Buy squandered its cash by spending $1.5 billion to buy back shares at an average of $27.50 a share, when shares are worth only $22 today.

But Cramer said that Best Buy's problems are unique to Best Buy, and he's not willing to expand the analog to all bricks and mortar retailers. He said that there are still plenty of places where personal service and a tactile experience is preferred. But in the case of Best Buy, the lure of largely commodity items being sold for less elsewhere, delivered right to his door, without the pressures of buying extended warranties, just makes sense.

Lightning Round

In the Lightning Round, Cramer was bullish on Monsanto ( MON), Heckmann ( HEK), Broadcom ( BRCM) and Owens Corning ( OC).

Cramer was bearish on Suncor Energy ( SU), Applied Materials ( AMAT), Vivus ( VVUS) and Silicon Graphics ( SGI).

--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, click here .
At the time of publication, Cramer's Action Alerts PLUS held 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."

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.

If you liked this article you might like

Cramer: Hunting for Bargains

Cramer: Hunting for Bargains

Tuesday Looked a Bit Like a Waterloo Moment for Bulls: Market Recon

Tuesday Looked a Bit Like a Waterloo Moment for Bulls: Market Recon

How to Play the Banks as They Get Set to Report Earnings

How to Play the Banks as They Get Set to Report Earnings

Your February Paycheck Could See a Little Bump, Thanks to the New Tax Bill

Your February Paycheck Could See a Little Bump, Thanks to the New Tax Bill

Use Technical Analysis to Win: Cramer's 'Mad Money' Recap (Wednesday, 12/27/17)

Use Technical Analysis to Win: Cramer's 'Mad Money' Recap (Wednesday, 12/27/17)