Cramer's 'Mad Money' Recap: Star Spangled Portfolio (Final)

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NEW YORK ( TheStreet) -- Old dogs may not be able to learn new tricks, but Jim Cramer told his "Mad Money" TV show viewers Tuesday that old companies sure can. That's why Cramer said it pays to own not just the hottest growth stocks, but also to invest in great American companies with a long history of reinventing themselves.

On a day when Apple ( AAPL), a stock which Cramer owns for his charitable trust, Action Alerts PLUS , reported yet another blowout quarter, Cramer reiterated that Apple should be viewed as an investment and not a short-term trade. He said the company continues to fire on all cylinders and shares remain far too cheap.

But there are other non-Apple standouts in this market, Cramer reminded viewers, companies like 3M ( MMM), AT&T ( T), Honeywell ( HON), Eaton ( ETN) and IBM ( IBM), another Action Alerts PLUS holding.

Cramer said all of these companies have posted strong earnings and offer solid dividend protection to boot. AT&T continues to push forward with the iPhone, while Eaton and Honeywell are making strides in energy efficiency. IBM just announced a meaningful stock repurchase program, said Cramer, while 3M has decades of dividend raises under its belt.

Looking for even more great names to invest in? Cramer also recommended United Technologies ( UTX), DuPont ( DD), PPG Industries ( PPG) and General Electric ( GE) as another group of notable mentions.

Cramer said of course the high growth names like Apple, along with Starbucks ( SBUX) and Allergan ( AGN) should also be in investors' portfolios, but not to the exclusion of these outstanding old-line companies.

Executive Decision

In the "Executive Decision" segment, Cramer sat down with Farooq Kathwari, chairman, president and CEO of Ethan Allen ( ETH), a stock that's down 10% so far this year, despite the company reporting a 1-cent-a-share earnings beat on an 8% rise in revenue.

Kathwari said that the recession afforded Ethan Allen an excellent opportunity to reposition itself for growth and that's exactly what the company has been doing. He said every quarter earnings have been increasing faster than revenues, as the company levers itself into increased efficiency. Ethan Allen is also rewarding shareholders with a recent 29% boost in its dividend.

Kathwari said that Ethan Allen is now a perfect blend of personal service and technology, using both the power of its 294 design centers as well as affiliated designers that can extend the company's reach even further. Kathwari noted that 60% of the company's items have been redesigned, a remarkable feat in a very short period of time.

Turning to China, Kathwari said that Ethan Allen continues to build its brand in China and now has 70 locations. Elsewhere in the world, the company just opened a manufacturing facility in Honduras that, along with a plant in Mexico, helps Ethan Allen keep tight controls on its manufacturing, while avoiding the pitfalls of outsourcing to the Far East. Kathwari noted that 70% of all Ethan Allen products are still made in the U.S., however.

Cramer reiterated his buy recommendation on Ethan Allen, saying that as housing in the U.S. recovers, so too should Ethan Allen.

Upon Further Review

In a new segment called "Upon Further Review," Cramer examined companies whose earnings have been lost in the plethora of releases hitting investors over the past two weeks. His first review candidate, Coca-Cola ( KO), an Action Alerts PLUS name that reported last Tuesday.

Looking at just the headline number, Cramer said that Coke didn't seem to do anything spectacular, delivering a penny-a-share earnings beat on better-than-expected revenue. That news sent shares up 2% after the release. But after digging deeper into the earnings, Cramer explained that Coca-Cola didn't actually deliver good earnings, it delivered terrific earnings.

Cramer said the key to Coke's earnings is to put them into context. What was the context for last quarter? Cramer said that everything was going against Coca-Cola, including high materials costs, rising gas prices, sluggish economies around the globe and a rising Euro. Under that prism, Coke's earnings actually "kicked butt," Cramer deduced.

The key metric for Coke is unit growth, Cramer explained. Coke's volume grew by 3% overall, with 2% growth in the U.S. and 6% internationally. Energy drinks in particular saw 25% growth. The company was also able to hold gross margins steady, even with all of the things going against them.

Cramer said, if Coke can deliver inline earnings when things are bad, that bodes well for the future now that both corn and aluminum prices are falling and rival PepsiCo ( PEP) is in the middle of restructuring efforts.

Coke trades at 16.5 times earnings and is just off its 52-week high. Cramer said that may seem expensive until investors look back at the company's 10-year historical average, which is 23 times earnings. Under that lens, shares of Coke are near a 20-year low.

Off the Charts

Have shares of IBM ( IBM) formed a bottom? In the "Off the Charts" segment, Cramer went head to head with colleague Carolyn Boroden to find out. IBM shares barely budged after the company reported a 13% dividend boost and a sizable addition to its already considerable stock buyback program.

Using a technique called "symmetry," or "measured moves," which theorizes that stock swings in the same direction tend to be of the same size, Boroden was able to calculate a "comfort zone," a good time to buy a stock that has just about completed its correction. Cramer said this method may seem silly but is actually quite accurate.

Boroden noted that shares of IBM tend to pull back in a range of $16 to $28. That suggests IBM's recent pullback should end between $192 and $196 a share. Sure enough, shares hit an intra-day low of $196.70 yesterday before rebounding then rising again on today's earnings and dividend news.

Boroden uses the same technique for Conoco-Phillips ( COP), predicting a range between $70 and $71 a share, just 50 cents below current levels. If Conoco is able to hold that level, Boroden felt shares could rally to $80, given the company's breakup plans.

Bed Bath & Beyond ( BBBY), another decliner, should stop between $65 and $66 a share, according to Boroden, creating another opportunity to buy.

Cramer said he agrees with Boroden's analysis, calling all three stocks winners on both the technicals and fundamentals.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer opined on the coming Facebook IPO, telling investors that he would still be a buyer of this hotly anticipated offering unless shares are priced at outrageous levels.

Cramer said he's willing to overlook the company's revenue and earnings shortfall, and the opaqueness of the company's recent acquisition of Instagram, because Facebook has the "demo," the people (demographics) that advertisers are clamoring for. Facebook is immensely profitable, said Cramer, calling the company "the real thing."

Cramer acknowledged that without knowing the final price of the deal, this recommendation to buy is being made in a vacuum. But Cramer also noted that he advised selling the IPOs of Yelp ( YELP), Groupon ( GRPN), Pandora ( P) and Zynga ( ZNGA) and would still be a seller of these companies. Only Facebook, he determined, has a solid business model.

Lightning Round

In the Lightning Round, Cramer was bullish on Allison Transmission ( ALSN), Intuitive Surgical ( ISRG), Lions Gate Entertainment ( LGF) and Whole Foods Markets ( WFM).

Cramer was bearish on Accuray Incorporated ( ARAY) and SuperValu ( SVU).

--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 KO, AAPL and ETN.

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."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, 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, 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 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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