Cramer's 'Mad Money' Recap: Stick With Growth (Final)

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NEW YORK ( TheStreet) -- Don't fear good economic data, embrace it. Those were Jim Cramer's words to the viewers of his "Mad Money" TV show Wednesday, as he urged them to not be consumed by economic data and instead focus on what matters, earnings.

Cramer said that any pundit who attributed today's stock market rally to words coming out of the Federal Reserve or some other economic factors are simply wrong. Moreover, sentiments like that are both confusing and harmful to many investors. The theory that "if things are bad, the Federal Reserve will swoop in to save us" just doesn't make any sense, Cramer continued. Investors should be investing, he said, and that means investing in the future earnings of great companies.

What the U.S. economy really needs is not low interest rates, it's jobs, said Cramer. Jobs creates spending, he said, which in turn drives home sales, auto sales, consumer lending and so much more. And all of that spending translates into earnings, which then drives stocks higher.

That's why Cramer continued to pound the table on great growth names like Apple ( AAPL) and IBM ( IBM), two stocks which he owns for his charitable trust, Action Alerts PLUS , along with countless others that have been telling investors that things are getting better on their conference calls.

Upon Further Review

In the "Upon Further Review" segment, Cramer took a closer look at the earnings of eBay ( EBAY), which last week delivered a 4-cent-a-share earnings beat on better-than-expected revenue and raised full-year guidance to boot. That news sent shares rocketing up 13%, but Cramer said the stock should be a whole lot higher.

Cramer explained that what got lost in eBay's earnings is its vision for PayPal, its online payments solution. PayPal now sports more user accounts that either Visa ( V) or MasterCard ( MA) and is already the default way to pay online without relinquishing sensitive credit card information.

But PayPal's plans for the future go far beyond online shopping. The company is betting big on mobile payments, which it expects to top $7 billion this year, up from $4 billion last year. PayPal is also testing its first point-of-sale terminals at Home Depot ( HD), which allows customers to pay using just their mobile phone number with a PIN.

Cramer said when it comes to valuation, eBay is just far too low. Visa has a marketcap of $99 billion, while MasterCard tops out around $56 billion. Yet for eBay, the entire company is only valued at $51 billion despite the fact that PayPal only accounts for 38% of the company's revenues.

Shares of eBay may be just off their 52-week high, but Cramer said trading at just 13.2 times earnings with a 12% growth rate and $4.50 a share in cash, investors can buy into PayPal and get the rest of eBay for free.

Slicing Apple

Sometimes the Wall Street research machine gets it wrong. And when they do, Jim Cramer will be there to call them on it. Such was the case with Apple ( AAPL), a stock that sold off 11% ahead of yesterday's earnings due in large part to one Wall Street analyst after another issuing warnings that the company couldn't possibly make its numbers.

Cramer called the analysis of Apple one of the biggest screw-ups he's seen in decades, as analysts struggled to come up with sales estimates that were even in the same ballpark as what the company was able to deliver. There wasn't a single analyst that was forecasting Apple's staggering $2.26 a share earnings beat.

So why did the estimates go so horribly wrong? Cramer said that first off, Wall Street was taking its cues from U.S. wireless carriers who didn't activate as many iPhones as expected. Some analysts also questioned whether U.S. carriers would continue to promote the iPhone as heavily or offer such generous subsidies on the device.

But Cramer reminded investors that Apple now sells the iPhone in 100 countries via 230 carriers. U.S. carriers, he continued, simply aren't important any more. As for carriers promoting other phones, Cramer said that also doesn't matter, since customers want the iPhone. "It doesn't matter what the carriers promote," he concluded.

Then there's the iPad, where sales were up 150% year over year. Here analysts took their cues from part suppliers who cited huge inventories of chips. Surely that means that Apple isn't selling many iPads, right? In fact, Apple couldn't make enough iPads to fulfill demand. As for all those extra chips, the parts supplies simply made too many, affording Apple better prices to boost margins.

Cramer said while the analysts were focusing on a single tree, they totally missed the bigger forest that is Apple. He once again urged investors to invest in this great growth stock for the long-term and to ignore the "research reports" that for the most part, aren't meant for the individual investor anyway.

Am I Diversified

Cramer spoke with callers and tweeters via @JimCramer to see if their portfolios have what it takes for today's markets. The first tweeter's portfolio included Annaly Capital ( NLY), Radio Shack ( RSH), Inergy ( NRGY), BP ( BP) and NovaGold ( NG).

Cramer said that Inergy and BP were too similar and Inergy should be replaced by a health care stock like Abbott Labs ( ABT).

The second caller's top holdings included Wynn Resorts ( WYNN), Priceline.com ( PCLN), Bristol Myers-Squibb ( BMY), Alcoa ( AA) and Phillip Morris ( PM).

Cramer said "hallelujah" as this portfolio was properly diversified.

The third caller had SeaDrill ( SDRL), Intel ( INTC), CME Group ( CME), H.J. Heinz ( HNZ) and Level 3 Communications ( LVLT) as their top five stocks.

For this portfolio, Cramer said "very nice."

The fourth caller's top stocks were Chesapeake Energy ( CHK), Beacon Roofing Supply ( BECN), Phillip Morris ( PM), Emerson Electric ( EMR) and Raytheon ( RTN).

Cramer also blessed this portfolio as diversified.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer opined on the latest happenings in Europe. He said frankly that nothing good is happening in Europe, as the entire continent is plunging into recession. Some days the news out of Europe matters, other days it doesn't.

Cramer said what's important to know about the debacle that is Europe is that it's not a crisis that threatens to wipe out civilization as we know it. Instead, Cramer said that Europe is simply an issue that needs to be worked into investors' thinking, as many companies have already started to lessen their exposure to the stricken euro zone.

Lightning Round

In the Lightning Round, Cramer was bullish on Peet's Coffee & Tea ( PEET), Starbucks ( SBUX), Boston Beer ( SAM), Sandridge Mississippian Trust II ( SDR), Ross Stores ( ROST), Grainger WW ( GWW), Boyd Gaming ( BYD) and Las Vegas Sands ( LVS).

Cramer was bearish on Sequenom ( SQNM), Sanofi-Aventis ( SNY), Baidu.com ( BIDU), Main Street Capital ( MAIN), Guess ( GES), OCZ Technology ( OCZ), Advanced Micro Devices ( AMD), Micron Technology ( MU) and Telecom Corp of New Zealand ( NZT).

--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, IBM.

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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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.