Cramer's 'Mad Money' Recap: Upside Action in AIG, Commodity-Linked Stocks

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.


NEW YORK ( TheStreet) -- Investors looking to make money in the markets need look no further than the commodities, Jim Cramer told his "Mad Money" TV show viewers Monday. He said the strategy is simple, companies who need commodities to go higher are getting crushed while those who need commodities lower are thriving.

Cramer reminded viewers that there are a lot of places they could put their money. Bonds remain a dumb bet, he said, with continued low interest rates. Gold never goes out of style, he added, saying that gold remains the best-performing asset class over the past 11 years. Investing in commodities themselves isn't working, thanks to a slowdown in Europe and a stalled economy in China. But what about stocks that rely on commodities? That, Cramer said, is where the action is.

Take a company like Procter & Gamble ( PG), a company that by many metrics delivered horrible results. The market's reaction? Essentially flat, thanks in part to the fact that Procter uses a lot of commodities and paid a lot less for them this quarter.

On the flip side, there's Cummins ( CMI), a stock that trades in lock-step with commodity prices under the premise that if economies are slowing, there will be less demand for trucks. Cummins has been a one-way ticket lower, said Cramer.

Commodity prices are the key to the rally in the restaurants and apparel makers, said Cramer, and the reason why soft drinks, transports and even the housing-related stocks can head higher. If a company does well when commodities fall, then its stock is doing great right now.

AIG in Demand

Don't you wish there were big neon signs telling investors to "buy, buy, buy?" Well, Cramer said there was one this weekend, when a last-minute deal to offer a $5 billion secondary for AIG ( AIG) priced at $30.50 a share, only to close at $31.84 and instantly make money for shareholders.

Cramer said that AIG, a stock he owns for his charitable trust, Action Alerts PLUS , is perhaps the greatest financial turnaround of our time, and that the demand for its secondary proved it.

Just a few years ago, AIG was a mess, taking a $182 billion life-line from the government. Yet today, the company is leaner, meaner and more simplified, focusing mainly on life, property and casualty, auto and mortgage insurance. These changes have paid off, said Cramer, as shares of AIG are up 37% so far this year.

Yet despite the run-up, Cramer said that shares of AIG are still cheap. How cheap? The company's book value equates to $58.71 a share, a full $27 a share higher than current levels. Cramer said AIG deserves to be trading at one time its book value and therefore should be trading 45% higher than where it does today.

The U.S. government still does own 63% of AIG, but Cramer said he's no longer worried about this fact, as the recent secondary offering showed that investors will not be hurt. AIG plans to buy back some $10 billion worth of stock this year and an additional $8 billion next year.

Cramer said AIG is a company with a plan and investors looking to buy into that plan should "go for it."

Executive Decision

In the first "Executive Decision" segment, Cramer once again sat down with Irwin Simon, chairman and CEO of Hain Celestial ( HAIN), a stock that's up 29% year to date as the grind toward healthy eating continues. Shares of Hain are up 23% since Cramer last spoke to Simon on February 22.

Irwin reiterated that healthy eating is not a fad, with research just today saying that the best way to reduce cancer risk is to reduce obesity. He said in just about every category, Hain is growing. Soups were up 12%, he said, despite a warm winter. Baby foods continue to grow, despite a slumping birth rate. And Hain's yogurt business is up 60%, while competitors are struggling. "The consumer is catching on," Simon concluded.

Irwin dispelled the myth that only the rich can eat healthy. He said that the bulk of Hain's products are not sold at higher-end stores like Whole Foods ( WFM); they're sold as mass retailers like Wal-Mart ( WMT). Irwin said the move toward healthy eating is still in the early innings and it's clear that all consumers are making the move to healthier foods.

When asked about growth, Irwin said there are still lots of great acquisitions to be made in Europe, but he still has lots of room to grow the 30 brands the company currently manages.

Cramer said that Hain Celestial, while pricey, continues to power higher.

In the second "Executive Decision" segment, Cramer also sat down with Herbjorn Hansson, chairman and CEO of Nordic American Tanker ( NAT), a stock Cramer said he's become worried about as it appears the company is paying a portion of its dividend out of capital instead of earnings.

Hansson said that while times are still bad for the shipping industry, they're good for Nordic American since the company is using the weakness to reposition itself. He said his company has paid a dividend for 59 quarters and will continue to pay shareholders to wait for better times to emerge.

Hansson also outlined a new deal with Exxon-Mobil ( XOM), a company Nordic American has done business with for 30 years. Hansson said that Nordic American will carry much of Exxon's oil across the Atlantic, using as much as 20% to 30% of Nordic's fleet. More important than the price Exxon will pay, said Hansson, is the fact that these deliveries will be scheduled, resulting in less downtime for their ships.

When asked about the company's cash flow and its dividend, Hansson said that he remains optimistic and feels good about the prospects for the world economy. He said even if he's wrong and there's not an uptick soon, Nordic American can continue to buy ships on the cheap and better position itself for the future. The company has a strong balance sheet, he noted.

Cramer said that Nordic American remains the best house in what is still a troubled neighborhood, but that the company does pay shareholders to wait for the recovery.

Lightning Round

Next came the "Lightning Round." Here's what Cramer had to say about some of the stocks that callers offered up during this fast-paced segment:

Time Warner ( TWX): "I want you to own it. They continue to deliver."

Scholastic ( SCHL): "The earnings have been too inconsistent there. I'm going to have to say don't buy."

Cliffs Natural Resources ( CLF): "I like the yield. Buy, buy, buy."

ARM Holdings ( ARMH): "I'm worried about them. I think that Intel ( INTC) will challenge them and they've become overvalued."

LSI Logic ( LSI): "This one's getting better and better. I think this one should be bought."

No Huddle Offense

In his "No Huddle Offense" segment, Cramer compared Warren Buffett's Berkshire Hathaway ( BRKB) to the upcoming Facebook IPO.

Cramer said that while Berkshire has made investors a lot of money in the past, the stock has underperformed the markets over the past decade, largely due to the fact that Buffett doesn't like the prospect of dividends or breaking up the company. Berkshire has no growth, said Cramer, and the markets have noticed.

Facebook, on the other hand, has a ton of growth and the markets will be rewarding it with an overvalued IPO, said Cramer. Berkshire, however, will remain undervalued as it struggles with growth. Cramer called Buffett's hands-off approach out of step with what the market wants, while Facebook's hands-on approach is exactly what the market is looking for.

--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.
At the time of publication, Cramer's Action Alerts PLUS was long AIG.

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

Cummins Has Been a Great Long, Recent Price Action Suggests a Shift

Cummins Has Been a Great Long, Recent Price Action Suggests a Shift

Start Your Engines, Cummins' Dip Seems Done

Start Your Engines, Cummins' Dip Seems Done

A Regular Winning Trade Becomes Roadkill in Market Meltdown

A Regular Winning Trade Becomes Roadkill in Market Meltdown

Jim Cramer: The Surprising Stock Market Winners That Investors Are Chasing

Jim Cramer: The Surprising Stock Market Winners That Investors Are Chasing

Stock Market Bears Are the Dumbest Thing on Wall Street

Stock Market Bears Are the Dumbest Thing on Wall Street