Cramer's 'Mad Money' Recap: A Tale of Two Markets

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NEW YORK ( TheStreet) -- It's a tale of two markets, Jim Cramer told "Mad Money" viewers. Thursday was the sixth straight down day for the market.

There are things to like and things to avoid in this market, said Cramer, but don't think that's it's all bad, that would just be foolish.

Cramer said there are still winners in this market, money can still be made. He said the utilities are doing well, as are the REITs, telcos and some retailers. Stocks such as AT&T ( T), Verizon ( VZ), Target ( TGT) and Wal-Mart ( WMT) are not hard to find.

Food stocks, drug stocks and even tobacco are still good investments, added Cramer. Both Merck ( MRK) and Johnson & Johnson ( JNJ) have been standout performers as of late. Cramer was also a fan of Starbucks ( SBUX) and Dunkin Brands ( DNKN).

But there's also a lot not to like about the markets. The industrials continue to plummet and falling oil prices are taking the oil and gas stocks along with it. Computer sales are sluggish and luxury shopping is coming to an abrupt halt. And stocks like Cummins ( CMI) and Caterpillar ( CAT) remind us daily of how a slowing Europe is affecting the machinery and infrastructure stocks.

Cramer said if the banks reveal the need for credit is still slowing, that would also be bearish for employment growth, and would in turn send the markets still lower. But that doesn't negate the fact that there are still plenty of things going right in the markets. Cramer said investors need to remain vigilant and keep their focus on what's going right.

Time to Buy Duke Energy

What should investors do with Duke Energy ( DUK) after the CEO shakeup of last week? According to Cramer, it's time to buy, buy, buy.

Cramer said that he's outraged at the last-minute maneuvering that gave Progress Energy CEO William Johnson the boot and turned control of the new company back to Duke CEO Jim Rogers. Was there a corporate hijack? Were shareholders misled? Cramer said there needs to be investigations to answer these questions.

But despite the corporate scandal in the boardroom, Cramer said the fact remains that utilities practically run themselves and the combined Duke and Progress Energy will yield 5% to 7% in cost savings. Cramer reminded viewers that Rogers has delivered an 88% return since taking the helm at Duke, so he clearly knows what he's doing.

Cramer said utility mergers have an excellent track record of making money for their shareholders and he expects Duke Energy to also deliver. That's why with shares down 4.6% since the merger and surprise CEO switch last week, the time to buy shares of Duke energy is now.

Different Fates

"Never take your cue from the weakest player in the industry," Cramer reminded viewers as he compared the fates of Mako Surgical ( MAKO) and Intuitive Surgical ( ISRG) in a battle of the surgical robot makers.

On Monday, Mako surprised investors by cutting its full-year forecasts, a move that sent shares plummeting 43%. In classic collateral damage fashion, shares of rival Intuitive Surgical also fell 20 points on the news despite the fact that Mako's problems have absolutely nothing to do with Intuitive Surgical.

Cramer said it was easy to see Mako's problems coming after the company reported terrible earnings on May 7, a 28 cent-a-share loss versus the 20-cent-a-share loss Wall Street was expecting. Those earrings gave Mako a 36% haircut at the time and prompted Cramer to put the stock in the penalty box on May 27.

Cramer said that growth stocks like Mako are just like sharks -- they can't stop moving or they're dead in the water. Mako couldn't afford to miss on earnings, he said, but it did. Despite this huge red flag, many analysts still took a chance on Mako and recommended the stock, only to get blown out of the water Thursday.

But what of Intuitive Surgical? Intuitive Surgical actually reported a strong quarter, noted Cramer, and the company has a proven track record and a huge base of installed customers from which to derive residual revenues. Trading at just 28 times earnings with a 21% growth rate, Cramer said the story at Intuitive Surgical remains intact.

Lightning Round

Here's what Cramer had to say about callers' stocks during the "Lightning Round":

Loews Corp ( L): "Symbol "L" is for winners. They have done a remarkable job making people money."

VeriFone ( PAY): "I think this company is out of the penalty box. I'm a buyer."

Nike ( NKE): "I think Nike is good to go. I think they will reward patient people."

Atlas Pipeline Partners ( APL): "I think they are money makers. Reinvest that yield. I like it."

TJX Companies ( TJX): "TJX acts terrific. I think that company is doing well."

Universal Health Services ( UHS): "It doesn't get much better than that. That company is well run."

Executive Decision

In the "Executive Decision" segment, Cramer sat down with Nick Schorsch, chairman of American Realty Capital Trust ( ARCT), a real estate investment trust with 485 properties in 45 states, a 6.5% dividend yield and a 100% occupancy rate.

Schorsch started off by explaining his company's sale and leaseback business model, which provides its 100% occupancy. Rather than buying properties, developing them and then looking for tenants as other REITs do, American Realty Capital buys existing properties from banks, drugstores and other companies and then leases those properties back using long-term leases of at least 10 years.

Schorsch explained that the lease back arrangement allows companies like CVS Caremark ( CVS) or Dollar General ( DG) to free up their investments into their properties while at the same time offering his company durable income streams for years to come. Schorsch noted that American Realty Capital avoids properties that would be difficult to lease and the deal only with established corporate tenants, not franchisees.

So with so many properties spanning so many industries, tenants and geographies, how is the American economy faring? Schorsch said the economy is essentially flat, but corporations are stable and their earnings are beginning to pick up.

Cramer said that American Realty Capital is a terrific domestic story and another example of how stocks can vastly outperform U.S. Treasuries that yield next to nothing.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer reiterated that he remains a huge fan of stocks with big dividends, but also cautioned that not all big dividends are created equal.

Case in point: supermarket Supervalu ( SVU), a stock that going into Thursday yielded 6.5% with repeated assurances from company management that its dividend remained safe. That was until management eliminated its dividend altogether, sending Supervalu shares into free-fall to $2.69 a share.

Cramer said Supervalu teaches us two important lessons. First, the supermarket business is a hard one, with increased competition from Whole Foods ( WFM) at the high end and Target ( TGT), Wal-Mart and the dollar stores at the low end.

But more important, Supervalu teaches the lesson that sky-high yields can be red flags, especially at companies in long-term spirals downward. Cramer said any investor doing their homework could have seen months ago that Supervalu's payments simply weren't sustainable, no matter what management was telling us.

"Buy and homework" remains the lesson of the day, Cramer concluded.

--Written by Scott Rutt in Washington, D.C.

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At the time of publication, Cramer's Action Alerts PLUS had a position in CVS, NKE and TJX.

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."

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