Cramer's 'Mad Money' Recap: Things Are Better Than You Think

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NEW YORK ( TheStreet) -- Things in America might just be better than you think.

Jim Cramer voiced those sentiments to "Mad Money" viewers Monday as he called into question the government's latest retail sales numbers, which paint a dismal picture of the American consumer.

According to Cramer, individual companies are telling a different tale.

Cramer said if the government's retail sales numbers were indeed so awful, how do you explain that shares of Wal-Mart ( WMT), Target ( TGT) and Costco ( COST) are all hitting new 52-week highs?

Both Ford Motor ( F) and General Motors ( GM) reported an uptick in sales, not a downtick, he added.

Even in the beleaguered banking sector, Citigroup ( C) reported better than expected earnings and Wells Fargo ( WFC) has positive things to say. Strip out the monster trading loss at J.P. Morgan Chase ( JPM) and even that bank saw strength in small business lending and credit card activity.

Cramer said the government's view of the economy is at odds with data from corporate America and he's siding with corporate America. He said the market didn't crater on Monday's news, and that's also a positive sign that things are simply better than the government is telling us. This being an election year, he added, don't expect that to change anytime soon.

Advice for Heinz

Cramer had some advice for the management at HJ Heinz ( HNZ): follow the lead of Kraft Foods ( KFT) and spin off lagging divisions.

Cramer said there's a lot to like about Heinz, including the company's safe, defensive business and its juicy 3.7% dividend yield. But when the company last reported on May 24, it lowered its long-term guidance, specifically citing weakness in it's frozen foods division.

Heinz' frozen foods has become the weak link in an otherwise stellar portfolio of products, noted Cramer, which is why he recommended the company either spin off the ailing division or just sell it.

While the company has shown no outward signs of making such a move, Cramer said Heinz does have a track record of similar of making divestitures to unlock value in the past and those deals were larger than its current frozen food products which accounts for 15% of sales.

Cramer said making such a spinoff would not only unlock value for Heinz shareholders, it would allow the company to focus on its other, growing domestic and emerging market businesses. He said hares of Kraft are up 16% since that company announced its breakup last August, while the overall S&P 500 is up only 7%.

Getting a Fit Stock

Is a fitness center stock the right fit for your portfolio? Cramer found out when he pitted Life Time Fitness ( LTM) against Town Sports Int'l ( CLUB) to see which company wins the fitness wars.

Cramer said while both Life Time and Town Sports are regional to national growth stories, that's about where the similarities end. He said the contest wasn't even a fair fight as Life Time has both a superior business model and is the superior operator.

Life Time operates 98 fitness centers in 22 states and has a membership of 700,000. Town Sports has 160 locations, but has fewer members at only 530,000. While Town Sports gets 78% of its revenue from membership fees, Life Time takes a different approach, getting only 65% of its revenues from memberships and the rest from additional services.

Cramer explained that Life Time offers a premium experience, one that's not dependent on price. The company offers everything from training and food products as well as classes and even daycare services. So while Town Sports is more vulnerable to losing members in any given month, Life Time's members stay longer and spend more, as the company's clubs are situated in more affluent neighborhoods.

Life Time is also the cheaper stock, said Cramer, trading at 14.4 times earnings with a 16% growth rate, compared to Town Sports at 15.6 times earnings with a 10% growth rate. During their last reported quarters, Life Time was able to grow revenues by 11.6%, while Town Sports only mustered a 5.3% increase.

Cramer declared Life Time Fitness the winner, but added that now is not necessarily the right time to own any fitness stock given renewed recession worries.

Lightning Round

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

Coinstar ( CSTR): "Too controversial. I don't want anything to do with a battleground stock, I have enough problems with the rest of the market."

Threshold Pharmaceuticals ( THLD): "This stock has had a monster move. I'm not backing away as long as you treat it as a speculative play."

NCR Corp ( NCR): "It has finally turned. I think they've done it right."

SPDR Gold Shares ( GLD): "I like it below $150. In the end, Europe will have to print more money and that will be the signal to buy the GLD. Get in ahead of it."

AGCO ( AGCO): "That's a little too risky for me. "

World Wrestling Entertainment ( WWE): "No, no, that one has got no growth whatsoever. "

Heckmann ( HEK): "I'll embrace it for the long term. This is about natural gas and oil. It looks good over the long-term."

Sprint Nextel ( S): "Something is going on over at Sprint. Do not sell your shares."

Freeport-McMoRan ( FCX): "When this gets to a 4% yield, that's where it will bottom. Then it will be safe to buy."

Know Your IPO

In the "Know Your IPO" segment, Cramer highlighted four upcoming initial public offerings to let viewers know which one are worth getting in on.

Coming in at number four, Fender Guitars, which is set to debut under the ticker FNDR. Cramer said this company is past its prime, growing sales at only 2%, which 25% of that total stemming from the troubled Europe. He would not be a buyer, even for the IPO.

At number three, Cramer reiterated that travel destination Kayak is a worthy investment, but only if investors can get in on the IPO and then sell those shares in the open market on the first day of trading.

In the runner-up position was Five Below, an up-and-coming dollar store chain aimed at kids and teens. Cramer said this company has good bloodlines, has plenty of room to grow and is seeing same-store-sales increase by 10.4%. With shares expected to price at just two times sales, Cramer said that Five Below is a worthy IPO trade or an investment.

Finally, coming in first, Palo Alto Networks, another IPO Cramer featured last week. He reiterated that Palo Alto is also a great IPO trade as well as a longer-term investment.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer said that bad news might actually be good news when it comes to the falling value of the euro. He offered three reasons why.

First, as the euro falls in value, wealthy individuals will begin using that weakness to buy properties in places like Spain and Italy, the countries that are most in need of that investment.

Second, tourism will rebound as the value of the euro falls. Americans love to travel in Europe and the weaker currency may just be the push they need.

Finally, as the euro weakens, the price of goods and services made in Europe will once again reach parity with those made in other parts of the world, making exporting a profitable enterprise.

Cramer said it might not be the ideal situation, but the decline in the euro at least has a silver lining.

--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 JPM and KFT.

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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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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