Cramer's 'Mad Money' Recap: Where the Bears Were Wrong

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NEW YORK ( TheStreet) -- Best-of-breed stocks can go down, but they don't stay down. That was Jim Cramer's lesson to his "Mad Money" TV show viewers Tuesday as he highlighted a handful of companies where the bears got it wrong.

Cramer said that McDonald's ( MCD) is one such best-of-breed name. After being one of the best-performing stocks in 2011, shares of the golden arches hit a wall earlier this year after the company reported disappointing results. After the analysts deserted the stock in droves, McDonald's was able to surprise to the upside Tuesday, but remains cheap at just 15 times earnings.

Also on Cramer's best-of-breed list, handbag maker Coach ( COH). Cramer said this stock got hammered from $62 a share to just $51 after the company missed earnings, but shares have since recovered. Likewise with shares of FedEx ( FDX), a stock that slid only slightly on its reduced guidance, only to quickly reserve course.

Cramer said examples like these can be found throughout the market. He said investors would be foolish to doubt companies like Celgene ( CELG) or Allergan ( AGN), both of which have proven themselves to shareholders over and over again.

Even the venerable Starbucks ( SBUX) has been beaten down, noted Cramer. "Who are we to doubt CEO Howard Schultz when he says he can turn things around?" asked Cramer. It would be smart to bet with Schultz, not against him, Cramer concluded.

Mr. Stability

In a special interview, Cramer checked in with Tim Massad, the Treasury Assistant Secretary For Financial Stability, also known as the man in charge of liquidating the government's stake in companies such as American International Group ( AIG). Earlier Tuesday it was announced that the U.S. Treasury sold $18 billion worth of AIG stock, taking the government's stake from a majority position to just 15.9%.

In total, the government invested $182 billion in AIG's bailout package. With today's sale, the government has recovered $197 billion, for a profit of $15 billion, and it still owns another 234 million shares.

Massad said that overall, the Treasury's Troubled Asset Relief Program has been a great success. He said the government acted with speed and force and, thanks to a range of actions, prevented the collapse of several industries.

It has now been able to exit many of its bailout efforts ahead of plan. Massad gave credit to the strategy, the Obama administration and also to those at AIG who have been working hard to turn the company around.

Massad noted that over 90% of all TARP dollars have been recovered so far and the government remains anxious to liquidate its remaining holdings.

When asked about the government's remaining stake in General Motors ( GM), Massad commented the government has no desire to "dump" its remaining shares and bury existing shareholders. He said the government remains patient and is working with the company to determine the right time and strategy for liquidating.

Massad said that even the bailouts in Fannie Mae ( FNM) and Freddie Mac ( FRE), both of which are not under his oversight, are beginning to turn around as the housing sector begins to recover.

Cramer thanked Massad for helping recover taxpayer money and reminded viewers that shares of AIG are still heading higher.

Off the Charts

With Germany's court ruling on the European bailout scheduled for Wednesday, Cramer went "Off The Charts" with colleague Ed Ponsi to see what the decision could mean for the Currency Shares Euro Trust ( FXE), which measures the health of the euro against the U.S. dollar.

Ponsi felt the euro had a great-looking weekly chart having finally broken out of a year-long downturn and crossing above its 200-day moving average. He said recent moves make a bullish case for the euro to head higher, but the relative strength indicator, or RSI, shows the euro is likely prime for a pullback before resuming course.

Using a daily chart of the euro, Ponsi determined that his entry point would be below the $1.26 level, or 2 cents below current levels. Why that level? Because that's the euro's former ceiling of resistance and likely now a support level for the currency.

Cramer said he agreed with Ponsi's analysis, noting the German decision Wednesday could be a "sell the news" event, giving Ponsi the entry point he was looking for.

Lightning Round

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

B&G Foods ( BGS): "I don't see this stock slowing down yet. Buy, buy, buy."

Huntington Bancshares ( HBAN): "I want you to stick with Huntington. We've stuck with it and it paid off. It's going higher."

Boardwalk Pipeline Partners ( BWP): "I think this one is very good. This is one of the better ones out there."

Arena Pharmaceuticals ( ARNA): "I want you to sell Arena. That area is way too crowded. "

Genworth Financial ( GNW): "I don't want to own the stock. There is another insurance company I like a lot more and that's American International Group ( AIG)."

Executive Decision

In the "Executive Decision" segment, Cramer spoke with Pierre Lassonde, chairman of Franco-Nevada ( FNV), a company that owns royalties in the gold industry.

Lassonde characterized his company as a "gold ETF on steroids," explaining his company provides gold miners much-needed capital in return for long-term returns on their investment. He said Franco-Nevada invested its royalty model in 1983 and since the company's return to the public market in 2007 has delivered a 30% compound rate of return.

Lassonde explained that one of Franco-Nevada's recent deals, announced on Aug. 20, guarantees the company 100,000 ounces of gold per year at a price of just $400 per ounce. Given the mine has a 35-year lifespan, Lassonde said his company will more than make up its investment. Better still, that mine may continue to operate for over 50 years, increasing Franco-Nevada's return even more.

In addition to its gold mining investments, Franco-Nevada also holds oil and gas assets. Lassonde explained his company acquired those assets some time ago and since they continue to produce, "why sell them?"

Cramer said he was largely unaware of Franco-Nevada's business model and found the Lassonde interview "enlightening." He said the company may indeed be an ETF on steroids and encouraged interested viewers to visit the company's Web site and do additional homework on the stock.

Campus Real Estate

In a second "Executive Decision" segment, Cramer sat down with Ted Rollins, co-chairman and CEO of Campus Crest Communities ( CCG), a real estate investment trust with a 5.8% yield that focuses on campus housing.

Rollins said Campus Crest continues to see increased college enrollment in America because college degrees have become something job applicants "have to have" in today's marketplace. He said his company is concentrated on tier-two schools, which is where 47% of America's undergraduate population is going to school. The average tuition at these schools is $8,000 per year, making them among the more affordable places to study.

When asked about the company's 91% occupancy rate, Rollins explained that Campus Crest has a fairly young portfolio of housing, and as the portfolio matures, occupancy rates will increase to the mid-90%s or even to 100%. He also noted that as his company continues to grow, it can do so more cost-effectively while controlling risk thanks to the fact that it owns the entire process from development to construction.

Turning to the company's balance sheet, Rollins said his company's portfolio is leveraged by 36%, which is in line with targets. He said the company uses credit swaps to manage its interest-rate risk, which may make its financials slightly more difficult to follow.

Cramer said with so few 6% yielders remaining, Campus Crest may be the right choice for investors.

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

To email Scott about this article, click here: Scott Rutt

Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.
At the time of publication, Cramer's Action Alerts PLUS had a position in AIG, COH and MCD.

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.

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