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NEW YORK ( TheStreet) -- The world's economies won't wreak havoc on your portfolio if you have the right stocks, Jim Cramer told his "Mad Money" TV show viewers Wednesday as he sounded off against the so-called "top-down" approach to investing. Cramer said that according to the macro-economic thinkers, all stocks are tied to their respective economies. So if the economies are accelerating, stocks will, too. But if they're decelerating, stocks will also follow suit. There's just one problem, however -- things just don't work that way. Cramer called the top-down approach "lazy thinking" because, in reality, the correlation just isn't there, especially if investors are picking the right stocks. He said with the interest rates in U.S. Treasuries expected to remain near zero for at least the next two or three years, stocks with dividends north of 3%, 4% and even 5% are the only place to be. Plus, with only 10% of mutual funds currently beating the S&P 500, investors will see a voracious appetite for stocks as money managers race to catch up. Cramer once again railed against the notion that individual investors are better off simply investing in index funds rather than picking their own stocks. He said if investors do their homework, they can choose a small portfolio of stocks that will easily beat the averages and most mutual funds as well. To illustrate his point, Cramer went through a list of his top holdings for charitable trust,
Cramer said these are just a few stocks that can transcend the macro economies and reward shareholders for years to come.
Executive DecisionIn the "Executive Decision" segment, Cramer spoke with Paul Palmieri, co-founder, president and CEO of Millennial Media ( MM), an advertising company at the forefront of the Internet's migration to mobile devices. Palmieri said consumers' transition from desktop to mobile is not necessarily a problem for companies like Millennial that are uniquely mobile. He said that, overall, click-thru rates on mobile ads are higher than their desktop counterparts and advertisers are willing to pay more for them. Among the differences between desktop and mobile, however, are that on mobile users are likely to begin a transaction from within an app, rather than via a search box. Thus companies like Yelp ( YELP) are able to deliver very precise ads within their own vertical. Since mobile only serves one ad per page, compared to 15 or 16 on a desktop browser, those mobile ads are far more effective. When asked about Apple's new iPhone, Palmieri said he's excited for a few reasons. First, he said the larger screen means ads can get taller and will be easier to read and click on. Second, 4G speeds mean richer ads with more animations and video. Finally, Apple's Passbook app allows advertisers to "close the loop" and see exactly how many sales are coming from their mobile ad efforts. Cramer said Millennial remains at the forefront of a great business and he continues to like the stock.
Looking for a CureInvestors need companies in their portfolios that can transcend politics, Cramer told viewers, and that means companies like those trying to develop treatments for Hepatitis C, the leading cause of liver disease in the U.S. and one that affects over 170 million people worldwide. Cramer said that Hep-C is a $20 billion market opportunity, which is why there are many biotech companies chasing it. But a lot has happened in the Hep-C race over the past few months, so Cramer laid out the latest news. He said that Bristol-Myers Squibb ( BMY), an Action Alerts PLUS holding, was clearly the leader in the space. But after a patient in its clinical trials had a heart attack, its program was halted and later discontinued. Cramer said Bristol-Myers remains a great growth stock with a terrific yield, but it's no longer a player when it comes to Hep-C.
Other players like Abbott Labs ( ABT), Merck ( MRK) and Johnson & Johnson ( JNJ) are also in the Hep-C race, but those companies are too huge for a single new drug to move the needle. Another player is Vertex Pharmaceuticals ( VRTX), but that company's drug is too early in development to be a major player at the moment. That leaves Gilead Sciences ( GILD), said Cramer, a company that's trading at just 13.5 times earnings with a 16% growth rate. Gilead's drug, currently known as the catchy GS-7977, is in the same family as Bristol-Myers' drug, only without the side effects. The treatment is a 12-week oral regiment, compared to a 24-week injection routine, and the cure rates are, so far, markedly higher. Cramer said Gilead is a lot more than just GS-7977. however. The company also leads the way in HIV treatments and has a host of other promising drugs in the pipeline.
Lightning RoundHere's what Cramer had to say about callers' stocks during the "Lightning Round": Cabot Oil & Gas ( COG): "I'd rather wait for a pullback. I say hold off and wait." Advanced Micro Devices ( AMD): "Why? I have nothing to say about those guys. I don't want to touch it." International Business Machines ( IBM): "I say take some profits in IBM and let the rest run." Frontier Communications ( FTR): "The business fell off. They were too confident in their business and I don't like the stock because of that." Main Street Capital ( MAIN): "This one is on fire. I think the stock is a good one." Ecopetrol SA ( EC): "That's a pretty good, well-run company. I think it's better than Total SA ( TOT)."
Am I Diversified?In the "Am I Diversified" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer to see if investors' portfolios have what it takes for today's markets. The first portfolio included: Coca-Cola ( KO), McDonald's ( MCD), Amazon.com ( AMZN), Apple ( AAPL) and Kraft Foods ( KFT). Cramer said this portfolio was properly diversified. The second portfolio's top holdings included: WellPoint ( WLP), McDonald's ( MCD), MGIC Investment ( MTG), Joy Global ( JOY) and Excelon ( EXC). Cramer said he was also bullish on this portfolio's diversification.
The third portfolio had: Public Storage ( PSA), Monsanto ( MON), Wal-Mart ( WMT), Verizon ( VZ) and Bank of America ( BAC) as its top five stocks. Cramer said "bingo," as this portfolio was also diversified.