Cramer's 'Mad Money' Recap: The Benefit of Doing Nothing

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NEW YORK ( TheStreet) -- Kicking the can down the road is working, Jim Cramer told "Mad Money" viewers Monday.

He reflected on the economic policies in both Europe and China over the past year, noting that this time last year U.S. markets were caught off guard by the faltering global economies. This year, the U.S. has become important again.

Cramer said "kicking the can" has been scorned but in retrospect it's been working. Last year the Europeans had no idea how badly their economies were faltering, but the strategy of endless delays gave the markets time to process and prepare for the worse-case outcomes. U.S companies, he said, have moved to contain their losses in Europe, which is why they're able to thrive this year.

In China the same is true. As the Chinese have made small steps to stabilize their economy, U.S. companies have also been given time to prepare and adjust. More importantly, U.S. investors have taken the time to realize that not that many U.S. companies are even affected by China.

Look at today's biggest winners, said Cramer, companies like Netflix ( NFLX), Carmax ( KMX) and Marathon Petroleum ( MPC) are all domestic stocks with no European or Chinese exposure.Other winners today included Eli Lilly ( LLY), Petsmart ( PETM) and Chipotle Mexican Grill ( CMG). No international worries there either.

Even Cliffs Natural Resources ( CLF), which is dependent on China, was able to rally today on the hopes of a "bad news is good news" scenario where things get so bad in China that the country is forced to act to save itself.

Cramer gave "three cheers" for the kick-the-can strategy, as its helped put American stocks back on the map.

Know Your IPO

In the "Know Your IPO" segment, Cramer featured Workday, the enterprise resource management company that's set to come public later this week under the ticker WDAY.

Cramer said Workday plays in the same space as Salesforce.com ( CRM), only instead of offering cloud-based software solutions for sales and customer service, Workday is offering similar software for human resources, payroll and employee expense management. This is a red-hot sector, said Cramer, which is why Workday should be on everyone's radar.

Workday is not yet profitable and only has 340 customers thus far, but Cramer said what's important to note is both the market opportunity, $39 billion, and Workday's growth rate -- the company increased revenue by 98% last year. While Workday is still losing money while it invests in its business, the percentage of the company's costs versus its revenue is declining rapidly, which is a very good sign.

So how much should investors be willing to pay for Workday? The IPO is expected between $21 and $24 a share, but Cramer said strong demand may send shares higher. At the middle of that range, Workday would be trading at 18 times sales, which is expensive by traditional metrics, but well below stocks like Guidewire ( GWRE) and Palo Alto Networks ( PANW), two recent IPOs that popped on their first day of trading and continued higher.

Based on the valuations those companies received, Cramer said he'd be willing to pay up to 20 times sales for Workday, which would put the share price at no more than $27.50 a share. He said this premium is justified given how fast the company is growing and how solid its management team has executed thus far. Beyond $27.50 a share however, Cramer said he'd take a pass.

Looking for Winners

As we enter the fourth quarter of the year, Cramer said growth and momentum fund managers follow a predictable pattern, they identify a handful of stocks that they deem winners and start piling in. These "anointed" stocks just cannot be stopped, noted Cramer, which is why he's featuring 10 of them throughout the week. His first two anointed winners were Amazon.com ( AMZN) and Google ( GOOG).

Shares of Amazon are already up 50% for the year, while Google is trading just 17% higher. But these gains won't stop money managers from taking them a lot higher, said Cramer, as there is a lot to like at both companies.

Amazon has become the Wal-Mart ( WMT) of the Web, said Cramer, a beloved retailer with prices and selection that are second to none. But Amazon hasn't stopped there. Under the leadership of CEO Jeff Bezos, the company has expanded into making hardware like it's successful Kindle tablets, as well as into online media distribution, making it a true online marketplace for the world.

With over $5 billion in cash on its books, Amazon currently trades at a whopping 110 times earnings. That may sound wildly expensive, noted Cramer, but fund managers look at the "out years," like 2015, where Amazon is expected to trade for a more reasonable 35 times earnings. This makes the stock not so expensive given its 36% growth rate.

Google is in a similar position. It dominates online search, commanding a 66% market share in the U.S. The company is a major in mobile with its Android operating system and it has a mobile and social strategy, as well as YouTube and other opportunities.

Given that online advertising still represents only 10% of all advertising, Google clearly has lots of growth ahead of it. Google trades at only 11 times its expected 2015 earnings of $67 a share.

Lightning Round

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

Equinix ( EQIX): "That's a cloud play that I don't expect to come down at all before the end of the year."

Cliffs Natural Resources ( CLF): "No. If it goes up tomorrow, I want you to ring the register."

EOG Resources ( EOG): "I think that EOG goes to $150."

Hospira ( HSP): "I like this one. I also like Covidien ( COV)."

NovaGold Resources ( NG): "I prefer the SPDR Gold Shares ( GLD) if you want to earn gold."

Computer Sciences ( CSC): "I worry about them. I don't like the fundamentals."

Questcor Pharmaceuticals ( QCOR): "No, they blew it."

OraSure Technologies ( OSUR): "Everyone is selling it, but I like it. I think it's cheap."

Diageo ( DEO): "If that stock comes down even $1, I like it. "

Express Scripts ( ESRX): "When this stock comes in I want you to pull the trigger."

Johnson & Johnson ( JNJ): "I think they have a great balance sheet and new management."

Executive Decision

In the "Executive Decision" segment, Cramer sat down with Edward Aldag, chairman, president and CEO of Medical Properties Trust ( MPW), a real estate investment trust that specializes in hospitals, acute care and rehab facilities. Medical Properties currently has a 7% yield.

Aldag started off by saying that over the past year his company has raised over $1 billion in capital and has put all but $400 million of it to work for shareholders. He said Medical Properties' prospects for 2013 now look outstanding.

When asked about the company's specialization in hospitals, Aldag noted hospitals are at the top of the food chain when it comes to health care in America, so they're not affected by politics. He said the market for additional acquisitions for Medical Properties remains huge because there is still about $500 billion worth of hospital real estate left to buy.

So what do hospitals get by selling their properties to Aldag and leasing them back from Medical Properties? Aldag said it's simple, the hospitals get to free up their investments and put that money to work elsewhere, making the decision to sell a win-win for everyone involved.

Cramer said Medical Properties remains a terrific company with outstanding prospects for growth as well as a terrific, stable yield.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer said that while the markets are abuzz with the latest labor statistics, it will be the earnings from aluminum giant Alcoa ( AA) that matter most to the markets. He said while this company has been a serial disappointer as of late, it offers a terrific read on the health of the U.S. and global economies.

Alcoa has a hand in the aerospace industry, said Cramer, because over one million Alcoa screws and fasteners go into every Boeing ( BA) 787 Dreamliner. It also plays into the defense arena, making parts for Air Force and Navy jets. Alcoa is big in the auto industry, as well as in commercial construction.

Alcoa makes the gas turbines that are replacing coal in our utility system, as well as the drill pipes used by the oil and gas industry. And the list continues, said Cramer, from the skin of the new iPad to of course, bottles, cans and wraps the world over.

So while the earnings of Alcoa may not be significant to most investors, the company's commentary should be.

In Closing...

In his closing comments, Cramer opined on the continuing decline in Apple ( AAPL), a stock he owns for his charitable trust, Action Alerts PLUS.

He continues to recommend Apple for the long term, and would use the current weakness in the stock to start buying back in.

--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 AAPL.

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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