Cramer's 'Mad Money' Recap: Caution's Cost

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NEW YORK ( TheStreet) -- Just because stocks were expensive five years ago doesn't mean they're expensive today.

Jim Cramer told "Mad Money" viewers Tuesday that bears believe that as the markets approach their all-time highs of five years ago, bad things could happen all over again.

Cramer said it's prudent to be cautious if you're a parent, for example, because there's no downside for warning your kids too many times about drinking and driving or hanging out with the wrong crowd. But investing is different, he said, because being too cautious can cost you a lot money.

Shares of Apple ( AAPL), a stock Cramer owns for his charitable trust, Action Alerts PLUS , were being extra cautious today.

The stock fell by 14 points on fears that a full-fledged correction was taking hold. But those fears turned out to be unwarranted and the stock rallied 12 points off its lows. "Those are 12 points I want for my portfolio," Cramer said.

Inaction has a cost, Cramer reminded viewers. Just because some stocks were expensive five years ago doesn't mean they all were. Besides, he said, it's more important to care about what a stock will be worth three years from now, not where it was five years ago. The prospects for individual businesses are what matters, not where some arbitrary average was in the past.

Executive Decision

In the "Executive Decision" segment, Cramer spoke with Gary Rodkin, CEO of ConAgra Foods ( CAG), the food giant that surprised Wall Street with an earnings beat of 9 cents a share on a 6.7% rise in revenue. The company also offered upside guidance and boosted its dividend to 3.6%. Shares on ConAgra are up 60% since Cramer last spoke with Rodkin in July 2009.

Rodkin said that after a tough year for commodity cost inflation, costs have moderated more than expected, allowing ConAgra to deliver such great results. He said his company is now aligned to be proactive, with an emphasis on productivity that's really working for them.

Among the company's strengths is its Healthy Choice brand of frozen products. Rodkin said the Food and Drug Administration regulates what can be called "healthy" on the label, which means that all Healthy Choice products exceed those standards for calories, fat and sodium content. Healthy Choice provides both taste and nutrition, he said, and its new packaging, including steamers and smart trays for baked items, are a big hit with consumers.

Rodkin explained that ConAgra's recipe for success includes building on its core competencies, being the fastest-growing private-label brand and doubling the company's international exposure, three things it is well on its way to achieving.

Cramer said investors looking for yield and growth along with a clear path for the future need to look no further than ConAgra.

Charging Stocks

Continuing with his "Anointed Growth Stocks" list, Cramer highlighted his next two stocks, Visa ( V) and MasterCard ( MA). Cramer reminded viewers that Visa and MasterCard are not banks and don't loan any money, they simply process transactions and make a bundle doing it.

That's why shares of Visa are up 35% so far this year and MasterCard is up 25% for the year. Cramer said the growth in these two stocks comes from the worldwide switch from paper money to plastic payments. In the U.S., nearly 52% of all payments are still made in cash, while in the rest of the world that number jumps to 85%, leaving plenty of growth remaining for both companies.

Cramer said he's not worried about competition from virtual wallets and other new payment technologies, although he still likes eBay ( EBAY), another Action Alerts PLUS holding, for its PayPal unit. Both Visa and MasterCard are working on their own virtual payment systems, he said, but all of these newer technologies are still years away.

In addition to their growth, Cramer said MasterCard and Visa have no debt, terrific balance sheets and strong management teams. Best of all, shares of Visa and MasterCard are cheap, with Visa trading at just 19 times 2013 earnings and MasterCard down at 18 times 2013 earnings.

Given that the switch from paper money to debit and credit cards can trump even a weakened global economy, Cramer said both of these stocks should be on investors' buy lists.

Lightning Round

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

Advanced Micro Devices ( AMD): "I don't want you touching that stock. Not now, not ever."

Illumina ( ILMN): "I like Celgene ( CELG) and Gilead Sciences ( GILD). I can't recommend yours on takeover rumors alone."

Flotek Industries ( FTK): "I'll give you DuPont ( DD) which has a good yield, good management and is less expensive."

World Wrestling Entertainment ( WWE): "No. I don't think this stock is worth owning. It has no growth."

Facebook ( FB): "There are some lockups expiring. I can't opine on the stock ahead of that. Lower prices beckon."

Home Depot ( HD): "I do like Home Depot. I think it's inexpensive. I would buy it under $60."

CenturyLink ( CTL): "They have a terrific yield and I think the business is a good one. "

Off The Charts

In the "Off The Charts" segment, Cramer went head to head with colleague Carley Garner over future of oil prices to determine which is right, last month's sell-off or today's strong rally.

Using a weekly chart of the West Texas Intermediary, or WTI, crude futures, Garner identified a pattern where speculators piled into oil when the unrest in the Middle East in June began, only to leave en masse shortly thereafter. She identified a similar pattern now, indicating that the selling in oil may not yet be done.

Garner used the "Commitments of Traders" report put out by the commodities exchange to determine that there are still many long positions being held by speculators in oil, which increases the odds that more liquidation is coming soon. Garner identified $80 a barrel as a key level of support for oil and felt the commodity could retest those levels.

The daily chart of the WTI also confirmed Garner's thesis as she identified a descending wedge pattern and another confirmation of an $80 floor. According to Garner, any rally in oil should be sold.

Cramer said he's been warming up to Garner's research and would follow her lead when it comes to oil prices.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer opined on those who feel there's a bubble forming in high-yielding stocks. He recalled how on last night's "Mad Money" he told an 80-year-old woman that Johnson & Johnson ( JNJ) would be a good replacement for her expiring bank CDs. It's this kind of investor, he said, that makes the bubble thesis irrelevant.

With the Federal Reserve set on keeping bond and CD rates low for the coming years, there's only one class of investments that will provide a 5% yield or more, said Cramer, and those are dividend-paying stocks.

That's why Cramer continues to like the high-yielding REITs and will even go so far as recommending Johnson & Johnson, a company with a good yield, a new management team and new hopes for growth.

-- 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.

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."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

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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