Cramer's 'Mad Money' Recap: A Season of Expectations

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NEW YORK ( TheStreet) -- This earnings season has nothing to do with earnings, Jim Cramer told "Mad Money" show viewers Monday. It's all about expectations.

Cramer said the roller-coaster action investors are seeing in some stocks has nothing to do with a company's revenue or earnings, but rather with the expectations management has set going into the quarter.

Case in point: Caterpillar ( CAT), a stock Cramer has been buying up for his charitable trust, Action Alerts PLUS. Cramer said despite reporting hideous results with an outlook to match, shares rallied. Why? Because for the first time in ages Catperillar management did not say "things were getting better" when they clearly aren't.

Another stock, Lam Research ( LRCX), has been one of the worst performers of the year, said Cramer, but when the company didn't slash estimates, it, too, was able to rally as investors' expectations were expecting the worst.

Compare that to Google ( GOOG), a perpetually rosy company with a history of beating the numbers and raising estimates to boot. Cramer said when Google missed on several key metrics, the stock got pummeled because investors were expecting another blowout and were totally unprepared for bad news.

Other companies suffering the expectation game include Chipotle Mexican Grill ( CMG), VF Corp ( VFC) and Mellanox Technologies ( MLNX). Mellanox got slammed from a high to $120 a share to just $75 a share after the company also set expectations far too high.

Executive Decision

In the "Executive Decision" segment, Cramer spoke with Scott Wine, CEO of Polaris Industries ( PII), makers of snowmobiles, off-road vehicles and motorcycles. Polaris delivered a 13-cents-a-share earnings beat on a strong 20% rise in revenue. Shares of Polaris are up 32% since Cramer first featured the company in January.

Wines said that Polaris relies on a strong economy to perform well, which is why he's closely watching the U.S. election for clarity on the "fiscal cliff," rising taxes and above all, increased regulations. He said with major changes in any of those areas Polaris may have difficulty delivering the strong results it has been seeing.

Beyond politics, Wine credited innovation for Polaris' strong results. He said the company spends 4% of revenue on innovation, which has yielded a strong pipeline of new products that customers really enjoy. Wine said whether it's a vehicle for recreation or a utility vehicle for a home, farm or business, Polaris simply has the vehicle to meet customers' needs.

When asked how those customers are finding the money to purchase their vehicles, Wine said that about two-thirds buy on credit and the other third typically buys using cash. Many customers have trade-ins, however, which help offset costs.

Cramer said Polaris continues to deliver for shareholders and he remains bullish on the stock.

Bullish About the Future

In his second "Executive Decision" segment, Cramer spoke with Jack Hartung, CFO of Chipotle Mexican Grill ( CMG), a stock down over 200 points after the company reported two disappointing quarters in a row with single-digit same-store sales growth.

Hartung said Chipotle continues to see value in its stock price, which is why the company is opportunistically buying shares as part of a $100 million buyback program. He said the company has $22 million of that buyback remaining but has also just authorized a second $100 million as well.

Hartung said Chipotle couldn't be more bullish over its long-term future as it only has 1,350 restaurants so far, but the opportunity to build thousands more. Plus, Chipotle's Asian Kitchen concept is gearing up to open a second location in Washington, DC, and one in Los Angeles and the company is only beginning an expansion in Europe.

Hartung said Chipotle is still delivering pretty good results considering the U.S. economy. Most of the company's declines are from food price inflation and not from customers dining any less. Hartung noted that while some business lunches have been curtailed and others have cut back on drinks and sides, overall just as many customers are visiting as before.

When asked about competition from Taco Bell, Hartung noted that customers are smart enough to know the difference in their food. He said customers can see Chipotle's food being made fresh in their open kitchen, while that's not the case at Taco Bell.

Cramer said that while Chipotle has clearly lost its momentum, at just 22 times earnings, the stock is once again representing a real value.

Lightning Round

In the Lightning Round, Cramer was bullish on Lions Gate Entertainment ( LGF), UnitedHealth Group ( UNH), Aetna ( AET), Accenture ( ACN), Berkshire Hathaway ( BRK.B) and Hartford Financial Services ( HIG).

Cramer was bearish on Cognizant Technology ( CTSH) and Dell ( DELL).

Big on B&G

For his final "Executive Decision" segment, Cramer sat down with David Wenner, president and CEO of B&G Foods ( BGS), a stock with a 4% yield that's up 5% since Cramer last spoke with Wenner in July.

When asked about B&G's re-acquisition of New York Style potato chips, a brand the company owned and sold some 10 years ago, Wenner explained that back then the brand had large manufacturing issues that have since been solved. The snack food category has become more of a focus to retailers, making the brand once again attractive to B&G. He explained that unlike some snacks, all B&G products have long shelf lives, which makes them easier to manage and distribute.

Turning to the issue of price inflation, Wenner said that unlike many food companies, B&G is not adversely affected for most of its products at the moment.

Finally, when asked why the company has not tried a larger acquisition than its usual smaller ones, Wenner noted that often big deals require big multiples, which makes them less appealing to his company's business model. B&G is not opposed to bigger deals, he said, as long as they can still bring value to shareholders.

Cramer reiterated his buy on B&G.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer told viewers that while much attention is being paid to the looming fiscal cliff, he's paying more attention to the earnings cliff.

Cramer said that here in the U.S., the economy could be stimulated if the banks would only lend money, while in Europe, leaders there seem to do everything in their power to prevent growth.

Meanwhile in China, the Chinese are getting things right, pumping money into their economy and investing in a crumbling infrastructure. That's why the industrials and materials stocks rallied, said Cramer, as the world begins to become a little more optimistic about a global recovery.

-- 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 CAT.

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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