Cramer's 'Mad Money' Recap: A Tale of Two Markets

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NEW YORK ( TheStreet) -- Which market is the real one, Friday's big rally or today's beat down? That's what Jim Cramer was pondering on "Mad Money" Monday.

To Cramer, the market's volatility represents the reality of our world. All is not well, but it certainly could be.

There were many factors driving Friday's market rally, Cramer told viewers. Many investors, himself included, had high hopes for a Chinese recovery. That's why his charitable trust, Action Alerts PLUS, has been buying the iShares FTSE China 25 Index ( FXI).

Cramer said many other stocks were also bullish on China, including Nike ( NKE), Yum Brands ( YUM), Joy Global ( JOY) and Cummins ( CMI). The rails were also strong on Friday, hopeful a growing Chinese economy will require more coal from the U.S.

Then there was retail. Good feelings about this year's holiday shopping season were tipped by positive comments from Wal-Mart ( WMT) and spilled over into a plethora of other retail names. The markets were also spurred by positive feelings from Washington about the looming budget negotiations.

But all of these positive notes were lost on the market Monday, said Cramer, as today's headlines included new worries about Greece, no interest rate cuts from China over the weekend and the lack of a compromise in Washington.

As if those negatives weren't enough, new surveys surfaced that holiday shopping was not as strong as predicted, although that wasn't enough to stop shares of Apple ( AAPL), another Action Alerts PLUS name, from rallying.

So which market is the real one? Cramer said it's a little bit of both, which is why he continues to remain cautiously optimistic.

Big on Ross

Investors looking for a hot retailer for this holiday shopping season need look no further than Ross Stores ( ROST), Cramer told viewers. He called the company one of his continued favorite retail names.

Ross shares have fallen well off their highs, from $70 to just $56 a share, largely in line with the broader markets. Some analysts were also spooked by the company's most recent quarterly results, which only delivered a 6% increase in same-store sales and tepid guidance going forward.

But Cramer said Ross is likely just being conservative with guidance, setting itself up to under-promise and over-deliver next quarter. He also said the 6% increase in same-store sales was actually very strong when compared to other retailers.

So why does Cramer remain bullish on Ross Stores? Mainly because the company is a regional to national growth story, one with lots of room to grow. He said the company's strategy of buying distressed merchandise from high-end retailers, then packing it away until next year has been a winning one that affords shoppers great deals. Additionally, Ross is also a play on the housing recovery because 25% of the company's items are home-related.

Beyond the company's growth, Cramer said it also offers investors a 1% dividend that has been raised every year for the past 18 years. The company also has a meaningful stock repurchase program that has retired 25% of its float over the past seven years.

With shares trading at just 14.5 times earnings compared to historically trading at 18 times earnings, Cramer said this 13% grower is one stock investors need to have in their stockings for this holiday season.

Shopping With FedEx

Cyber Monday, the biggest online shopping day of the year, may be upon us but forget about investing in online retailers, Cramer said.

The best way to make money off online shopping is with FedEx ( FDX), another of his Action Alerts PLUS holdings.

Cramer said that while FedEx certainly benefits from the estimated 20% increase in Black Friday sales this year, the company has another big catalyst pulling in its favor -- a massive restructuring that was announced just a few months ago.

Until now, FedEx has essentially been running two separate shipping networks, one for express packages and another for slower ground shipments. But under the restructuring plan those networks will be merged, affording the company huge savings and investors huge profits.

While much of the restructuring is planned for 2015 and 2016, Cramer said some of the initial gains will come in the company's fiscal 2014, which is only seven months away.

FedEx has other trends pulling in its favor including a dwindling U.S. Postal Service and an uptick in China. Cramer noted that FedEx derives 30% of its revenue from overseas.

Shares of FedEx are now trading at just 11 times earnings, a full 20% below that of rival UPS ( UPS), and are now trading at levels below where FedEx first announced its restructuring plans.

Lightning Round

In the Lightning Round, Cramer was bullish on American Tower ( AMT), Sprint Nextel ( S), Exelixis ( EXEL), Cirrus Logic ( CRUS) and Phillips 66 ( PSX).

Cramer was bearish on GrafTech International ( GTI), NovaGold Resources ( NG), Nvidia ( NVDA) and Suburban Propane ( SPH).

Executive Decision

In the "Executive Decision" segment, Cramer sat down with Vernon Hill, vice-chairman and co-founder of the privately held, London-based Metro Bank. Hill was also the founder of the highly successful Commerce Bank and is the author of a new book, Fans! Not Customers: How To Create Growth Companies In A No Growth World.

Hill said Metro Bank is the first new bank in London since 1830 and is already a major disrupter in the industry. The company is making banking fun in what is otherwise a troubled market. Hill said banking, like retail, is all about the experience, which is why price is not the only thing that matters.

Hill described the four stages rival banks go through when dealing with Metro Bank. First they feel Metro is too small to worry about. Second, they concede that Metro is winning new accounts, but not those that really matter. Third, Hill said rivals argue that "once they get big, they'll become as bad as we are." Finally, there's an "Oh my God" moment. Hill said Metro plans on taking the bank public in 2014.

When asked about what the looming fiscal cliff means for America, Hill said he's scared that our country may lose a big part of its American Dream. He said as the regulators work on reeling in the big banks, they risk destroying the regional banks, which are the drivers of that dream.

Cramer commended Hill for all he's done at Commerce Bank and now Metro Bank and recommended his book as a must-read.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer said that while investors are going gaga over possible turnarounds at Hewlett-Packard ( HPQ), Nokia ( NOK) and Research In Motion ( RIMM), they forget about another important turnaround player, Alcatel-Lucent ( ALU).

Cramer reminded viewers that back in the day, Lucent was the hottest thing in technology and included the old Bell Labs, the brains behind all that was AT&T ( T). The company had thousands of patents and traded upwards of $80 a share.

But then, in the blink of an eye, technology and innovation passed Alcatel-Lucent by. The company's technology was no longer state of the art and its patents were nearly worthless. The company fell into a death spiral ala Kodak and now pins its hopes on yet another lifeline loan. Its shares trade around $1 a share.

Cramer said there's only been one successful technology turnaround in recent years, and that was Sprint Nextel. Nokia, HP and RIMM, said Cramer, will not be the next Sprint.

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-- 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

At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, FDX and FXI.

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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