Cramer's 'Mad Money' Recap: Reasons to Worry

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NEW YORK ( TheStreet) -- A new school of thought has entered the stock market, Jim Cramer told "Mad Money" viewers Monday. This new contingent feels that going over the fiscal cliff wouldn't be all that bad.

The only problem is, that line of thinking is dead wrong.

Cramer said these newfound market optimists believe job losses won't come for months after going over the cliff, giving those in Washington more time to hammer out a deal, one that will most likely be retroactive to Jan 1. The optimists also think a rise in capital gains and dividend taxes won't affect that many investors because only 14% now have taxable investment accounts, down from 24% in years past.

But Cramer disagreed with these rosy outlooks, saying that without a budget deal by Jan. 1, company executives will have no choice but to lower earnings estimates starting on Jan. 2, a move that will send the stock market sharply lower.

With the economy surely headed into a recession, these same executives will be under immense pressure to start laying off staff soon as opposed to later.

But there are other reasons to worry, said Cramer, including the alternative minimum tax, which would snare up to 30 million unknowing Americans when they least expect it.

Finally, he said a deal is seemingly less likely with both Republicans and Democrats feeling they have the upper hand. There is no room for compromise when you believe the American voters are behind you, he said.

While the irony of the situation is that the "fiscal cliff"resulting from federal law was designed to be so horrible that it would force lawmakers to compromise, it now appears Congress may do just the opposite. That's why Cramer said investors need to stay flexible and be prepared for "deal or no deal," which may happen at any time.

Do Your Homework

Investors don't need to constantly search for new ideas, Cramer told viewers, especially if their old ideas are still working. That's why Cramer continues to recommend doing homework, circling back to the stocks already in your portfolios to see if they're still worth owning.

That's why Cramer took a second look at his "If you can't beat 'em, join 'em," series of stocks he debuted in October. Back then, Cramer said these market winners would be mutual fund favorites through the end of the year. Since then, the market plunged, then recovered and is currently down 3% from its October levels.

Amazon.com ( AMZN) was Cramer's first pick in October and he said the company still has the same terrific story. The move to online retail continues and Amazon is assured to be at the front of the pack.

Google ( GOOG) was next on the list. Cramer said this company was crushed after it reported in October as it struggles to migrate from desktop to mobile advertising. He said he likes Google a little less than he did before.

As for Visa ( V) and MasterCard ( MA), both stocks have had slight gains since October. Cramer said these companies are plays on the worldwide switch from paying with paper to plastic and he still likes them both.

Finally, there's Sherwin-Williams ( SHW), a stock that sold off after a good quarter in October but also one that rebounded after Hurricane Sandy provided a huge number of homes and businesses that will need repainting.

More Stocks for Review

Continuing with his growth stock review, Cramer looked at five more stocks he recommended in October.

Cramer said Ulta Salon ( ULTA) took a big hit when its CFO resigned in October, but since then has delivered an 8.8% pop in same store sales. The company is still growing like a weed and Cramer said he's still a fan.

Then there's Tractor Supply ( TSCO), a stock that fell from $98 to $89 a share. Cramer said he blew this one as expectations had gotten too high and even a beat-and-raise quarter was not enough to take the stock higher. He said it makes a lot more sense to own Tractor Supply at these lower levels, but Home Depot ( HD) is probably a better bet.

In the biotech space, Cramer said he still likes Gilead Sciences ( GILD), which popped 8.8% since his recommendation, and Alexion Pharmaceuticals ( ALXN), which has fallen 14%. He said the stories at both companies are still intact and he's sticking with both, even with Alexion down big.

Finally, there's Diageo ( DEO), another Cramer favorite. Shares have risen 14% since October and Cramer said this company continues to deliver for shareholders.

Lightning Round

In the Lightning Round, Cramer was bullish on Dominion Resources ( D), Duke Energy ( DUK), Apple ( AAPL), Linn Energy ( LINE), LinnCo ( LNCO) and SandRidge Mississippian Trust ( SDT).

Cramer was bearish on Alltel ( AT), Antares Pharma ( ATRS), American Eagle Outfitters ( AEO), Knight Capital Group ( KCG) and Frontier Communications ( FTR).

Hit the DECK

Speaking of circling back to old ideas, Cramer also took a new look at Deckers Outdoor ( DECK), makers of Uggs boots and Teva sandals. Deckers has been one of Cramer's favorite footwear plays, but the stock imploded in 2012 -- falling from a high of $117 a share down to just $28 a share as investors feared that the Uggs fad had run its course.

Deckers did not help its situation by slashing guidance as its sales slowed at the same time its prices for materials like sheepskin were on the rise. The trends, said Cramer, were horrid, which explains why nearly 46% of Deckers' shares are still sold short.

But things are looking up for Deckers. The company posted stronger sales and is seeing its materials prices begin to decline. Deckers caught an important upgrade Monday, which sent shares up a quick 10%.

What do the analysts see in Deckers? In a word, takeover. Cramer said VF Corp ( VFC) has a terrific acquisition in Timberland footwear, leading may to think Deckers could be an attractive target. Until now, the fundamentals at Deckers had been horrible, keeping suitors away. But with things looking up, the tide may be turning, according to Cramer.

With the fiscal cliff looming, Cramer said that he'd only start half a position now, and buy more on weakness or after the fiscal cliff is solved.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer said he changed his mind on a recent Goldman Sachs ( GS) upgrade of Dell ( DELL) from a sell directly to a buy.

Cramer said he initially dismissed the upgrade, but after reading the research he's now more swayed to agree.

He said the upgrade is not outlandish, calling for the $9 stock to rise to a mere $13 a share. With everyone having written off Dell, Goldman now has a contrarian view, said Cramer. Most important, the research suggests a leveraged buyout of the company is now "difficult to completely dismiss" given its low share price.

While still a believer in the post-PC era, including tablets and cloud computing, Cramer said those willing to speculate on something happening at Dell should now feel free to do so.

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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.

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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