Cramer's 'Mad Money' Recap: Bull Market, Better Economy

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NEW YORK ( TheStreet) -- Think the economy isn't getting better? Think again. That was Jim Cramer's lesson to his "Mad Money" TV show viewers Thursday.

Cramer said it's no coincidence that as the markets are hitting new five-year highs, unemployment in our country is hitting five-year lows.

Things are indeed getting better, said Cramer, and when things get better, investors are willing to pay up for corporate earnings. The logic is simple: More demand equals higher prices, which in turn means better gross margins and ultimately more earnings on the bottom line.

That's why investors are willing to pay up for Bristol Myers-Squibb ( BMY) and Johnson & Johnson ( JNJ), said Cramer, and why they're willing to pay up for oil stocks like Schlumberger ( SLB) and pretty much anything and everything that goes into a home, car or plane.

Cramer said the only confusing sector in this multiple expansion period is tech. What are investors willing to pay for Apple's ( AAPL) slowing growth? Not as much as before, said Cramer, who owns Apple for his charitable trust, Action Alerts PLUS . Cramer said the markets are now valuing Apple alongside Intel ( INTC) and Microsoft ( MSFT).

But as Apple declines, investors are taking those profits and rolling into other tech names, stocks like Amazon.com ( AMZN), Facebook ( FB), Google ( GOOG) and Netflix ( NFLX). Are these the new "four horsemen" of tech? Cramer said they might be.

When it comes to the market, Cramer said the current prices of stocks are just wrong. As things get better, stocks are worth more, he said, which is why the market continues to rally higher.

Executive Decision

In the "Executive Decision" segment, Cramer checked in with Jim Griffith, president and CEO of Timkin ( TKR), the steel maker that delivered an earnings beat of 16 cents a share earnings Thursday. Shares of Timkin are up 34% since Cramer last featured them on location in Ohio on Oct. 18.

Griffith said Timkin is a very different company than it was just a few years ago. He characterized the company not merely as a steel maker but as a technology company bringing knowledge and know-how to its customers.

Griffith said that 30% of the products his company makes didn't exist just a few years ago. With that level of innovation and execution, Timkin can deliver earnings power even at only 50% factory utilization.

Griffith was also bullish on Asia, particularly in China, where he said government stimulus is starting to translate into orders for Timkin. He said things are also picking up in India, another big market for the company. Here at home, Griffith noted that low U.S. energy prices are driving profitability for his company as well as for its customers.

When asked about the truck market, Griffith said Timkin is seeing a pickup in truck demand in Asia and expects to see the low levels of production in the U.S. to strengthen as well in 2013.

Cramer said Timkin typifies everything we want from American manufacturing as well as in an investment. He continued to recommend the stock, saying that 2013 with "be amazing" for this company.

Wake Up, Apple

In the aftermath of Apple's disappointing earnings and the stock's subsequent 12.5% haircut, Cramer said Apple's management needs to wake up and realize that it's a publicly traded company and one that needs to do a better job of explaining itself.

Cramer said from Apple's point of view its actions seem justifiable. The company makes some of the best technology products in the world, and makez a ton of money doing so.

So why should Apple worry about these nitpicking analysts who want to dissect every component price and change in gross margin?

Cramer said that public companies need to pander, at least a little bit, to the analysts if they expect them to continue to be excited about recommending their stock. With Apple's perceived arrogance about answering questions, it's no wonder the analysts were out in droves today downgrading and cutting targets for Apple shares.

Apple remains a great company, he said, but it needs to give the analysts at least a morsel of insight or humility in order to keep them happy.

Cramer said Apple could easily prop up its shares with a stock buyback or a dividend boost or a transformative acquisition, but so far management hasn't hinted at any of those, leaving analysts to focus on increased competition and supply constraints. He said the stock has certainly overshot to the downside but may not yet be at its bottom.

Lightning Round

In the Lightning Round, Cramer was bullish on Research in Motion ( RIMM), Salesforce.com ( CRM), Realogy ( RLGY) and Mattel ( MAT).

Cramer was bearish on NetSuite ( N), Allegheny Tech ( ATI) and JC Penney ( JCP).

Overcoming Low Expectations

In his second "Executive Decision" segment, Cramer spoke with Rick Hamada, CEO of Avnet ( AVT), the tech component supplier that reported an 18-cent-a-share earnings beat today, sending its shares up 6.9%. Shares of Avnet are up 21% since Cramer last spoke with Hamada on Oct. 26.

Hamada explained that at the end of the third quarter customers were becoming increasingly cautious about their businesses, which is why Avnet set low expectations for the fourth quarter. But after deferring and delaying purchases in that third quarter, many orders came in during the fourth quarter, allowing Avnet to beat lowered expectations handily.

Hamada also credits Avnet's adjusting of expenses and reduction of inventory as drivers that allowed the company to have enough working capital to fund the growth seen in the fourth quarter. Avnet was also able to buy back a lot of company shares, he added, at around $28 a share.

When asked about the tech market overall, Hamada reiterated Avnet serves a broad industrial customer base and is now seeing strength in many areas. He said while the third quarter was weak, many companies adopted the "use it or lose it" mentality when it came to their IT budgets towards the end of the year.

Cramer remained bullish on Avnet.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer opined that if Apple ever wants to get its mojo back, it needs to pay attention to the younger generation, which is now seeing the company as old and stale.

He said while Apple may not yet be in the same situation as Tiffany ( TIF), Coach ( COH) or Microsoft ( MSFT), which have no relevance to the younger demographic, it is certainly not as cool as Twitter or Netflix ( NFLX).

Apple needs to pay attention before it's too late, Cramer concluded.

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-- Written by Scott Rutt in Washington, D.C.

To email Scott about this article, click here: Scott Rutt

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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, BMY, SLB.

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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