Cramer's 'Mad Money' Recap: Be an Informed Skeptic

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NEW YORK ( TheStreet) -- Are investors too positive or too negative on the markets? That's what Cramer wondered on "Mad Money" Tuesday. Cramer said he prefers to straddle the middle ground and stay an "informed skeptic."

Cramer said the problem with most market coverage is the bears almost always sound more informed than the bulls. This often leads investors to believe the bearish commentators and brush off the bulls as uninformed optimists. But Cramer noted that believing the bears only keeps investors out of the bull markets.

Such was the case during the market decline of 2011 between April and October. After having fallen 17% from its highs, the newspapers were riddled with articles predicting endless doom and gloom. Headlines read of slowing manufacturing and heightened threats from Greece and the rest of Europe. The bears sounded brilliant in their arguments, absolutely brilliant, Cramer said. The only problem was, they were dead wrong.

At the time those headlines were printed in October, manufacturing was already on the rise and the U.S. economy was well on its way from breaking free from the euro contagion once and for all. But for investors who listened to the bears, well, they missed out on a 40% rally in the S&P 500 over the next 18 months.

So while Cyprus may take some wind out of the U.S. economic sails, Cramer said the fact remains that housing in the U.S. is on fire, and that's good news for the home builders and for everything that goes into a home, from doors and windows to electrical and plumbing.

It is also great news for everyone who sells those homes, finances them or moves people in and out of them. It's great for retailers that furnish them. The list goes on and on. That's why it pays to be an informed skeptic, Cramer concluded.

Off the Charts

With the bears fretting over when the Federal Reserve will begin raising interest rates, Cramer used his "Off The Charts" segment to examine what the U.S. Treasury market is signaling for the direction of interest rates. Using the help of colleague Carly Garner, Cramer looked at the chart of the iShares Barclays 20+ Year T-Bond ETF ( TLT).

According to Garner's analysis, long-term Treasures have a floor of support at the $114.59 level and major support at $112.40. Thus, she would be a buyer of bonds for a trade on any weakness. The relative strength indicator, or RSI, is also nearing an oversold condition, further bolstering Garner's views. With the ceiling of resistance at $120, Garner felt the ETF could see $127 a share.

Cramer noted the big money has been betting against Treasuries in anticipation of an upcoming Fed move, but that thesis was foiled by worries over Cyprus, which pushed up bond prices as investors fled to safety.

Cramer said he still would not be an investor of bonds because high-yielding stocks are far safer than low-yielding bonds.

Rental-Car Favorites

Continuing with his this week's series on oligopolies, Cramer honed in on the rental car industry, which is currently controlled by Hertz ( HTZ), Avis Budget Group ( CAR) and the privately held Enterprise.

Cramer noted that just a decade ago there were nine major rental car players, ensuring customer choices and low rates. Today, there are only three major players and those three control an astonishing 94% of the U.S. rental car market. So strong are these remaining players than when Hertz announced its acquisition of Dollar Thrifty last year, its stock shot up 11% on the news, while Avis, which should've been hurt by the news, rallied 4%.

Given the pickup in travel and the shortage of vehicles from superstorm Sandy last year, Cramer said both Avis and Hertz have done well, with Avis shares up 38% for the year while Hertz is up 29%. That said, Cramer picked Hertz as his favorite going forward, given that the stock has held up exceptionally well during two recent secondary offerings.

Hertz currently trades at 11.2 times earnings, while Avis is slightly higher at 12 times, said Cramer. With Hertz' historical levels, he said the stock could have 35% more upside given how powerful the Thrifty acquisition will be for the company.

Lightning Round

In the Lightning Round, Cramer was bullish on Cypress Semiconductor ( CY), Stewart Information Services ( STC), BlackRock ( BLK) and Tyson Foods ( TSN).

Cramer was bearish on E*Trade Financial ( ETFC), Chiquita Brands International Inc ( CQB) and Corrections Corporation of America ( CXW).

Executive Decision: Francois Nader

In the "Executive Decision" segment, Cramer sat down with Dr. Francois Nader, president and CEO of orphan drug maker NPS Pharmaceuticals ( NPSP), a stock that's up 7.7% since Cramer first got behind the company in late October.

Nader commented on his company's newly announced deal securing the rights for its Gattex drug in Europe from partner Takeda Pharmaceutical Co. for $50 million. He said the all-stock deal is a win-win for both companies and returns Gattex to NPS, which has its sole focus on orphan drugs. While the drug currently only has 72 patients, Nader said he expects between 200 to 300 patients before year's end.

Nader also commented on the price of Gattex, which costs upwards of $200,000 per year. He said that ultimately Gattex saves the system money because patients' current treatments can last for 10 to 12 hours per day and cost between $200,000 and $600,000 per patient per year.

In that context, Gattex offers real value, said Nader, not to mention the fact that patients can also lead productive lives instead of living at the hospital.

When asked about health insurance reimbursements for such a costly drug, Nader said reimbursements have been favorable thus far. While market conditions are different in Europe, he is not expecting major issues going forward.

Cramer said he continues to like the NPS Pharmaceutical story.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer said he found one silver lining to the moronic Cyprus bailout plan -- the end to the slump in gold that began last October.

Cramer noted that the multi-year bull market in gold ended in October, when the SPDR Gold Shares ( GLD), along with most of the major gold mining stocks, began to slump. But enter the Europeans to save the day by all but forcing wealthy investors to pull their money out of euros and put it into U.S. banks as well as in gold.

Cramer said now is the time to get back into gold because in the months to come these wealthy European investors will be pushing gold higher.

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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 BLK.

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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