Cramer's 'Mad Money' Recap: Maximum Gains From Minimum Competition

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NEW YORK ( TheStreet) -- Before you buy a stock, stop and think about the company's competition, Jim Cramer warned "Mad Money" viewers Tuesday. Cramer said that in today's market competition matters, and those in cut-throat businesses are getting pummeled.

Cramer's theory was clearly evident in Tuesday's trading with companies such as United Technologies ( UTX) leading the charge higher. Not only is the company in the red-hot aerospace market, but it's also able to raise its prices and enjoy bigger margins thanks to extremely limited competition.

On the flip side, there's Travelers ( TRV), the insurer that's getting hit on all sides as it is forced to compete for business largely on price alone. Shares of Travelers did not fare well in today's trading, noted Cramer.

Both Honeywell ( HON) and General Electric ( GE) did well in the quarter, as did rails CSX ( CSX) and Union Pacific ( UNP). Cramer also liked banks such as JPMorgan Chase ( JPM) and Wells Fargo ( WFC), two stocks he owns for his charitable trust, Action Alerts PLUS.

Meanwhile, companies with lots of competition, from Coca-Cola ( KO) to Microsoft ( MSFT), struggled. Even the venerable Google ( GOOG) failed to impress investors this quarter.

Cramer once again gave the nod to mortgage insurers like Radian Group ( RDN) and Genworth Financial ( GNW) as they, too, have little in the way of competition.

Should You Buy Sprint?

With all of the mergers and buyouts now complete, is the new Sprint ( S) worth owning? The analysts are clearly undecided because the company has received various upgrades and downgrades over the past few weeks. Cramer dove into Sprint's fundamentals to discover the truth.

Cramer said Sprint is a completely new company now that its Clearwire and SoftBank deals are complete. The old Sprint was a turnaround story, he said, but the new Sprint is a growth story. CEO Dan Hesse is still in charge, and that's a good thing -- but the new company now has more 4G LTE spectrum than all of its competitors combined.

It will likely take Sprint up to a year to fully roll out its LTE network, which is why just about everyone expects the current quarter's results to be a disaster, noted Cramer.

But in the longer term, the company can likely grow earnings by 30% without the overhang from its old Nextel network and possibly even 40% by integrating Clearwire. Sprint is only just now able to truly go after new customers, he said, which means the company is only just getting started.

Cramer said that some investors are worried about a funding gap at Sprint that will prevent it from building out that much-needed 4G network. But Cramer said he's not worried because its new alliance with SoftBank will give it access to all the capital it needs to once again become a major player in the U.S. wireless market. He said that he's a buyer of Sprint on any weakness.

Executive Decision: Patrick Doyle

In the "Executive Decision" segment, Cramer checked in with Patrick Doyle, CEO of Domino's Pizza ( DPZ), a stock that fell 6.5% after it reported an earnings beat of 1 cent a share on slightly higher-than-expected revenue. Shares of Domino's are up 12% since Cramer last spoke with Doyle on April 30.

Doyle started off by saying that Domino's earnings this quarter were driven by demand for the brand and not by any special products or offers. He said while margins were up, they didn't meet the expectations of some analysts.

Doyle continued that he is slightly less optimistic when looking at the pizza category overall because he sees more headwinds than tailwinds in the short term. He noted that growth outside the U.S. will remain larger than inside, partly because tight credit standards are preventing franchisees from opening as many stores as they'd like.

When it comes to innovation, however, Doyle said that at Domino's innovation comes from products and from technology, where the company is constantly coming up with new apps and features like cameras in the kitchen, which allow customers to see how their food is being made. Once customers turn to digital ordering, Doyle noted, their loyalty to Domino's increases.

Cramer said he remains a buyer of Domino's on any weakness.

Lightning Round

In the Lightning Round, Cramer was bullish on Raymond James Financial ( RJF), Alere ( ALR), Baker Hughes ( BHI), Halliburton ( HAL) and Rambus ( RMBS).

Cramer was bearish on Green Mountain Coffee Roasters ( GMCR).

Executive Decision: Nick Pinchuk

In his second "Executive Decision" segment, Cramer sat down with Nick Pinchuk, chairman and CEO of Snap-on ( SNA), the toolmaker that recently beat earnings expectations by 7 cents.

Pinchuk has some positive things to say about Europe, of all places. He said that sales were stabilizing in the region, with some countries like the U.K. actually posting gains for the quarter. He said Snap-on's strategy has been to make more money every sale it makes, and that strategy allowed his company to post gains in Europe, even though sales were essentially flat.

Pinchuk was also excited about the company's many innovations. He said products such as the new wireless scopes allow mechanics to view inside an engine or transmission or dashboard and see exactly what's going on inside. High-tech tools not only spur new sales, he noted, but also increased sales of more traditional tools.

When asked what factors most drive Snap-on's sales, Pinchuk said the number of cars on the road and the average age of those cars. With the average age of a vehicle now over 11.5 years in the U.S., that's great news for the auto repair market.

Cramer continued his support of Snap-on and its continued growth and expansion.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer pondered what to do with shares of Netflix ( NFLX), which fell nearly 5% in Tuesday's trading.

Cramer said that even the most beaten-down stocks of late have been following a pattern -- one of seller's remorse, where shares are substantially higher in the days and weeks that follow the so-called "disappointing" event.

That was certainly the case with FedEx ( FDX) and Starbucks ( SBUX), he said, and it could be the case with Netflix, which has terrific long-term prospects.

Cramer said it may turn out that Netflix could actually be a buy in the coming days.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

-- 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 positions in GE, HON, JPM and WFC.

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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