Jim Cramer's 'Mad Money' Recap: The Rally Rules

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NEW YORK (TheStreet) -- The market rally that isn't supposed to be happening continues to prevail, Jim Cramer told his "Mad Money" viewers Monday as he opined on the day's market action. Cramer said while some investors argue on whether the market's move higher is right or wrong, the smart investors are already buying and making money hand over fist.

Cramer reminded viewers that investing isn't about being right or wrong, it's about making money, which is why those investors who have done their homework and pay attention to historical patterns will be the ones prevailing as the market ratchets ever higher. Smart investors, he said, understand that when companies are increasing their bottom lines, not from cost cutting but from real earnings growth, their stocks head higher and that's where we are in the cycle today.

Eventually good news will be once again seen as good news, said Cramer, proving the "good news is bad news" crowd wrong once and for all. But the smart money will be invested now when many investors still feel the market stinks.

The section rotations are already occurring, with money flowing into the financials and out of the high-yielding real estate investment trusts and master limited partnerships, said Cramer. There will still be many who won't believe, Cramer concluded, but while they remain skeptical, the markets will likely propel to the next level.

Executive Decision: Manny Chirico

In the "Executive Decision" segment, Cramer spoke with Manny Chirico, chairman and CEO of PVH Corp (PVH), the apparel maker that's home to such brands as Calvin Klein and Tommy Hilfiger.

Chirico addressed one of his biggest challenges at the moment: Calvin Klein jeans, a segment the company acquired when PVH took over Warnaco last year. Chirico said CK jeans will be a second half of 2014 story as it ramps up new distribution and new products to address what customers are seeking. He said the investments the company is making today unfortunately won't pay dividends before then.

Outside of jeans, Chirico remains cautious on the holiday season, which has proven to be competitive for many retailers with lots of promotions and markdowns. Chirico said it's still too early to see what this year's shortened holiday season will bring overall.

Turning to international sales, Chirico said southern Europe, mainly Spain and Italy, continue to be challenged. Other areas of the globe, including China and Southeast Asia and Latin America, all continue to be growth drivers for the company.

Cramer said PVH continues to be a stock that investors should be buying ahead of what will likely be a very strong 2014 for the company.

More on Masco

When analysts argue, investors win, Cramer reminded viewers as he looked into Masco (MAS), a stock he owns for his charitable trust, Action Alerts PLUS, and one that received both an upgrade and a downgrade today.

Cramer said there are smart people on both sides of Masco, with Goldman Sachs (GS) advising investors sell the stock, while Credit Suisse (CS) rated it a buy. The makers of Delta faucets, Kraftmaid cabinets and Behr paints currently pays a 1.4% yield and has seen its shares rise 29% so far in 2013.

Goldman's argument is that with residential housing heating up, the smart money would be better placed in non-residential construction names that have yet to rise. Meanwhile, Credit Suisse was content to ride the residential market even higher.

Cramer said while Goldman cites categories such as insulation are peaking, insulation currently only accounts for 16% of Masco's revenue. Goldman fails to account for the fact that 73% of Masco's sales stem from the repair and remodel market, which is roaring outside of new home construction. As home values rise, people spend more on their homes, he said.

Goldman also cited margin pressure and a bad balance sheet among Masco's other negatives. But Cramer  sees margins rising in 2014. While the company does indeed have a lot of debt, it's also expected to generate $1.5 billion in free cash flow next year. He said trading at 19 times earnings is below historical average for Masco, and the company does sport a 44% growth rate.

Lightning Round

In the Lightning Round, Cramer was bullish on Watsco (WSO), BioMarin (BMRN), FedEx (FDX), United Parcel Service (UPS), Randgold Resources (GOLD), SPDR Gold Shares (GLD) and Sirius XM Radio (SIRI).

Cramer was bearish on Eldorado Gold (EGO).

Executive Decision: Ed Heffernan

For his second "Executive Decision" segment, Cramer sat down with Ed Heffernan, president and CEO of Alliance Data Systems (ADS), the loyalty program provider that offers services for hundreds of companies and retailers. Shares of Alliance Data are up 70% in 2013 and trade at 20.4 times earnings with a 15% growth rate.

Heffernan said Alliance is growing because companies need to learn more about their customers, and there's no better way to do that than with a loyalty program. He said the company's services allow retailers and others to know who their customers are, what they like, when the shop, what motivates them to buy and so much more. That's why Alliance works with hotels, retailers and big pharmaceutical firms.

When asked about the holiday season, Heffernan said the company sees the largely multi-channel picture and the kickoff to this year's shopping rush seems to be getting going with a bang. He said it remains to be seen how things finish up.

Finally, when asked about whether the company would consider splitting its now-$250 stock, Heffernan said that in his mind such a move wouldn't create a lot of value. What does create value, however, is producing great earnings and reducing the share count through buybacks.

Cramer said he thinks Alliance Data Systems is a buy.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer opined on why so many stocks in this market are heading higher. In a word, acquisitions.

That's how stocks like Sysco (SYY) and Whitewave Foods (WWAV) sent their shares higher, Cramer said -- by inking deals that were instantly accretive to earnings. Micron Technologies (MU) did the same, merging with a rival in order to take capacity out of the market and firm up pricing.

Still others, like Linn Energy (LINE), are also getting into the acquisition game, knowing that buying up companies will allow them to raise estimates.

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

To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.

-- 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 LINE and MAS.

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."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, TheStreet.com or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor TheStreet.com, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.

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