Jim Cramer's 'Mad Money' Recap: Market Headwinds Getting Worse

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NEW YORK (TheStreet) -- This market has some huge headwinds that are getting worse, not better, Jim Cramer said on Mad Money Monday. Cramer said investors are just as likely to lose money as they are to make money on any given day, and there are a host of good reasons why.

Even with the U.S. economy gaining steam, Cramer said the rest of the world just isn't following our lead. Just last year it looked like Europe was improving, China was stabilizing and Japan had a plan. Fast forward just a few months and it now looks like Europe is stalled, as is China, and Japan, along with most of the emerging markets, all need a new plan.

Then there are the U.S. financials, a big part of the S&P 500, that has simply become too big to manage and is coming apart at the seams. Cramer reiterated that Bank of America (BAC) and JPMorgan Chase (JPM), two stocks he owns for his charitable trust, Action Alerts PLUS, are both on his sell list after this latest round of errors, restatements and disappointments.

Next there's housing, which continues to have a difficult year as the hugely disappointing quarter from Realogy (RLGY) proved today. Mortgage rates are holding fast and home prices are on the rise again, both of which led to Realogy's 8.5% decline.

Finally, retail is holding back the market, said Cramer. Target's (TGT) announcement that it's firing its CEO is just the latest sign that while some retailers are improving, most are not.

Soft Drink Fizz

Are the tides changing in the soft drink market? One would think so if they saw how number three player Dr Pepper Snapple (DPS) has seen its shares rise 15% for the year, while the big boys of Cola-Cola (KO) and Pepsico (PEP) are showing declines and only slight gains respectively.

Cramer said there are many theories to explain this dichotomy. Dr Pepper derives 90% of its sales domestically, for example, and therefore shelters investors from international risk. The company is also strong with the Hispanic market, one of the few places cola sales are still increasing. Then there's the company's 15-cents-a-share earnings beat last quarter. Not too shabby.

But Cramer noted Dr. Pepper's earnings stemmed mainly from cost-cutting and not from organic growth. This means the company will have a hard time growing and justifying its gains going forward.

That's why Cramer said he remains a fan of Coke, which trades at 19.6 times earnings, and Pepsico, trading at 18.9 times earnings, over Dr Pepper at just 16.2 times earnings. Coke is seeing organic growth, he noted, and is also seeing some improvements in pricing power.

But Cramer said his favorite among the three is Pepsico, which has a strong international growth story, along with a fabulous snack business and activist investor Nelson Peltz pushing the company to unlock value, possibly by splitting itself into two.

Cramer Still Loves GM

"Enough is enough," Cramer told viewers, General Motors (GM), an Action Alerts PLUS holding, is not toast. Yes, the 2.6 million-vehicle recall is bad news for the company, he admitted, but investors need to be buyers into the weakness, not sellers.

Why is Cramer so bullish? He said it's because the market doesn't take long to process bad news. With the recall first coming to light some three months ago, GM has already lost $5.5 billion in market cap.

Investors need only look at BP (BP) after the 2010 oil spill to see how the pattern works, Cramer told viewers. Back then, BP shares were cut in half, from $60 to $30, but have been gaining slowly ever since.

Cramer said even if the recall ends up costing $2.5 billion, GM is big enough to handle that loss and still prosper. In fact, given that the company went bankrupt in 2010, the new GM might not even be liable for all the costs.

Given the company's strong earnings, its 3.5% yield and the fact its taking market share, Cramer said the fact GM now trades for just seven times 2015 estimates is ridiculous.

Executive Decision: Neil Cole

For his "Executive Decision" segment, Cramer sat down with Neil Cole, chairman, president and CEO of Iconix (ICON), purveyors of such retail brands as Joe Boxer, Umbro, Candie's and London Fog. Iconix just delivered a nine-cents-a-share earnings beat on better-than-expected sales and raised guidance. The company has also retired 37% of its shares since 2011, leading to a 40% gain since Cramer last checked in back in June 2013.

Cole described the U.S. retail market as still "choppy," but did say that sales in April were a little more encouraging. However Iconix is still flourishing, he said. The company derives 40% of its sales from outside the U.S.

When asked how the company fares in an ever-increasing e-commerce world, Cole explained that most of his company's licensees, like Kohls (KSS) and Macy's (M), have e-commerce and are doing quite well selling their brands.

However one of the company's biggest bright spots is its Peanuts brand, which is set to benefit big time from a new Peanuts movie set to debut in November. Cole explained that Iconix purchased the Peanuts brand four years ago, not expecting the movie upside. He said he could not be more pleased that a new generation of children will be exposed to Charlie Brown and Snoopy, just as his generation was.

Cramer said that Iconix is a stock that can go much, much higher.

Lightning Round

In the Lightning Round, Cramer was bullish on Valero Energy (VLO), Old Republic International (ORI), Pharmacyclics (PCYC), Pfizer (PFE), Taser International (TASR) and Dun & Bradstreet (DNB).

Cramer was bearish on Plug Power (PLUG), Goodyear Tire & Rubber (GT) and West Pharmaceutical Services (WST).

No Huddle Offense

In his "No Huddle Offense" segment, Cramer asked why investors are still focusing on the negatives, such as interest rates and Ukraine, when there are so many positives on the buyout, breakup and merger front?

Case in point, B/E Aerospace (BEAV), which today popped 9% after the company announced that it's open to "new ways" to unlock value for its shareholders.

Cramer said there are a number of players that B/E could acquire, or be acquired by, but investors must look at the stock's six months of stagnation as an opportunity, not as a negative. Clearly management has gotten frustrated by its inability to move shares higher, and that same inactivity will only pique the interest of potential suitors.

Investors who saw the potential in B/E were rewarded today, and shareholders will likely get more rewards in the near future as well.

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 positions in BAC. GM and JPM.

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