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NEW YORK (TheStreet) -- Some stocks are cheaper than they appear, Jim Cramer said on Mad Money Monday as he sounded off against the professional money managers who trade the market like it's merely a basket of commodities.
Cramer reminded viewers that individual stocks are more important than the averages and indices and they should never be traded in baskets as you would wheat or corn. Cramer cited the battle over Hillshare Brands (HSH), as one reason why doing the homework and investing in individual stocks is better. Shares of Hillshire are up 60% in just a matter of weeks.
Other examples of individual stocks trouncing the averages include MeadWestvaco (MWV), a stock Cramer said he'd buy today now that activist investors are involved. Cramer also cited Apple (AAPL), a stock he owns for his charitable trust, Action Alerts PLUS, as another activist investor success story.
Still need more proof? How about Allergan (AGN), a stock up 89% since just last August or Broadcom (BRCM), a stock up 9% just today on the announcement the company is selling off an underperforming division.
Cramer said all of these stocks have seen big gains but, more important, all of these gains could have easily been gotten with a little homework and the patience to invest for the long term. That's where home gamers have the advantage, Cramer concluded -- the big money managers prefer to invest with sectors and indices, leaving all of these names dramatically undervalued.
Executive Director: Gary Evans
For his "Executive Decision" segment, Cramer sat down with Gary Evans, chairman and CEO of Magnum Hunter Resources (MHR), a stock Cramer said is a more speculative way to play the oil and gas revolution occurring in America.
Evans confirmed the firm Relational Investors just purchased a 15% stake in Magnum because it realized the true value of Magnum's assets in the Utica and Marcellus shale regions. He said Magnum continues to sell its non-core assets and has another $300 million in asset sales planned for the remainder of 2014.
When asked about those asset sales, Evans said that while the company's acres in Canada and in the Bakken shale were productive, in its core Marcellus and Utica acreage it has infrastructure available today and doesn't have to wait to get the oil and gas out to market.
When asked about converting some of the company's assets to a master limited partnership, or MLP, Evans said it is considering such a move for 2015 and estimate it could unlock $600 million to $700 million by creating a midstream MLP.
Finally, turning to production growth, Evans said Magnum is currently pumping 18,000 to 19,000 barrels a day but expects to see 32,000 barrels a day by the end of 2014.
Cramer said investors looking to add a speculative name to their portfolio should consider adding Magnum Hunter.
Cramer on J&J
Putting on his investment banker hat, Cramer offered some advice for the management of Johnson & Johnson (JNJ), an Action Alerts PLUS holding. He said that after Zimmer Holdings (ZMH) announced it's acquiring Biomet and Stryker (SYK) announced it's not buying Smith & Nephew (SNN), the only logical thing would be for Johnson & Johnson to buy Smith & Nephew.
Cramer said while he's pleased with J&J's 69% return over the past two years and its 2.9% yield, the company can certainly do even more for shareholders. He's already suggested the company follow in so many others' footsteps and break itself up in order to unlock value. Buying a company like Smith & Nephew would be almost as good.
Given the new competitive threat from Zimmer, Cramer said J&J needs to bulk up in the medical devices space and Smith & Nephew would certainly fit that bill. Since J&J has $29 billion in cash with most of that cash overseas, picking up the foreign-based Smith would be a perfect fit for tax reasons as well.
Executive Decision: Ed Heffernan
In his second "Executive Decision" segment, Cramer sat down with Ed Heffernan, president and CEO of Alliance Data Systems (ADS), the loyalty card purveyor that's seen its shares rise 544% over the past five years.
Heffernan explained that loyalty cards are all about providing value to both the consumer and the retailer. He said Alliance takes a customer's transactional information, then layers on demographic and other data to give retailers the ability to communicate on a personal level based on interests and need.
That need sparks excitement in the customer, which has translated to 8% to 9% organic growth for Alliance compared to just 2% to 3% for general merchandise here in the U.S. Overseas, Alliance is seeing greater than 20% organic growth.
Why have Alliance shares stalled of late? Heffernan explained Alliance chose to invest in its business, a move that raised some questions among analysts. However, despite the skeptics, growth has not slowed as a result.
Cramer said he likes the Alliance Data story and investors should be buying the stock.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer sounded off against the phrase "not sustainable," a favorite among the bears and one that has been keeping investors out of stocks for far too long.
Cramer explained that it works like this: The market gets a terrific piece of news, like the strong Chicago purchasing managers report on Friday, and the bears immediately retort that it's "not sustainable." Citing the weather or some one-time anomalies, the bears have a litany of reasons why good news won't be good news for long.
Cramer called this trend "faux analysis" and it has been cropping up in all sorts of macro and micro data. No matter what the metric, if it's good it's "not sustainable," but if it's bad it must certainly be the truth.
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-- Written by Scott Rutt in Washington, D.C.
To email Scott about this article, click here: Scott Rutt