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NEW YORK (TheStreet) -- Most stocks are trapped within their index or sector, Jim Cramer told his Mad Money viewers Monday. But using only comparative analysis doesn't allow investors to think big -- and that can leave big gains on the table.
Case in point, Netflix (NFLX), a stock that rallied another $20 a share today on yet another analyst upgrade ahead of the company's earnings. Using traditional analysis, investors may conclude that Netflix is ridiculously expensive compared to where shares traded just a few months or years ago. But could it be that Netflix shares are ridiculously undervalued based on where the coming will be a few years from now?
At current valuations, Netflix is valued below CBS (CBS) and Discovery Holdings (DISCA). Unlike CBS or the Discovery Channel, Netflix is an entertainment juggernaut, the go-to destination for all our entertainment needs. Neither CBS nor Discovery introduced us to binge viewing, but Netflix did -- and who knows what it'll think up next.
Using the four walls of the spreadsheet canvas are how many investors learned to value stocks. But whether it's Netflix or Twitter (TWTR), a stock Cramer owns for his charitable trust, Action Alerts PLUS, or Receptos (RCPT) or HomeAway (AWAY), some stocks beckon to be valued differently.
Investors must always leave room in their portfolios to think bigger, as Netflix proved today, Cramer concluded.
Executive Decision: Kevin Davis
For his "Executive Decision" segment, Cramer sat down with Kevin Davis, president and CEO of Performance Sports Group (PSG), the sports equipment maker that just posted a 3-cents-a-share earnings beat with a big rise in revenue.
Davis said his company provides innovation in every product line it sells whether it's hockey, lacrosse, baseball or softball. He touted the company's new Easton Torq softball bat as one such innovation. The bat includes a rotating handle to help hitters stay in the sweet spot longer.
Davis was also excited about his company's opportunities for lacrosse equipment. He said that sport is coming on strong and attracting a lot of new players. Lacrosse sales were up 19%, he noted.
Cramer said that while Performance Sports Group is a thinly traded stock, it is a very exciting company.
Time to Sell Qualcomm?
With Qualcomm (QCOM) announcing that it lost the contract to provide chips for Apple's (AAPL) next iPhone, it's pretty clear that investors should be selling Qualcomm and buying something else. Or is it?
That simple logic is how most money mangers tend to think of the stocks in their portfolios. But as Jana Partners proved today, they're not most money managers. In fact, Jana used the weakness in Qualcomm to take a $2 billion stake in the company as a platform to invoke change and make money for shareholders.
Cramer praised Jana for making the bold move to apply pressure to management rather than just selling its shares and moving on. More money managers should take a page from Jana's playbook, he noted.
Red-Hot Data Companies
With so many mergers and acquisitions hitting the markets recently, investors may have missed that Informatica (INFA) is being taken private via a $5.3 billion leveraged buyout. Why is this deal worth mentioning? Because the enterprise infrastructure sector is red-hot, and Informatica won't be the last deal to be made in this space.
With the Internet of Things burgeoning, companies like Informatica, which deals in data integration including the cloud, big data and mobile devices, will be the ideal leveraged buyout candidates. That's why Tibco (TIBX), Riverbed (RVBD) and Compuware (CPWR) have all seen similar deals in recent months.
Now is the moment for funds to pounce because low interest rates make for cheap borrowing, but that cheap money window may soon be closing as the Federal Reserve prepares to raise interest rates.
Companies like Citrix Systems (CTXS) or Blackbaud (BLKB) may be next on the takeover list, with Cramer reiterating his recommendations on RedHat (RHT) and Cisco Systems (CSCO) as two other ways to play this emerging trend.
In the Lightning Round, Cramer was bullish on EOG Resources (EOG), TG Therapeutics (TGTX), Federal Realty Investment Trust (FRT), Ventas (VTR), Northrop Grumman (NOC), Kohlberg Kravis Roberts (KKR), Blackstone Group (BX), Phillips 66 (PSX) and Advaxis (ADXS).
Off the Tape
In his "Off the Tape" segment, Cramer sat down with Al Goldstein, CEO of the privately held Avant, a new breed of online lender that makes instant loans between $1,000 and $35,000.
Goldstein explained that Avant is creating better lending products for consumers by using proprietary machine-learning algorithms to instantly match people with unique products suited just for them.
Avant has already raised $350 million in funding and is upending traditional face-to-face lending with realtime, mobile options that don't require lengthy approvals.
Cramer said Avant is just another example of exciting innovation and a glimpse into our technological future.
To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.
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