Jim Cramer's Mad Money Review

Plan of action: buy damaged stocks that are cheap in value. To do this, you need to compare your stock to others that have similar businesses. For example, when looking at Amazon (AMZN), which was killed last week, compare it to Borders (BGP) and Barnes & Noble (BKS). When looking at the values, BKS is the cheapest and most attractive. Look to buy after they report a poor earnings this quarter.
Also, XM Satellite Radio (XMSR) is looking very attractive because it not only hit a bottom, but it is also a great take over target for Sirius Satellite Radio (SIRI) which would allow a monopoly in the satellite radio business.
Lightning Round:
Bulls: NOK, OATS, SO, GSK, MET
Bears: RACK, BC, IP, FDC, ALKS
Cramer believes a recession its currently taking place, ever since May 11th. Sell anything that peaked on this date. Stay away from copper and gold. Possible stocks to look at include: PEP, GIS, MO, WFC. Bottom Line: Stay defensive in this slowdown.

There are certain patterns that the market goes through. You need to find yourself in relation to the current cycle. In the current business cycle, banks should be performing badly. However, Cramer is going against the rules and claiming banks are a good buy. Reason why banks should be bought:

• banks stopped issuing stock and are beginning to buy back
  
• government has allowed those in bankruptcy to be held liable for their debt
  
• banks are valued below market multiple of 16
  
• banks are relying more heavily on their fee based businesses as opposed to interest rates
  

Cramer received a tip on Amylin Pharmaceuticals (AMLN), which could pose a good buying opportunity on Monday after they announce earnings. However, Cramer is skeptical on tips. You can't just take a tip and buy based on that tip, you have to look into it and do some research. Bottom Line: Forget tips, homework pays.

Lightning Round

Bulls
SMDI
UTX
PFE
UL
CL
MO
PG
CHS
FUN
TRN
ZOLT
CWTR
WFMI
SBUX

Bears
MRVL wait for earnings

Concluding thoughts:

• Analysts don't have inside information
  
• Macro thesis generally wrong
  
• VF Corp (VFC) is a great company
  

Side thoughts:

• In the current market conditions, you needs to have a balanced portfolio. Cramer recommends having 1 oil stock, 1 food stock, 1 defense stock, 1 cash stock, and 1 gold stock. This will allow your portfolio to hedge risk.
  
• Look for a Google (GOOG), Microsoft (MSFT), and Amgen (AMGN) rally
  

Cramer came out tonight saying that the word "Brands" makes him quiver. Stocks should not be bought just because they have brands. There are two stocks that have brands but should not be bought. These stocks include: Spectrum Brands (SPC) and Prestige Brands (PBH). These companies were put together by private equity firms who make money at everyone's expense, which is not a good thing for investors.

Reasons why SPC is bad:

• offer a bunch of products that have no business being together
• based on a false concept
• they need zinc for their battery brand, their biggest product, and there is a shortage of zinc
• their costs are going up but can't pass these costs on to customers because they have no pricing power
• they are in a mountain of debt

Bottom Line: Stick with best of breed, stay away from companies like SPC

Reasons why PBH is bad:

• it is competing with best of breed, Johnson & Johnson JNJ
• only thing attractive is their cheap prices and that won't carry the day
• they are deep in debt
• CEO left unexpectedly last year which raises the red flag

Bottom Line: Get defensive, these lousy brands only have hype, buy best of breeds

Cramer likes Altria group (MO) because they are about to split off its Kraft division and their tobacco branch expected to be praised by the congress. Cramer believes it will reach par, which is Wall Street gibberish for 100.

Lightning Round

Bulls
RTK
PEP
KO
ORCL
HAL it will be painful for a while, go long
EZM
BTU
INTC
SBUX

Bears
TZOO
FIZ
ECA
WMT
RTI
ALVR
MEE
NT
MSFT

Cramer reiterated the importance of doing homework. He warned to be careful of media traps. He gave the example of the NY Times reporting the cut in Medicare. Most people panicked once they read this and sold their positions in Medicare stocks. However, the NY Times reported old news, this was reported three months ago by a best of breed analyst, Weakely, which is one of Cramer's favorites. Cramer claims JNJ and STJ are buys despite the medicare cuts.
Bottom Line: headlines won't make you money, do your homework.

How do you know whether a stock that has been going down should be bought or held? There are four questions to ask:
1. How is the stock's sector performing?
2. Is the stock cheap when compared to its peers?
3. How is the stock's management?
4. How does the future look for the stock?

Between Nabors ( NBR) and Ebay (EBAY) which one should be bought and which one should be sold?
NBR passes 3 out of 4 of the questions and EBAY passes only 2 out of the 4 questions. Cramer likes NBR because it's within a good sector, it's cheap, and it has good management. He sees a bright future for this company. On the other hand, EBAY is a dog. It is within a bad sector, it isn't cheap, management is in denial, and the future of the company does not look good.

You must do your own research to avoid losing money. A company's fundamentals are the basic elements. When looking at the fundamentals, which is the better home retailer, Home Depot (HD) or Lowe's (LOW)? Look at:
1. Compare the stocks to the s&p 500, which is the benchmark for stocks, to determine the real price of the stock. Look at its multiple.

• Both HD and LOW are cheap compared to its benchmark (s&p 500)

2. Compare the future earnings estimates, the growthrate determines its multiple.

• HD has almost reached its saturation point in this country
• LOW is better and cheaper because of their growth rate, also LOW's management is better

Lightning Round

Bulls:

SWY

CME

ZZ

OO

NKE

Bears:

CIEN

BWNG

EXP

IRM

MMM

SLM

Gen Electric's (GE) infrastructure is doing well...how can you play that?

Buy:

ABB

CIT

BA

WHR

VAR

Sell:

CMED

HW

Tonight on Mad Money Main Event, Cramer gave life advice that you can take to the bank. What was this divine advice you may ask? It's all about pricing power. Investors should be filling their baskets with stocks that have the position to be able to set prices or price gouge. Not sure what industries or stocks to play? Cramer gave ten stocks that can make you "Mad Money".
1) Commercial real estate in Manhattan, 2 plays: Equity Office (EOP) and Vernado Realty Trust( VNO)
2) Boeing (BA)
3) Valero Energy (VLO)
4) Air Products ( APD)
5) Brush Engineered ( BW)
6) Genentech (DNA) and Celgene Corporation ( CELG)
7) Defense: Lockheed Martin (LMT) and Gen Dynamics (GD)
8) Barge business: Kirby Corporation (KEX)
9) Oil rigs: Transocean (RIG)
10) BHP Billiton (BHP) and Eurozinc Mining (EZM)

Lightning Round

Bulls:
SNE
GME
EL
SHLD
SWB
MO
WWE
CAL

Bears:
AVP
NEM
MSO
JNS

Tonight on Mad Money, Cramer hyped up Walgreens (WAL) as a good buy in this fickled market. He also liked Freeport MCMoran (FCX) in these unstable conditions. The reason why these stocks were are hot is because once the market is done beating them up they will become great buys. Especially in FCX case. Mutual funds have been bringing this stock down because they refuse to stay in the stock while its on its way down and sell. This causes the stock to take a beating, which FCX has done. Once the mutual funds are done beating this stock up, it will become a great takeover target. Bottom Line: The business cycle is here, wait for the cyclicals to drop then pull the trigger home gamers.

Lightning Round
Bulls:
ASH
LIFC
IDT
AL
FWLT
LMT
PNRA
SBUX
HDI

Bears:
FNSR- wait until ATT and Bell South close deal
CRM
CECO
AA
MVL

As of late, the tech stocks have been hurt the most. The question becomes, "What do you do when earnings don't matter?" The answer is, stay away from defenseless stocks. For example, Apple (AAPL) has good earnings and a laundry list of new consumer products; not to mention a great opportunity in the software industry since Microsoft (MSFT) delayed its Vista launch. However, they have no defenses which include, Dividends, buybacks, and guidance. In the current market conditions, shorters are killing these defenseless stocks because they can. All it takes is a few calls to some big firms and then the cold calling begins, that will take the life out of a stock, even one as good as AAPL. However, while these tech stocks are being hammered, look for bottoms. A bottom for AAPL is soon to arise. Bottom line: buy stocks that have defenses (dividends, buyback, guidance).

Cramer concluded the show by interviewing the CEO of Dynamic Materials (BOOM). Cramer crowned this stock as his "orphan stock" on June 2, 2006. Since 2003 this stock has grown 88%. Cramer still likes it this stock and once you do your homework, buy on a pullback.

There has been a bull market in gold and other commodities this past year. Gold has roared up to $600 an ounce this past year and is expected to keep rising. When you think of gold, the stock that comes to mind is Newmont Mining (NEM). It is a big company with a market cap over $23 billion and is one of the only pure-play gold stocks in the S&P 500 or the Fortune 500. They also have a global prtfolio of top-notch properties, first-rate management and robust finances. 60% of its gold production comes from developed countries. This company has discovered more gold than it has mined for four years straight. These reserves are expected to last 16-20 years. They hold 32.4 million acres in prime gold districts. Over the past 5 years, gold has risen 122%, and NEM has risen 186% with it. When gold rises NEM follows. However, over this past year, gold has been up 14% and NEM is down 2%. This failure to outperform could prove to be an opportunity for investors as NEM begins to bring major new production onstream, 3 new, low cost mines. NEM expects to sell 6.1 million to 6.25 milllion ounces of gold, with expenses around $280-$295 an ounce. These costs are expected to shrink by 2008 when low cost production from 5 major new projects kick in. Production in 2008 will rise and by 2009, they could see 2.5 million ounces of new gold, replacing the 1 million ounces that will be lost from aging mines, especially Yanacocha in Peru. All in all, it is a good time to buy gold and a good time to buy Newmont Mines (NEM).