Cramer's 'Mad Money' Recap: Staying Cautious for Coming Week's Earnings

Then there's the growth aspect. CarMax has 110 locations but ultimately plans for 300, expanding its footprint by 10% a year. AutoNation, on the other hand, has new car franchises, which can't be built without approvals from the manufacturers.

Cramer said shares of AutoNation are also closely held, making them not trade as well as Carmax, meanwhile CarMax just announced its first share repurchase program.

So when it comes to domestic autos, Cramer said that CarMax is the way to go.

Lightning Round

In the "Lightning Round," Cramer was bullish on Chipotle Mexican Grill (CMG) , Alexion Pharmaceuticals (ALXN) , American International Group (AIG) and Union Pacific (UNP) .

Cramer was bearish on Palo Alto Networks (PANW) , Zipcar (ZIP) and Trinity Industries (TRN) .

Homework

In his "Homework" segment, Cramer tied up a few loose ends. He said Omega Healthcare (OHI) may have an 8% yield but investors need to wait for more clarity on the company's reimbursement rates. Cramer said InvenSense (INVN) has seen its stock slide in recent months so he's not a fan.

Cramer was also not a fan Greenway Medical (GWAY) , with that stock trading at 37 times earnings.

Finally, Cramer issued a mea culpa for Dynavax Technologies (DVAX) , a speculative biotech that was cut in half, down 47%, after the FDA asked for more safety information on its latest offering.

Cramer said Dynavax shows the downside of speculating in biotech and he got this one wrong. Since the FDA did not reject Dynavax's drug, Cramer said he wouldn't be a seller down here, as the company has plenty of cash to survive and lots of promising prospects.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer educated investors on what the term "oversold" really means. Using Apple (AAPL) , a stock which he owns for his charitable trust, Action Alerts PLUS, as his example, Cramer explained why the stock fell sharply to just $504 a share, only to snap back sharply to $529 a share later in the day.

Cramer said often times large sellers of a stock will simply overwhelm the buyers, as they have been in Apple. As the sell orders from big shareholders start to flow, others investors will follow suit and short the stock, betting that the flow will continue to be negative.