Cramer's 'Mad Money' Recap: An Irrational Stock Market

Tickers in this article: AA AAPL AMZN ARII ARR CBI CSX DAN DD DUK EOG ETN F GBX GNW GOOG HFC HTA IBM ISIS KEY LNCO LNKD MAS MS NAT NSC NUAN PAG PFE RAIL SAN SWHC TRN TRV VOD WPRT WR
Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener .

NEW YORK ( TheStreet) -- There are exceptions to every rule, Jim Cramer told his "Mad Money" TV show viewers Wednesday. When it comes to the stock market, everything is most definitely not rational.

Cramer said the industrial stocks continue to soar despite having nothing new to say. Meanwhile, Johnson & Johnson (JNJ) saw its shares barely dinged despite cutting estimates.

In the tech sector, investors continue to pile into stocks like Amazon.com (AMZN) and LinkedIn (LNKD) , two stocks that don't seem to be constrained by traditional metrics, said Cramer.

And then there's Apple (AAPL) , a stock Cramer owns for his charitable trust, Action Alerts PLUS. Apple's in-line results were seen as a disappointment, said Cramer, sending its shares down 8% in after-hours trading.

Despite having $137 billion in cash and pretty good earnings, the markets were focused on gross margins, which came in below consensus at 38.6%. The number of iPhones sold was also a tad below what Wall Street was expecting. Are sellers just taking profits or are they worn down by the stocks' total lack of momentum?

Cramer said it doesn't matter what the reason, but investors need to remove the emotions from Apple and realize that it's just another stock, one that will likely deliver decent, but not spectacular, earnings from here on out. Apple has a ton of potential, he said, but under Tim Cook we have yet to see any blockbuster new products that don't cannibalize existing ones.

"Don't let this one stock blind you to the other opportunities the market is offering," Cramer concluded.

Know Your IPO

In the "Know Your IPO" segment, Cramer highlighted Zoetis, the animal health division of Pfizer (PFE) , which is expected to offer 86.1 million shares next week between $22 and $25 a share.

Cramer said that Zoeits plays into the $22 billion animal health market, in which it currently has a 19% share. The new company makes everything from vaccines to feed additives and will derive 65% of its revenue from livestock and the remaining 35% from horses and household pets.

Cramer noted that unlike the human health-care market, most animal patient bills are paid out of pocket. When it comes to drugs and vaccines, there is far less generic competition. Given the stock's expected valuation and growth rate of 6%, Cramer said he expects Zoetis to have 20% upside from its IPO.

So should investors sell Pfizer to buy Zoetis? Cramer said absolutely not! Pfizer will retain 80% of Zoetis after the IPO and will be using the proceeds to reward shareholders with a sizable stock buyback. In addition, the split companies will both receive higher market valuations as individual companies are easier for analysts to value.

Usage of this site is governed by TheStreet's Terms of Use available here. Information collected on this site may be collected by TheStreet and OC Register. TheStreet's use of information collected on this site will be governed by TheStreet's privacy policy available here. OC Register's use of information collected on this site will be governed by OC Register's privacy policy available here. If either TheStreet's or OC Register's privacy policy have provisions that are more restrictive than the provisions of the other party's privacy policy, such more restrictive provisions shall not apply to such other party.

Copyright © 2012 Orange County Register Communications. All Rights Reserved.
Site Help | Site Map