Jim Cramer's 'Mad Money' Recap: Stick With the Best-of-Breed Stocks

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NEW YORK (TheStreet) -- Stop playing themes and start investing in best-of-breed stocks. That was Jim Cramer's advice to "Mad Money" viewers Thursday.

Cramer said if investors only read the headlines, they'll never understand the markets. One day tech stocks are good, the next they're bad. Oil is good, but then oil is bad. Housing is horrendous, but then it's fabulous.

That's why it's more important than ever to pay attention to individual companies, in particular those that are executing well. Investors only need to look at Caterpillar to see what happens when things go wrong. With construction on the rise and China recovering it should be all systems go at this heavy equipment maker, but CAT still managed to miss the numbers and cut estimates.

Cramer said a better way to play construction would be with United Rentals and China with Cummins .

Other examples of bad execution include Diamond Offshore in the oil patch and Union Pacific for the rails. Both failed to deliver while rivals Ensco , a stock Cramer owns for his charitable trust, Action Alerts PLUS, and Norfolk Southern delivered the goods.

From airlines to chemical to even the home builders, Cramer said some companies get it while others clearly don't. Which is why investors need to continue doing their homework and stick with only the best-of-breed players.

Executive Decision:

In the "Executive Decision" segment, Cramer once again spoke with Ellen Kullman, chair and CEO of DuPont , the chemical maker that delivered today a four-cents-a-share earnings beat on better-than-expected revenue while reaffirming guidance and announcing the spinoff of its cyclical performance chemical business. Shares of DuPont currently yield 3% and are up 15% since Cramer last spoke with Kullman on June 25.

Kullman said DuPont is now splitting into two world-class companies. One will be a company dedicated to new and novel applications of science, while the other will remain a strong, industry-leading chemical company with high margins.

One example of science in action is DuPont's insecticide business, which now tops $900 million in annual sales after just five years. Meanwhile, on the chemical side of the house, Kullman said she sees the market for TiO2 stabilizing.