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Cramer's 'Mad Money' Recap: Bubble? What Bubble?

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NEW YORK (TheStreet) -- Has the market become ridiculously overvalued? Jim Cramer tackled the bear argument that the markets have entered bubble territory on his "Mad Money" TV show Thursday.

He said the bears are right... partially.

When looking at the markets overall, the S&P 500 only trades at 15 times earnings. That's the index's historical average -- no bubble there, Cramer said. Likewise with the Dow Jones Industrial Average, which trades at 14 times earnings, also near its historical norms. There's also no bubble when it comes to stocks versus bonds, noted Cramer, as bonds still pay next to nothing while stock dividends continue to enjoy favorable tax treatment.

So where are these bubbles the bears keep citing on TV? Cramer said he's worried about the utility stocks, for one, as that sector is now at 4.5 year highs, a level that's simply not sustainable once the Federal Reserve slows or stops its bond buying.

Then there are other groups that have have miraculous runs, mainly the food and beverage names and the drug stocks. Cramer said he sold Bristol-Myers Squibb for his charitable trust, Action Alerts PLUS, as that stock now trades at 2.5 times its grow rate and leaves little room for error when the company reports later this month.

The upside in these sectors is limited, said Cramer, because the stock prices have run and their yields have fallen, making them less attractive overall. So while there may not be a bubble in the markets as a whole, these are some of the areas investors need to be cautious about.

Sell Block: Teva

In the Thursday "Sell Block" segment, Cramer focused on a drug stock investors should avoid: Teva Pharmaceuticals , the world's largest generic drug maker.

Cramer said the generic drug business was a thing of beauty back in the 1990s and 2000s as companies like Teva took the process of formulating generic versions of branded drugs to an art form, sometimes offering them just months after their branded counterparts lost their patent protection. But that golden age is no more, said Cramer, because there are fewer blockbuster drugs coming off patent and competition to make the generics has increased.