Jim Cramer's Real Money Radio Show Recap 5/18

Recap of Jim Cramer's radio show on Thursday, May 18. Click on a stock ticker for more analysis:

General comment: GM's Comeback

Although Cramer has been critical of General Motors (GM) for a long time, he says that now it is time to buy, as the stock is bottoming out. First, the company sold off a substantial portion of its finance arm, but can still participate in the upside of that unit, and is creating a better product. Moreover, GM has taken on Jerome York, who has the reputation of turning around major companies, such as IBM (IBM) and DaimlerChrysler (DCX). Cramer does not believe that this stock will go up in a straight line, but will have more ups than downs.

Caution in the Market

Cramer discussed how last week's downturn, the largest stock market decline in three years, was caused by the Federal Reserve's decision to raise interest rates to 5%. When the Consumer Price Index indicates rising prices and impending inflation, interest rates go up, and investors bail, causing a dramatic fall. However, this is a good opportunity to get in; "Think of it as a one-day sale at the mall," said Cramer. There was a surplus of stock, because people were trying to get rid of it all at once.

Cramer says that a smart investor will buy stocks that fell even though the financials of the company are strong. He suggests buying incrementally to limit risks, and to avoid natural gas and other commodities right now. "You have to understand the fundamental rules of trading," he said. "Buy weak. When you get strength, you have to let some go."

Bullish calls:

*Goldman Sachs (GS): Although the stock has fallen to $147, Cramer has been touting this stock, since it was at $90, and he believes that it may reach $225. He says that this stock will not go up in a straight line, but it will increase, and some patience is required.

*Abercrombie & Fitch (ANF): Cramer is very bullish on ANF.

*Schering-Plough (SGP): Cramer prefers SGP over Merck (MRK), because its management is better, and that it "represents all the upside of Merck without the legal downside."

*Dow Chemical (DOW): This company will benefit from the natural gas slide, since it was paying around $14 per million British thermal units, and now it is paying only $5. Cramer predicts that "People will be shocked by the earnings from this deeply neglected company."

*Prudential (PRU) and AllState (ALL): Cramer likes these stocks.

*Sears (SHLD): Cramer owned this stock when it was at $40. It has gone up to $159, and he believes that it is not finished going up.

Neutral/Bearish calls:

*Burger King (BKC): This stock has recently gone public. Cramer does not think it is secure, since it rose to $18 and immediately dipped down again. He likes to see companies who sell stock and then make the money work, but it seems that the owners are just taking the money out, which does not bode well.

*Target (TGT): has not been performing up to its usual standard lately.

*Wal-Mart (WMT): This stock is "moving upscale," but it is losing some of its momentum. Cramer has faith in WalMart management, and expects it to recover, but not in the near future.

*Goldcorp (GG): This stock slid to $27, since gold has taken a beating. This company did not report a good quarter. However, the company just bought some assets from Placer Dome (PDG), and Cramer suggests holding on to GG in case gold goes up again.

*Valero (VLO): Cramer notes that this stock is stuck on a high and should not be purchased, but he suggests hanging on to the stock, because it might rise a bit more.

*Seagate (STX): This stock closed up on a bad day, and the future looks good, but in the short term, Cramer recommends against buying Seagate, because its disk drives are installed in personal computers. This is a disadvantage now, because Microsoft (MSFT) is late with its new Vista system.

*Pfizer (PFE) and Merck (MRK): "Big pharma has very little momentum."

*Metlife (MET): Cramer liked the last CEO, but does not know enough about the new CEO to recommend this stock.

More: Cramer's latest stock picks, including: Mad Money Recap, Lightening Round, Stop Trading and his Radio Show.