Jim Cramer's Mad Money In-Depth Stock Picks 7/24

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday July 25. Click on a stock ticker for more analysis:

Sitting Pretty: Avon (AVP) and Catepillar (CAT)

While CAT reported a great quarter, the stock got hammered, partly because investors view CAT as a cyclical rather than an emerging markets play, although CAT is "practically printing money in China," according to Cramer. He suggests buying Avon, a stock which he once hated, but which now he sees as "... one of the best turnaround stories that there are." Avon has undergone a major structural "makeover," 57% of its revenue is from emerging markets, and its stock is trading below its 10-year average price-earnings ratio. "All the managers that sold Caterpillar will likely rotate into Avon, but don't expect it turn around by summer's end," Cramer said.

Take Another Slice of Domino's Pizza (DPZ)

What do you do when you buy stock based on Cramer's advice or an analyst's report and it gets smashed? Cramer used Domino's as an example of a stock he touted because of bullish comments from the CEO, but which ended up dropping dramatically. "I think you buy more," Cramer said. "This is not just Cramer refusing to admit he's wrong. At $22 now, I think buying Domino's is right." He likes the low real-estate costs because of the company's emphasis on delivery. Unless pizza goes out of fashion or the market becomes saturated, he wouldn't sell the stock.

Cramer's Prescriptions: Schering-Plough (SGP), Rite Aid (RAD)

People are getting out of cyclicals because of recession fears, and are investing in Big Pharma. Cramer suggests buying SGP now, even though it has jumped 5.7%, because he doesn't see it going lower anytime soon. Cramer identifies this trend as "sector rotation" which happens every time the economy slows down. Cramer also comments that Medicare D is going to encourage people to buy more drugs, and picks RAD as a good speculative play.

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