Jim Cramer's Mad Money In-Depth Stock Picks 7/31

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Monday July 31. Click on a stock ticker for more analysis:

Off the Books: Amazon.com (AMZN), Borders (BGP) and Barnes & Noble (BKS)

Although Cramer often recommends picking up crushed stocks, this strategy is only advisable for companies with good fundamentals and potential growth. He cites AMZN as an example of a stock which has understandably declined, and, selling at 44 times earnings compared to BGP at 12 and BKS at 15, it is not so cheap. Cramer notes that AMZN has not been successful in expanding beyond books. Although he prefers BKS, which is buying back stock, he believes that they will report a lackluster quarter, and would hold off buying until then.

Healthy Skepticism: AT&T (T), XM Satellite Radio (XMSR), Sirius Satellite (SIRI)

Cramer recommends skepticism when listening to analysts, saying that they loved AT&T at its 20s and 30s, but when it became a good takeover option at $6, they jumped ship. Cramer sees the same trend with XMSR, a stock he disliked at its 20s, but which looks like a good purchase for Sirius (SIRI) at $11.60. He observes that CIBC analyst Jason Helfstein has fled from XMSR, and since he believes that this analyst has misjudged XMSR in the past, Cramer suggests doing the opposite. Atlhough XMSR has substantial debt, problems with the FCC and challenges from iPod, he believes that SIRI will still buy it, since the fierce competition is hurting both companies and SIRI would become a monopoly.

Staying Defensive: PepsiCo (PEP), General Mills (GIS), Heinz (HNZ), Altria (MO) and Wells Fargo (WFC)

The Fed's consistent interest rate hikes remind Cramer of what happened 5 years ago, when defensive and financial stocks peformed well for 6 months. He says that according to this trend, PEP, GIS, HNZ, MO have 14 more weeks of good performance, and recommends WFC as a good financial play.

CEO Interview: Mike McCallister, Humana (HUM)

Cramer commented on Humana's excellent quarter and asked how HUM is benefitting from the Medicare Advantage program. "Our approach all along has been to grow the PDP program, which is just the drugs, because we believed over time the opportunity to move these people into Medicare Advantage was going to provide a longer-term growth opportunity for us," McCallister said. Although 82% of seniors already have coverage, McCallister said the company is employing aggressive marketing strategies to reach new customers. Cramer says HUM is a good stock to buy instead of Aetna (AET) and Cigna (CI).

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