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Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Friday May 21

Campbell's Soup (CPB), Diamond Foods (DMND), Heinz (HNZ)

Friday was an "excruciating rollercoaster day" after a "train wreck of a week;" but the Dow finished up 125 points and the S&P 500 increased 1.5%. In such a confusing and volatile market, one thing is clear; "We are still hostages to world governments." Therefore, as part of Cramer's game plan for the coming week, he discussed what government leaders need to do to improve the world economic situation:

1. Stop the Financial "Munich Pact." Cramer had harsh words for Senator Blanche Lincoln's proposed reforms that would restrict banks from trading profitable swaps and would give market share to European banks on American soil. He urged Congressman Barney Frank and President Obama to speak out against these destructive proposals and prevent them from passing. Cramer also urged the President to concentrate his energies on resolving the unemployment problem before pushing through more reforms of his own.

2. The SEC should ban "ETFs of Mass Destruction." Double and triple leveraged short ETFs wreck havoc with stocks and should not be traded.

3. European Interest Rates Should be Zero. Jean-Claude Trichet, head of the European Central Bank should copy Ben Bernanke and eliminate interest rates until Europe recovers. Cramer applauded Treasury Secretary Tim Geithner's decision to go to Europe to give advice and wake up "Rip Van Trichet." Germany, France and the rest of Europe should then decide what to do about PIGS (Cramer has removed the additional "I" for Italy, because he thinks Italy's worst problems are behind it.)

4. Need to hear from China that its reversal this week was because of the Chinese government trying to put the brakes on the economy to create a soft landing, and not for an underlying fundamental reason.

5. Keep an eye on recession stocks. If the government leaders do what they need to do,it will be worthwhile for individual investors to keep an eye on stocks that are "tells" on the economic situation. Campbell's Soup (CPB) reports Monday and is a fairly decent dividend stock with a 3.1% yield, but Cramer wants to know why CPB has been underperforming. Heinz (HNZ), which reports Thursday, has a respectable dividend of 3.7% but is 60% levered to overseas markets. Cramer wants to hear from Heinz about the effect of the strong dollar and the weak euro on sales. Diamond (DMND) Foods, reporting on Thursday, has a higher margin and is a faster growing company than the other two. Cramer added the caveat that none of these earnings are significant unless there are moves by government leaders toward economic reform.

KKR Financial Holdings (KFN)

In this tough environment, speculative stocks should carry a strong dividend as a cushion. Camer recommended KKR Financial Holdings (KFN), which is the debt management platform of KKR, a private equity firm. KFN is structured like a REIT, although it doesn't own actual real estate, but manages the debt of commercial real estate companies. Cramer thinks the stock is undervalued and is run by executives who "really know what they are doing."

In this kind of business, like a hedge fund, the most important thing to know is who is in charge; Cramer says CEO Bill Sonneborn is "incredibly sharp, one of the best in the business" from his years at Goldman Sachs. His purchase of 50,000 shares of his own company is a vote of confidence, and another former Research Director at Goldman Sachs, Leon Cooperman of Omega Advisors, just bought 520,000 shares.

If KFN is so good, why is it trading at just $7? During the credit crisis, the stock was considered a "goner" and traded at a mere 75 cents. KKR runs KFN, and while Cramer doesn't usually like externally managed companies, he trusts KKR and thinks KFN could go public. In addition, KFN is down 18% from its $9.19 high on the European contagion, but its book value is $8.31. While Cramer thinks it is possible the stock may go lower in the short-term, it is a good idea to buy it now well below book value and to reap the benefits of the 5.3% dividend.

KFN reported a great quarter April 29th and beat earnings estimates by 4 cents per share. Its book value rose 13% over the course of the quarter on improving credit conditions, falling defaults and a 75% increase in cash flow.

Mad Mail: JA Solar (JASO), First Solar (FSLR), Freeport McMoRan (FCX), Bristol Myers (BMY), Lin Energy (LINE), Con Edison (ED)

Cramer told one viewer that the reliance of solar companies on government subsidies and oil at $65-$70 make JA Solar (JASO) and First Solar (FSLR) "uneconomic." Although he doubts the Australian mining tax will pass, the possibility that other countries might propose similar taxes makes him wary of Freeport McMoRan (FCX). Cramer urged another viewer to reduce positions in Con Edison (ED), Linn Energy (LINE) and Bristol Myers (BMY) by a fourth and to buy them lower.

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Jim Cramer was up 31% in 2009. Click here now to trade alongside him.

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Source: Cramer's Mad Money - 5 Things World Leaders Can Do to Save Your Portfolio (5/21/10)