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Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday May 24.

Johnson&Johnson (NYSE:JNJ), Perrigo (NYSE:PRGO)

For the third time in 9 months, Johnson&Johnson's (JNJ) McNeil segment has had to recall children's liquid pain relief products. While this sounds like a major blow for JNJ, the company stands to lose only $200-$300 million compared to its total $62 billion in sales. Perrigo (PRGO) will gain much more than its giant competitor will lose by the recalls; after the Tylenol recall, Perrigo gained 10 market share points, and it is estimated that 50% of customers who started buying Perrigo's products as the result of the most recent recall won't bother switching back.

"If Perrigo can scoop up even a large fraction of JNJ’s lost sales,” Cramer said, “then that would be a big break for this company.” This opportunity has not yet been priced into Perrigo's stock, Cramer notes.

Even without JNJ's problems, Perrigo seems to be on its way up. The stock rose on the announcement it would acquire infant formula producer, PBM Holdings and has dropped to the "steal" level since. The company beat earnings estimates by 13 cents when it reported, and European exposure for Perrigo and PBM is less than 10%. Cramer would go buy Perrigo before it receives an upgrade.

How Bad Would a Greek Default Be?

The fact that the Dow fell 127 points on Monday after rallying 125 points on Friday reflects the uncertainty of the current economic climate. Some view the possibility of Greece's default on its $350 billion debt as a disaster that will cause yet another global recession. Others think the effect of Greece's problems on the U.S are minimal. Cramer thinks there is some truth to both theories. While the U.S. was moving up to regain its title as a global economic power prior to the European contagion, the sad fact is "their negatives outweigh our positives...If Athens defaults on its debt,” Cramer said, “it would be ruinous.”

What is most disturbing is the European problem could have a profound effect on our economy, and yet the U.S. is powerless to control the crisis. The solution lies in the hands of European officials, and unfortunately, there is significant discord between European powers concerning the best course of action. Germany's introduction of a ban on naked short-selling is a radical move that shows disunity and perhaps misunderstanding of the right priorities now.

Cramer outlined three things that need to happen before the situation improves: 1) Europe must unite to prevent a Greek default 2) the U.S. should concentrate on growth and employment 3) China should be involved in solving the global problems. Cramer predicts all three will happen, and noted that the American markets are far too negative. He would continue to play it safe and buy more accidental high yielders and defensive stocks. His potential downside target for the Dow is 9,500.

Eureka Moment: Goldman Sachs (NYSE:GS), Citigroup (NYSE:C), Sprint Nextel (NYSE:S)

If stocks are in the single digits, there is probably a very good reason for it. No CEO wants to see his company's stock at under $5, and few analysts would want to stake their reputation on such companies. If this is the case, why did Goldman Sachs (GS) go out on a limb and upgrade Citigroup (C) at $3.78 and Sprint Nextel (S) $4? The only possible answer is they must be doing better. In fact, the two companies must not only be doing well...they must be doing really well.

Sprint is currently losing less customers and its "churn rate" is declining. It is also an attractive takeover target. Citigroup is seeing the largest drop in non-performing loans of any of the banks, and Cramer says its target of $4.50 is too conservative and would set it at $5. The U.S. government's selling of Citigroup stock puzzles Cramer, who says there are a lot of "unanswered questions" about this, but he added Citi keeps looking better and better.

CEO Interview: Tom Ward, SandRidge Energy (NYSE:SD), Arena Resources (ARD)

Cramer made a bullish call on SandRidge Energy (SD) in March and thought it would be an ideal takeover targer, but since then, the company has since acquired Arena Resources (ARD), reported a disappointing quarter and is down 27% to its 52-week low while crude prices have declined just 13% over the same period. In addition, management has lowered SandRidge's production forecast, and says finding costs will increase 6%. However, Cramer thinks the worst might be over for SandRidge's stock price and is positive about the Arena acquisition, which will raise the company's oil-to-natural gas exposure another ten percentage points. In addition, Cramer is interested in the company's extensive reserves in Texas's Permian Basin and Oklahoma.

CEO Tom Ward said that SandRidge enjoys flexibility and balance between natural gas and oil, and has increased its oil exposure to 70%. Ward discussed the company's clean balance sheet and the fact that it has no debt until 2014. Ward admitted he was puzzled by the negative response of analysts to the recent quarterly report, since they were told beforehand that SandRidge was planning to slow production because of lower prices and was cutting back on capital expenditures. Cramer concluded that while he liked SD at $7 a share, he likes it even better at $5.

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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 - Who Benefits From J&J's Latest Recall? (5/24/10)