Fairy tale stocks ready for a big turnaround

Jim Cramer believes in fairy tales now—at least when it comes to the stock market. He saw five companies that represented tales of hope on Wednesday that could lead investors to some serious gains if they follow through.

"Turnarounds are like fairy tales, they rarely come true. Yet today's action was all about the fairy tale turnarounds that look like they could become reality, and the market cheered them," the "Mad Money" host said.

It is a rare occasion when a company can successfully pull off a turnaround but if they do, the payoff can be huge. The extraordinary rate of failure is the exact reason why Wall Street is littered in failed turnarounds from the past.

Just take one look at tech companies that have been pushed aside because of new technology surrounding computers and handsets. Think about Grant's, Radio Shack, Circuit City or Borders, which have all fallen to the wayside.

There were five companies that reported earnings on Wednesday and caught Cramer's eye as being primed for a comeback: McDonald's, Yum! Brands, Coca-Cola, Yahoo and IBM.





The electronic McDonald's sign in Times Square, New York
Scott Mlyn | CNBC
The electronic McDonald's sign in Times Square, New York

Starting with McDonald's, ever since Steve Easterbrook took over from Don Thompson as CEO in January, investors have been filled with hope that this hamburger chain could light a fire again to bring out more value. Easterbrook not only delivered numbers that equaled what analysts were look for in sales, but he also admitted that something will be revealed May 4, giving even more hope to investors.

The growth engine was revved up for Yum Brands, too, thanks to KFC. Yum rallied on a nice surprise earnings from KFC of 80 cents per share, versus the 72 cents expected. Additionally, the company announced that it expects the second half of the year to gain strength, which had Cramer drooling with thoughts of a comeback.

Coca-Cola didn't report stellar unit growth numbers, either. However, Cramer is betting that its stake in the growth of both Monster Beverage and Keurig will boost the bottom line.

"I think we have to look at Coca-Cola as a company that is turning around a battleship, focusing on profitability, cash flow, cost cutting and better advertising, including a ton of it on the Web. It's got some time to go, but it's succeeding so far on the journey," Cramer said.

Then there are the two problem children, Yahoo and IBM. Yahoo did report a big miss, along with some horrible advertising numbers, and the stock was crushed in after-hours trading. But then CEO Marissa Mayer said she was going to find a way to monetize Yahoo Japan to return money into shareholders' pockets.

In Cramer's perspective, when he considers how much money could come from Yahoo's huge stake in Alibaba and when he adds in Yahoo Japan, this company is still cheap. So, you might not like Yahoo's progress, but it does have a great balance sheet and can make money from Alibaba and Yahoo Japan.

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The toughest of them all is IBM, which is has been racing to compete in the cloud, social, mobile, and connectivity areas. Cramer saw some light of hope with this company, as it has been making progress while buying back stock and could increase its dividend.

"All of these companies have one thing in common: They are hard to kill…I think these can succeed, some more than others, but they all make sense to speculate on, even after they've made pretty big moves," Cramer added.

Ultimately, these five stocks have proven that they are fighting their way back into glory. Cramer encourages investors to keep an open mind and let the past be the past, so that the fairy tales can come true.

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