Cramer’s Top Picks of the S&P Bottom

Cramer is always looking for stocks that have been knocked down too far and are poised to turn around. So on Monday, he turned his attention to what he calls the “dogs of the S&P 500” — the worst performing stocks in the index. And he found some names he thinks are worth buying.

One of those is Monster Worldwide, the parent company of online employment service The “Mad Money” host admitted he got behind MWW too early back in April, but he thinks the time is right now. Recent employment numbers are “rearview,” he said. It’s the future that matters.

(Slideshow—Cramer: Buy This, Not That)

“What matters to Monster is where the employment picture is going, not where it’s been,” he said. “While most U.S. economic data got off to a weak start in June, we got several more positive indicators later in the month ... which makes me feel like the transitory weakness is behind us.”

Cramer also thinks with the stock down 39 percent in the first half of the year, the short interest is high. And if the short-sellers turn out to be wrong, you could get a nice squeeze as they buy all the stock at the same time to cover their positions.

What’s more, he said Monster is reinventing itself and could make a terrific takeover candidate for LinkedIn , Yahoo! or eBay.

Another poor performing name on Cramer’s radar is Janus Capital. The company has transformed itself from a company known primarily for technology mutual funds into a "solutions firm" offering diversified products and advice.

Down 27 percent the first half of the year, the stock was hammered because it’s a stock-centric asset manager and weakness in the broader market made it harder for them to bring in new investors. As money comes back into the market, Cramer thinks this stock will be a bargain.

Janus Capital also has a new management team that has cleaned up the company’s balance sheet. It has generated a lot of cash and has boosted its dividend, which now yields two percent.

But Cramer’s top pick from the bottom of the S&P barrel is Alpha Natural Resources, the largest supplier and exporter of metallurgical coal in the U.S. The stock was down 25 percent in the first half of the year, but he thinks it will come back with a vengeance because “coal is king.”

Remember, Cramer believes coal is all about international demand. Fast-growing emerging markets need coal to produce electricity. Plus, with oil prices still high, coal is extremely cheap.

ANR, Cramer’s third favorite coal play, sold off because of macro-economic worries. But the company is still in great shape, and has a clean balance sheet. And while the company delivered disappointing earnings in May, it expects to do better over the rest of the year. Alpha has already signed a new contract for almost 3 million tons of metallurgical coal for 2011 delivery. It also took over Massey Energy last month, which Cramer called a “brilliant move.”

Alpha Natural Resources “doesn’t deserve to be a dog of the S&P,” Cramer said, “and I don’t expect it to stay one by the end of 2011, unless it’s a greyhound.”

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