Jim Cramer’s “Mad Money”
Cramer said Healthcare stocks, a group hated all year, stand to benefit from the upcoming Medicare spending bill. According to Cramer, the new Medicare spending bill now provides incentives for using electronic prescriptions, as opposed to paper, through 2010, and mandates electronic prescriptions thereafter. The provisions, now in both the House and Senate versions of the bill, will be a windfall for Allscripts (MDRX), a company with a lock in the e-prescription business, he said. Management has proclaimed their electronic healthcare platform is ready for prime time, after recent bugs in the platform. Cramer said now is the time to invest in the company, especially with electronic prescriptions expected to grow 400% in 2008. Allscripts trades at just 18x its earnings, despite a 23.5% long-term growth rate. Cramer expects the company will soon return to a 25 multiple on its 2009 earnings, which translates into a 44% gain in the stock. “Allscripts is the one I want you to own,” he asserted. Another Medicare spending play Cramer recommended was ResMed (RMD), one of the two biggest companies making equipment to treat sleep apnea. With a 40% share of the market, ResMed enjoys a happy duopoly with Respironics, a company recently acquired by Philips Electronics (PHG). Cramer noted that beginning this fall, Medicare will make it easier for patients to obtain sleep apnea equipment. With the sleep apnea market only 10% penetrated, Cramer said the growth potential for ResMed is significant, with or without competitive bidding. Cramer expects ResMed could see $50 to $53 a share, translating into a 30% gain from current levels. He called the shares “way underpriced.” Next, Cramer recommended Bristow Group (BRS) as another play on increased drilling, both on and off-shore, in the U.S. Bristow provides helicopter services to transport manpower to off-shore oil platforms. With more off-shore rigs heading to deeper waters, Cramer says demand for Bristow’s services should increase over time. Cramer said Bristow’s private placement of additional shares on June 19 hurt the common stock, but with money now in hand to purchase 19 additional choppers, the upside of the deal will be realized quickly. MAD MAIL: Watts Water (WTS) Cramer said his recommendation on November 2, 2006 was wrong, adding he needs to see a bottom in residential housing before he can recommend the stock again. Cramer is still bullish on Hornbeck Offshore (HOS), Anadarko (APC), Nabors (NBR) and Transocean (RIG). SUDDEN DEATH: (Bullish) NFX and INTC. (Bearish) SAP. LIGHTNING ROUND: (Bullish) UTX, HON, EXC, DUK, ED, VZ, T, HEV, SQM. (Bearish) PBY, BW, STI, OI, WB, EMKR.
Fast Money position recap
First Moves: Tim likes TSL, Guy likes GM, Karen likes MRK, Pete likes shorting PRU.
Adami Owns (C), (AGU), (BTU), (GS), (INTC), (MSFT), (NUE); Finerman Owns (GS); Finerman’s Firm Owns SPX Index Puts; Finerman’s Firm And Finerman Own (C) And (C) Leaps; Finerman’s Firm Owns (MSFT), (SUN), (TSO), (VLO), (SBUX); Finerman’s Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM); Pete Najarian Owns (AAPL), (NOK), (TSO), (XLF); Pete Najarian Owns (HBC) Puts, (MER) Puts, (RIMM) Calls, (SLB) Calls, (UBS) Calls, (WM) Calls, (YHOO) Calls; Seymour Owns (AAPL), (CFC), (F), (MER), (MSFT), (TSO), (TSL); Seygem Asset Management Owns (TTM), (PKX), (FMX); Seygem Asset Management Owns Shares Of Grupo Modelo.
Market starting out with a bounce. Let’s see the lasting power of this move before declaring it a rally. We are still in a bear market but I will try to take advantage of the bounce by looking for good longs and shorts. Shale plays getting a big boost this morning on the CHK news. Shale play list is: CLR, XCO, HK, CRK, XTO, GMXR, SD, GDP, WLL, EAC, FST, PQ, PVA, SM, NFX. Shale Drillers: NBR, UNT. These moves should continue higher over time. Looking at tech as well. Great Luck and great trading.
