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Tuesday, September 12, 2006

Cramer's MAD MONEY (September 11, 2006)

Cramer was comparing drug companies to cyclicals, and said institutions have been selling cyclicals they have been buying Big Pharma companies and it isn't too late to get in on the drug action. He said this trend will continue and you will continue hearing about the institutional money. He wants to look at forward P/E's and forward growth rates, but don't only look in the rearview mirror at past multiples because it willmake the stocks look artificially expensive or look artificially cheap. He said you don't pay the same for all of them. The drug pipeline is what drives future growth and that drives earnings growth.

He identified good pipelines: who has best patents and who has best in development.

He likes these 3 for their pipelines and for their current drug lineups: Schering Plough (SGP) because of their current drugs for allergies. He likes Eli Lilly (LLY) for depression and diabetes. He also like Wyeth (WYE) for its menopausal and arthritis drugs.

He also said to keep your fingers crossed that CEO Dolan gets canned tomorrow at Bristol-Myers Squibb (BMY) the board meeting, and he noted that there shouldn't be too much downside. He also said that Prudential went today from an Underperform to an Outperform.

Cramer even likes Pfizer (PFE) and Merck (MRK) right now, even though they have bad patent problems.

In a call-in Cramer was OK on MRK. In another call-in he was asked about GlaxoSmithkline (GSK), Cramer said he thinks it is fine with its 3% yield.

Cramer said the staples like Kimberly Clark (KMB) still work in this environment, but drugs are the winner.

Cramer also wants you to know that he does not think oil stocks are cheap just because they have sold off. He says these need to come in even more and many of the prices are still higher than they were at comprable levels to when oil was going up, so they should keep selling off.

He is now negative on ChevronTexaco (CVX). He said that CVX stock is up $6.00 from where it was when oil was $4.00 higher per barrel. He also thinks options expiration week will hurt the stock. When people expect oil to go lower it will come down, and the expectation is that oil will keep coming down. Cramer noted that if you think Iran has their hand in international terrorism, then this may just be a lull; although Cramer thinks oil will keep sliding to under $60 per barrel. He thinks it is possible that it may never go back to the $30 handle though.

In a call-in about BP (BP) Cramer said it is still not cheap and that you might as well wait for it to go on sale even more. He also said that even with Devon (DVN) CEO being positive it should go on sale even more.
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