Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Wednesday, December 3.
The Fed is finally getting it right in solving the housing crisis and is buying mortgage-backed paper. As a result, mortgage rates are dropping, homeowners can refinance and new buyers are appearing. Cramer is outraged that Bernanke didn’t implement this plan a year ago, since such an action would have spared the economy a lot of pain. He therefore gives Ben Bernanke the Plaxico Burress Award for Good Judgment.
In the Blood: Celgene (NASDAQ:CELG)
Cramer would use the American Society of Hematology 50th annual meeting this weekend as a catalyst to buy Celgene which is expected to give guidance during the meeting. The Street is predicting revenue growth of 44%. However, this is not just a short-term trade; Cramer noted the company’s blood cancer treatment, Revlimid’s sales may hit $3 billion by 2012 and its orphan drug Vidaza, which has special exclusivity status, may reach $409 million in sales by 2010. Celgene has over 100 clinical trials scheduled to expand the usage of existing drugs and the company has earnings visibility, is flush with cash, debt-free and has room to grow. It is down $25 from its high and trades at only 23 times earnings. Finally, biotech stocks are likely to be favored with the Democrat in the White House.
When a viewer told Cramer he was writing a letter to Obama to suggest appointing Cramer to the position of SEC chairman, Cramer declared “…There’s so much stuff that I want to stop. And if they call me, I know all the tricks that [Wall Street traders] pull. And I’m going to end them. And I’m going to make the market fair again for people. Because everybody knows this market feels like it’s rigged everyday.”
Cramer told another viewer that it is worth holding onto Foster Wheeler because it is cutting back copper production and China will soon be a customer again. When someone asked if Yahoo was worth buying now that CEO Jerry Yang left, he replied; “I think that Yahoo! has a lot of pageviews. And anything that has that much pageviews, if you came in now, I think you could do a great job with. Jerry Yang was really bad.”
Cramer praised Johnson & Johnson’s smart acquisitions of Mentor and Omrix, and thinks low prices caused by mass hedge fund selloffs can make other companies ripe for picking. He would make a match between Allergan and Pfizer. Allergan has been cut nearly in half, from $70 to $36 and Pfizer could use the growth Allergan would provide with its “Hollywood cosmetics”: Botox, breast implants and lap bands. Pfzier has $26 billion in cash, double the price it would pay for Allergan, and the acquisition would take Pfizer’s long-term growth from 1% to 14%. News of an acquisition would make AGN jump to $54 a share, and the company’s cost-cutting strategies might provide a reason to hold the stock even if Pfizer doesn’t buy the company.
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