Cramer's Mad Money - Big Money Gets Defensive (6/17/09)

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Includes: AAPL, AGU, ANTM, DOX, MCD, MOS, POT, UNG, WEN, WMT
by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday June 17.

Potash (NYSE:POT), Agrium (NYSE:AGU), Mosaic (NYSE:MOS), McDonald's (NYSE:MCD), Wal-Mart (NYSE:WMT)

Wednesday's selloff was caused by a change of mood in the markets as Big Money shifted out of commodities and into defensive stocks. When oil failed to break $72, and there were indications that Europe would stop pumping money into its stimulus packages, institutional investors started to dump and run. Potash's news that it is cutting prices because of the falling value of farmers' end markets brought the stock down $11.60, and peers Agrium and Mosaic were down $5 and $3 respectively.The money is now going into defensive stocks; McDonald's and Wal-Mart are always safe bets.

Cramer's Outrage: Natural Gas Fund (NYSEARCA:UNG)

Cramer thinks the unnaturally high price of natural gas may be due to market manipulation rather than demand, and lays blame squarely at the feet of UNG. The fund's meteoric rise is not in tune with demand, and increased buying of UNG is driving up prices for natural gas. Cramer decried the lack of regulation in the market, and compared the damage done by this kind of manipulation to the problems caused by UltraShort ETFs, which drive stocks in the opposite direction.

Mad Mail: McDonald's (MCD), Wendy's (NYSE:WEN), Amdocs (NYSE:DOX), Apple (NASDAQ:AAPL)

Concerning one viewer's observation that most people he knows prefer Wendy's to McDonald's, Cramer says the world still thinks the Golden Arches is #1. Wendy's price tag is too high and it lacks momentum. When a viewer mentioned Amdocs, which provides billing and customer service technology for smartphone carriers, Cramer said he preferred to play the smartphone trend with Apple than with Amdocs.

Wellpoint (WLP)

Uncertainty over Obama's proposed healthcare reforms has not been healthy for stocks in the healthcare ector, and Cramer would buy Wellpoint ahead of any news on these reforms - even bad news is better than uncertainty. The effect on the healthcare sector is likely to be less bad than expected; Senator Max Baucus, chair of the Finance Committee, said the passing of the bill may be delayed in an attempt to keep the cost of the reforms below $1 trillion, which is a smaller amount than predicted.

Cramer compares the current stress on the sector to fears over Hilary Clinton's healthcare proposals in the 1990s. While multiples of healthcare stocks shrank while the pressure was on, they eventually returned to their original levels after the reforms were scrapped. While he doesn't like the fact Wellpoint and others bought back stock at relatively high prices, Cramer thinks the right multiple for the stock is 10 or 11 rather than the current 8, which means this $47 stock should be trading in the $60s. Cramer likes Wellpoint, in particular because of its profitable sale of Express Scripts for $4.6 billion. If Obama's healthcare reforms fail, the stock could fetch as much as $100.

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