Cramer's Mad Money - Think Discount, Not Decline (6/23/09)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday June 23.

Bank of America (BAC), CSX (CSX), BP (BP), General Motors (GM), Verizon (VZ)

While others see huge declines, Cramer sees discounts. Everything is on sale: clothing is cheaper, real estate in some areas is 40% lower, the rate of a 30 year mortgage has declined 20% since last year, and because of GM's difficulties, cars are 20% cheaper. The same bargains can be found in stocks, which have declined 32%. Among Cramer's favorite stocks on sale are Bank of America, 52% cheaper, CSX, down 49%, BP, 31% lower and Verizon. Cramer doesn't think his glass half full way of looking at the markets is Pollyanna, it is just another way of finding investment opportunities.

Quest Diagnostics (DGX), Boston Scientific (BSX), St. Jude Medical (STJ)

Investors are gaining clarity on which healthcare stocks will be the hardest hit by Obama's reforms. Most HMOs which once benefited from Medicare are going to feel the pain, while medical device companies like Boston Scientific and St. Jude Medical have already seen significant gains, since it seems they will be spared Obama's wrath. Another healthcare stock which is not levered to HMOs is Quest Diagnostics. Technicians don't seem to agree on Quest: some say it may be a buy in the low $50s while others are completely bearish.

According to the fundamentals, Quest is a buy, according to Cramer. Only 15% of its revenues come from Medicare, it owns just 12% of the market and has room to grow, Quest is moving into gene therapy and into India and Brazil, and Quest's costs-cutting measures should mean $500 million in cash by the end of the year. Since 70% of healthcare decisions are made through lab tests, the demand for Quest products is strong. Quest has just a 13 multiple compared to a 12.8% growth rate and Cramer thinks this $53 stock could reach $65.

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Comments

[TCK:]

It is always a good day to buy stocks in Cramerica !

Jun 25 05:21 AM