Cramer's Mad Money - The 4 Horsemen Of Biotech Ride On (7/9/14)

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 |  Includes: AA, AGN, APC, BIIB, CELG, GILD, IRM, MU, NFX, REGN, SNDK, TAP, UNM, VRTX, VRX, WMB
by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday July 9.

The Four Horsemen of Biotech: Celgene (NASDAQ:CELG), Regeneron (NASDAQ:REGN), Biogen Idec (NASDAQ:BIIB), Gilead (NASDAQ:GILD)

Cramer consulted the technical analysis of Bob Lang to see what the charts are saying about the "Four Horsemen of Biotech": Celgene (CELG), Regeneron (REGN), Biogen Idec (BIIB) and Gilead (GILD). Biogen is making a series of higher highs and higher lows, and if it crosses its ceiling of resistance at $334, it should venture higher. Regeneron is meeting a ceiling of resistance at $315, but if it crosses that point, it could rise another 37 points. Gilead has risen substantially, but shows an inverse head and shoulder pattern and a bullish crossover. According to the Williams oscillator, it is overbought, so Lang would wait for a dip before buying the stock. Celgene also seems to be overbought, but has long-term trends going for it, and potential investors should wait for a pullback. Cramer added that given that these stocks tend to move quickly, those who want to buy shouldn't wait too long when the stocks pull back before pulling the trigger.

Stick With the Winners: Williams Companies (NYSE:WMB), Newfield Exploration (NYSE:NFX), Micron Technology (NASDAQ:MU), SanDisk (NASDAQ:SNDK), Anadarko Petroleum (NYSE:APC), Iron Mountain (NYSE:IRM), Vertex Pharmaceuticals (NASDAQ:VRTX), Molson Coors (NYSE:TAP)

Investors may wonder what stocks to buy; Cramer would look to companies that reported strong results. Williams Companies (WMB) and Newfield Exploration (NFX) are showing significant growth. Micron (MU) and SanDisk (SNDK) are buys on weakness, and Anadarko Petroleum (APC) should also have some upside. Vertex Pharmaceuticals (VRTX) is worth buying as well as Molson Coors (TAP), given the strength of the beer industry. Cramer would sell Iron Mountain (IRM), because its story is not strong.

Alcoa's (NYSE:AA) Comeback

Alcoa (AA) has been a hit-or-miss stock in the past, but it has risen significantly so far this year, and Cramer thinks its trend is headed further up. The company has shown the street that it can reinvent itself, and the stock jumped 5.6% after a solid quarter. The company has closed non-performing plants and is revving up innovation in its products. It is levered to the bull markets of construction, aerospace and autos.

CEO Interview: David Pyott, Allergan (NYSE:AGN)

Allergan (AGN) caught a hostile takeover bid by Valeant (NYSE:VRX), aided by hedge fund manager Bill Ackman. Valeant tends to acquire companies and slash their budgets, while AGN prefers to invest in R&D, and has been rejecting Valeant's offers. Cramer could imagine AGN accepting an offer from a source that is less aggressive, although he preferred to check in with the CEO David Pyott before opining.

Pyott thinks that the current offer undervalues the company and believes the company can grow on its own. The company has a strong balance sheet, and Pyott discussed the possibility of creating value through an acquisition of a company that has a strong growth profile.

Pyott added that he strongly resists a takeover by Valeant because he is concerned that Valeant's aggressive cost cutting would cripple Allergan's strong investment in R&D.

CEO Interview: Thomas Watjen, Unum Group (NYSE:UNM)

Unum Group (UNM) is a slow and consistent grower which trades at just nine times earnings. This insurer has a healthy growth rate in the high single digits and consistently returns value to shareholders. The Affordable Care Act won't be as large a headwind as expected, since it will only defer revenue, not reduce it. There is still significant opportunity in the areas of accident and disability insurance, not only in the U.S. CEO Thomas Watjen discussed the strength of the company's U.K. business. Cramer is bullish on UNM.

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