No. 3 Savient Pharmaceuticals (SVNT)
Cramer says that everyone has room for speculative stocks, but that they should not be purchased with retirement funds or occupy more than 20% of a portfolio. Cramer suggests buying about five different speculative plays rather than relying on one or two. His 3rd favorite speculative stock is Savient which takes the "risk factor up a dozen notches." Cramer says the company has been a "tear" but it has room to rise because it has great management, Oxandrin, which promotes weight gain after surgery and Puricase, a Phase III treatment for gout. Puricase will be the first medicine for gout developed in 40 years, and 3 to 5 million Americans have this condition which is often resistant to treatment. Cramer predicts SVNT could double if Phase III results will be positive.
Related: On December 5's Lightning Round, Cramer said Savient was too expensive.
No. 2. Rite Aid (NYSE:RAD)
Cramer says this "unloved" stock which only has 10 analysts covering it should be picked up on Monday, since it is a "sizzling" speculative play. He notes that its deal with Brooks-Eckerd will save RAD $150 million, RAD is the one drugstore which is immune from the "Wal-Martdisease," it is a great inner-city play, and it can't go much lower without "catching a takeover bid." Cramer invited CEO Mary Sammons, the "architect" of RAD's turnaround, onto the program, and she commented that the $150 million savings from the merger was a conservative estimate, which doesn't take into account increased revenue and productivity. She added that every new store acquired entails "strong double-digit gains for five years." In addition, Sammons commented that the company is "well covered" on integration risk.
Related: On Mad Money, Dec. 5, Cramer discussed Rite Aid's advantages over Wal-Mart.
And the Winner is ... Level 3 Communications (NYSE:LVLT)
Level 3 Communications is Cramer's top speculative pick for 2007 because he believes it will benefit from the bandwidth shortage. Although the stock is up 35% since Cramer's initial recommendation in September, he sees potential for a more dramatic jump because of its deal with YouTube and NBC. In addition, LVLT's deal with Broadwing was completed on Thursday, and the stock has a "big risk, big reward." Although the company also has $6.8 million debt and investors may lose money on the stock, Cramer comments "if you're gonna stay interested in stocks, you gotta take a few risks, and one of those risks is taking LVLT, even at its $6 level."
Related: Ant & Sons commented that LVLT jumped in November on Cramer's recommendation.
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