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 (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 (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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