Scenarios For The Healthcare Bill - Cramer's Mad Money (3/23/17)

by: SA Editor Mohit Manghnani


Agilent is a natural takeover target.

Five Below has room to grow.

Cramer said he's fed up of Fitbit.

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

The vote on Obamacare is delayed, but the Mad Money host said investors should be ready with a game plan for whatever happens with regard to the healthcare bill. "Be ready for all considerations, but most important, understand that the Republic is not in jeopardy with this postponed Obamacare repeal vote, there is no systemic risk, and there are so many companies that are doing well regardless of Washington that a sell-off could give you just the break you need to do some serious buying," Cramer observed.

He laid out a best- and worst-case scenario for the bill. If the bill is passed, it will strengthen President Trump who supports the bill, giving him leeway to implement tax reforms. As a result, stocks and interest rates will go higher. In that case, Cramer would buy JPMorgan (NYSE:JPM) and Citigroup (NYSE:C).

The industrial and tech stocks will benefit as well. "I'd go for Martin Marietta (NYSE:MLM) and US Concrete (NASDAQ:USCR) to play the border wall or any infrastructure initiative. I'd buy Alphabet (NASDAQ:GOOG), Apple (NASDAQ:AAPL), Amgen (NASDAQ:AMGN) and Cisco (NASDAQ:CSCO) for repatriation. And I'd pick up 3M (NYSE:MMM), United Technologies (NYSE:UTX), Cummins (NYSE:CMI) and Dow Chemical (DOW) for worldwide growth," he added.

With the rise in interest rates, utility stocks, REITs and consumer packaged stocks with high dividend yields that act as bond market equivalents will go down. Stay away from them.

In the more likely case that the bill is not passed, buy the market in the downturn. This advice might seem counterintuitive, but there is an opportunity no matter which way the vote goes. The companies are strong, the economy is strong and any fall unrelated to earnings is a buying opportunity.

If the vote doesn't go as the Republicans plan, there will be another vote. "Doing nothing is too politically risky for the GOP, because both Washington officials and company executives know something has to be done to prevent Obamacare exchanges from falling apart," said Cramer. If the bill fails, Trump would promote other popular parts of his agenda, like tax reform and deregulation, which will pump stocks higher.

If the bill is not passed and rates decline, buy strong companies like American Electric Power (NYSE:AEP), PepsiCo (NYSE:PEP), Eli Lilly (NYSE:LLY) and Allergan (NYSE:AGN), along with high-growth names like Adobe (NASDAQ:ADBE), Oracle (NYSE:ORCL) and the FANG stocks. Don't panic, and keep looking for opportunities.

Agilent Technologies (NYSE:A)

In the highly chaotic healthcare sector, Agilent is like a breeze of calm. It engages in the provision of core bio-analytical and electronic measurement solutions to the life sciences, chemical analysis, communications and electronics, diagnostics and genomics industries.

The stock has rallied 23% in the last month, and has more room to run. It not only has great fundamentals, but is a prime takeover target. Agilent was spun off from Hewlett-Packard in 1999, and then it split itself into two in 2014, leaving Agilent to focus on complex lab equipment for life sciences and chemical makers.

This allowed the company to be understood easily and gave it room to expand. It is not a global company with growing market share and expanding gross margins. This is what makes Agilent a natural target. Cramer thinks General Electric (NYSE:GE) and Danaher Corp. (NYSE:DHR) would be natural suitors. Either way, the stock is headed higher.

Five Below (NASDAQ:FIVE)

In a declining retail environment, Five Below delivered strong earnings and the stock jumped 10%. Its 1% same-store sales sent investors cheering, as the current environment is tough for retail. There is lot to like about Five Below, as the company has a terrific long-term story.

"First, Five Below has a well-defined regional-to-national growth story with a 20/20 plan for 20% sales growth and 20% net income growth - a plan it beat in 2016 and hopes to continue beating until, well, 2020," Cramer noted.

With just 522 stores, the company has room to grow in California and the rest of the country. It has a strong balance sheet and one-year payback on each of its $300,000 store locations. "'We are a desired tenant,' as they mentioned on the call, which brings vibrancy and traffic, two qualities many a mall lacks these days," said Cramer.

The company keeps learning from new stores and implements changes to old locations. It has become an expert in reaching kids through online and social media channels. "Suffice it to say they know more than we do about what kids want," Cramer added.

For those worried about the potential border tax impact, the company believes there would be a low-dollar exemption for imports. "If that's the case, then Five Below will become one of the go-to names for retail in 2017," concluded Cramer.

CEO interview - Ionis Pharmaceutical (NASDAQ:IONS)

The stock of Ionis is down 20% in 2017, mostly due to the Goldman Sachs downgrade, which said that 47% of Ionis's drugs are discontinued before reaching FDA approval stage. Cramer interviewed company CEO Dr. Stanley Crooke to know his side of the story.

"I think that's just wrong. First of all, we identified no specific safety signals, and probably the best evidence for that is that the FDA approved the drug in a record time of about 3 months with the broadest label possible," said Crooke.

He added that the company is profitable, and its main drug, Spinraza, is doing well. Things look positive for Volanesorsen, which is in Phase 3 trial stage. Ionis has 38 drugs in pipelines, and many are in partnership with strong players in pharma. "I would say that it would be very difficult to make the case for those folks to invest knowing everything going on in the company if all of our drugs were going to fail and our toxicities were a big problem," Crooke noted.

Viewer calls taken by Cramer

First Solar (NASDAQ:FSLR): It is a value trap, as the company cannot get it right with technology. With oil remaining down, it is tough for the stock to rise, although Cramer admitted that it's inexpensive.

Fitbit (NYSE:FIT): The stock is near a bottom, but the company has not be able to manage expectations. Cramer said he's fed up of Fitbit.

Alibaba (NYSE:BABA): The company's ecosystem is right for it to go higher.


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