Drug Blockbuster - Cramer's Mad Money (7/31/08)

by: Joan Wickham


Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program,Thursday, July 31.

The "Bottom" Line

Don’t worry. This is just part of the process. Cramer defended calling the bottom in the markets on last night's show. “Bottom,” to Cramer, means that the market won’t again sink to the levels we saw back on July 15. In making the call, he said he did not mean that all stocks had bottomed, but rather that the time is right to begin buying stocks as they go down. Cramer even allowed for the possibility that a bad unemployment number on Friday could hurt the market even more. But that’s consistent with the kind of reports you get at a bottom when everyone is horribly negative and worried.

Wind: Owens Corning (NYSE:OC), Trinity Industries (NYSE:TRN), Mastec (NYSE:MTZ)

Cramer said investors should be celebrating the wind and solar stocks 365 days a year. “Wind and solar stocks are transcending the weakness in oil,” said Cramer, indicating that the strength in these sectors is genuine, and will continue even if oil hits his ultimate target of below $120 a barrel. Cramer said he expects at least four more years of strength in the green stocks, and reiterated his buys on Owens Corning, Trinity Industries and Mastec. Owens Corning recently predicted its wind business will be growing in the high double-digits for at least the next decade. With up to 18 tons of fiberglass used to produce a single windmill, Cramer said Owens' composite fiberglass business should easily be able to achieve those targets. Trinity is Cramer’s favorite in the wind power business. The company's stock was up 6.7% today alone on strong quarterly earnings, and Trinity more than doubled its wind tower backlog to almost $1.5 billion. With wind power only accounting for 10% of the company's revenues, Cramer said he expects wind to overtake Trinity's flagship railcar business in just a few short years.  Finally, Cramer reiterated his buy on Mastec, a company whose stock is up 18.9% since it was added to his "Windex" index of wind power stocks.

Solar: First Solar (NASDAQ:FSLR)

In the solar industry, Cramer reiterated his buy on First Solar, a company he called the best of breed in the solar industry. The company recently posted earnings of 85 cents a share, blowing away estimates of 58 cents a share, a 47% upside surprise. He said First Solar is not a maker of residential rooftop solar panels, but a provider of large-scale industrial solar facilities. The company manufactures solar cells at a price of just $1.42 per watt, compared to traditional cells which average $2.50 per watt. Cramer did warn that Congress' eighth delay in passing a bill to provide investment tax credits for wind and solar may hurt both industries to the tune of $11 billion in lost investments. Cramer said these credits are, eventually, expected to pass. And in the very least, there’s a one-year extension planned for when the credit’s set to expire in September.

Oil Outlook: National Oilwell Varco (NYSE:NOV)

Cramer talked with Peter Miller, National Oilwell Varco (NOV) chairman, president and CEO, about the company's outlook amidst falling oil prices. Miller said the demand for new oil rigs is not declining with oil prices. He said the company's backlog extends well into 2011. Even with oil prices as low as $110 or even $100 a barrel, Miller said National Oilwell Varco would not be affected. He explained that many of the orders in the company's backlog were placed over two years ago when prices first hit those levels.

Miller touted the company's current oil rigs as extremely safe and environmentally friendly. He said the big offshore oil spill of 1969 just couldn't happen with today's equipment. Cramer reiterated his buy on National Oilwell Varco, calling it the “single best drilling-related company to own.”

Blockbuster Diabetes Drug in the Making: Novo Nordisk (NYSE:NVO)

Cramer released a prisoner from the sell block. Cramer looked at a recent New York Times article which reported that the instances of Type 2 Diabetes in children increased 10% to 12% a year. Between 2001 and 2007, prescriptions for these children were up 151%. In light of the news, Cramer released Novo Nordisk, the global leader in insulin, from the sell block where it did not belong. He called the company a buy. Cramer called the company's new diabetes and weight-loss drug, Liraglutide, one of the biggest prospective drugs he's ever seen. With approval expected for the drug in the second quarter of next year, Cramer said now is the time to get into Nordisk before the anticipation for the drug grows. Liraglutide's slow release formula allows for it to be taken just once daily compared to twice daily for the closest competitor, Byetta. Cramer said Liraglutide appeal also extends beyond diabetes. Novo Nordisk released a study back in June showing that overweight patients without diabetes lost an average of 16.5 to 17.6 pounds. He called the drug a potential blockbuster. Further the company only has one patent set to expire in 2009. Cramer’s short term target is $70.

Mad Mail: Research In Motion (RIMM), Apple (AAPL)

Cramer repeated “the market is big enough for both Research In Motion and Apple's iPhone. He defended his positive call on Research In Motion.

Sudden Death: China Telecom (NYSE:CHA), Grey Wolf (GW)

Cramer said no to China Telecom. For Grey Wolf, he said "take your money and run."

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