Cramer on BloggingStocks: Buy this extremism

Posted Jan 25th 2008 9:05AM by Jim Cramer
Filed under: Bausch and Lomb (BOL), Bristol-Myers Squibb (BMY), Merck and Co (MRK), Cramer on BloggingStocks

TheStreet.com's Jim Cramer says the overreaction to pharma news lets you into the best names on the cheap.

There are so many crazy mistakes being made by this market that you have to keep your eyes open every minute. The biggest-cap stocks are acting like small-cap stocks.

Which brings me to Merck (NYSE: MRK) (Cramer's Take). This morning, Merck traded down to $47 off some deaths from maybe one of the most important inventions of all time, Gardasil, the anti-cancer vaccine.

Three bucks! How can that be! This vaccine's not going off the market. When you put this on top of how Schering-Plough (NYSE: SGP) (Cramer's Take) got cut in half because of fears that a drug will be pulled that represents 50% of its earnings (after the Organon merger, that's my estimate), you can see how extremist the market has become. Both Merck and Schering act like there will be no Vytorin sales at all next year at this time.

In Stay Mad for Life, I talk about how I was spooked out of Bristol Myers (NYSE: BMY) (Cramer's Take) because people predicted that it would have to cut its dividend because a generic form of Plavix could come early and destroy that franchise. Wrong! The generic form was out there and then got pulled off, and the stock rallied 12 points from $20.

Or last year, when Bausch & Lomb (NYSE: BOL) (Cramer's Take) fell to $43 off of a worry that its main solutions business would be shut down because of an eye fungus that it caused.

A few months later you got a $65 bid.

I am telling you that when you get that kind of action in a Merck, in a Schering, ripped right off the headlines, you have to buy, not sell.

I have been buying SGP the whole way down for Action Alerts PLUS, alongside the CEO, Fred Hassan, who just bought $2 million worth of stock. Merck coming down here off of Gardasil should be bought, too.

Random musings: We might need MBIA (NYSE: MBI) (Cramer's Take) and Ambac (NYSE: ABK) (Cramer's Take) to fail in order to keep the Fed in the game. Let's hope Bernanke knows the symbols.

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Schering-Plough.

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Reader Comments (Page 1 of 1)

1-25-2008 @ 10:12AM

Richard said...

IBM's Jan 17 & Jan 18 2008 SEC filings (Press Release) start with the following statements:

Press Release:
The following statement on Page 1: “Revenues were flat excluding the year-to-year impact of the Printing Systems Division divestiture in June 2007.”

Slides:
On Slide 3 (4Q 2007 Summary), the following information: “Revenue flat*”

And there is more! See Jan 17th SEC Filing.

Considering revenue was flat for the 4th quarter (excluding printer div. divestiture), approx. 5% of revenue was attributable to currency exchange (not growth), and the Asian and European economies and markets are slowing and/or falling respectively, (which constitute 50% of IBM's business), it's hard to see how IBM can forecast such a rosy outlook for 2008 … not to mention their upbeat report for 4th qtr 2007!

1-25-2008 @ 3:26PM

don jones said...

jim,
Heavy in 3M stock. What's the long termoutlook?
Great company.
Thanks,
Don J

1-29-2008 @ 11:40AM

Donna said...

So, do you think Microsoft will take over Yahoo!? If it does, do you think that will finally take Microsoft out the of the $30.00 range?

1-30-2008 @ 3:38PM

FRANK KULHANEK said...

ONE OF THE BEST STOCKS TO BUY IS MONSANTO. WITH ETHANOL AND ALL THE BUSINESS WITH LATIN AMERICA, THE ONLY WAY THE STOCK WILL GO UP. IT DOUBLED IN PRICE LAST YEAR