After this segment, you
can see Jim's Lightning
Round picks
here...
. . . .
.
JJC: I just
want a few more days like
today. The market staged a
back from the dead rally
today... One of the few in
what seems like ages... So
many times we have seen
rallies look fabulous at
the beginning, only to
fail later in the day and
we choke on everything we
bought... Not today...
Today, for the first time,
we were rewarded if we
pulled the trigger with
fabulous pit action... And
I think that's because
we've got some new
leaders, some new leaders
top business models, so to
speak... And to beleaguer,
and belabor the teen play
at NBC issue, one ripped
from the front pages, but
not necessarily from the
newspapers, no the
"Cramerican Marine Field
Guide to Recessions...
Right on schedule... The
drug and healthcare stocks
that were so hated just
one weak ago are the very
stocks that went up today
and of course the stocks
we are featuring all week
on Mad Money... Remember,
Wall Street is a vicious
and mercurial fashion
show... At times like
this, when the economy is
weak and the global
economy seems like it's
teetering, Uh, well... The
big money guys, who are
the critics and the buyers
of the ready to wear stuff
at the fashion show will
tend to decide that stocks
with safety and
consistency, yeah that's
right, boring ones, were
all over the runway... And
momentarily, the commodity
plays get shoved into the
sidelines...
I think the safest and
most consistent group in
this environment of high
energy prices, yeah, I
know they came in little
today, high raw costs, and
economy that is doing the
dead man's floats despite
the 150 Dow Jones move...
The best one, is the group
I started yapping about
yesterday and will
continue to highlight,
some say tap, some may
promote, I don't care...
Every day this week it's
going to be healthcare...
It's generally immunized
against those energy
prices and I still
consider the price of oil
to be high after the $10
swan dive of the last few
days or high grain prices,
yeah, I see them coming
down too, but it ain't
that much, or an economy
that is flatlining, and a
financial system that
showed a bit of a pulse
today, but otherwise has
been DNR, as in "do not
resuscitate"... These
healthcare stocks, even
the ones I don't like, are
right now worth owning...
As money managers swap out
of less dependable
sectors, that had been ,
and into relative safety,
and boredom of healthcare
stocks... Now drugs, the
drug stocks had been in a
vicious and horrible bear
market, as measured by the
pharma-index, called the
DRG, uh huh drug, aren't
we great on Wall Street,
which fell from $355 in
early January to as low as
$283 on June 11th... But
now the index be
flying!... Ho, ho... Buy,
buy, buy... Closing at
$305, and showing that
healthcare is back and
bigger than ever, just
like Ghandi two... You
might not have seen that
movie...
Remember, it is all
perception... It's the
fashion show... The big
boys like this group now,
versus others because they
fear the more exciting
mineral and oil plays may
not be able to meet
expectations... Put aside
whether you think they can
or not for a moment...
What I need you to
understand is the fashion
show, and the big boys are
comfortable with these new
stocks... Even if they
really are the same old,
same old, really with now
pizzazz... The stocks that
went up the most today,
nothing changed for
them... You could be
sitting there saying wow,
hey, what happened to
Merck (MRK)?...
What's going on with
Bristol-Myers Squibb Co.
(BMY)?...
There is nothing, except
for the fact that the big
boys feel more
comfortable... This (bear)
was Bristol-Myers last
week... This (bull) is
Bristol-Myers today... Oh,
and before I can give you
what could be the next big
healthcare winner... Can I
just say point blank,
right here, right now,
that the only thing that
can immunize you from the
vicissitudes of this
really crazy fashion show
is diversification... See,
if you just own nothing
but the first half of the
year's winners, oil and
gas, you know what would
have happened in the last
few days... You would have
been blown away... A
diversified portfolio with
some healthcare in it to
offset a commodity loser
could keep you in the
game... The ultimate goal,
if we were to keep on
gunning, for the American
Dream... Oh, 7 o'clock
Sunday night, on NBC, for
those who want to catch my
Nascar network special...
Shameless?... Who cares...
Alright, so for tonight's
healthcare play, I give
you a guy and his
nephew...
This one is a medical
equipment company that got
beheaded after a
disappointing first
quarter... Sinking from
$64.73 on April 30th at
the close to $57.40 on May
1, the day after it
reported... Hey, that's an
11% drop, and it's
languished down in the
$50's ever since...
Closing today at a mere
$52 and change, this one
hasn't been recognized
other than Cramer... The
Street is overreacting to
that quarter and shunning
what I think is an
otherwise good company...
It gives you a chance to
get in a great stock at a
much too low price that
hasn't been swept up in
this incredible rotation
of the last three days...
SNN has it's hands in
several different
businesses... 37% of their
sales come from orthopedic
reconstruction, hip and
knee replacement... Good
business to be with our
aging, weight gaining
population, even if SNN is
the number 4 player in the
business... Boy, I'll tell
you, if I were number 1, 2
or 3, I'd snap these guys
up... Both Smith and his
nephew...
SNN also has an orthopedic
trauma business where they
make the equipment doctors
need to help deal with
bone fractures and other
trauma... These are
generally stable
businesses, because
doctors don't like to
change their suppliers...
Then SNN has an endoscopy
business, making the tools
for minimally invasive
surgeries that let doctors
look around their
patients... You've seen
this a million times on
House, I mean, on ER...
And then, finally, there's
SNN's advanced wound
management business, this
is really my favorite...
It's part of a happy
Duopoly with
ConnetiConcepts selling
wound VAC equipment...
$1.6 Billion market for
that equipment... Creates
a low pressure environment
to help wounds heal more
quickly, and with less
risk of infection, get
people out of the hospital
quickly... That's the
story for both democrats
and republicans... Now,
uh, what happened with the
missed quarter?... And why
do I think SNN will make
or beat the numbers in the
future based on the fact
that they screwed up...
It's a tale of two
acquisitions... Last March
SNN bought a Swiss-based
company, an orthopedics
company, it's called Plus,
and another company they
bought called BlueSky in
the middle of 2007, which
is how it got into that
nifty wound vac business,
the duopoly... When SNN
reported its quarter it
turned out that there were
some skeletons in the
closet at PLUS, causing
$100 million in sales
costs and $10 million in
investigational costs
because of it... Here's
some language,
"unacceptable selling
practices"... Woo, with
PLUS... Look, I don't
think it's a big deal,
okay?... Compared to the
$3.37 billion in revenues
the company brought in
2007... But nonetheless,
the stock got pummeled...
Partly because again, no
one wanted this, they were
too busy chasing the
Wildcatters... Uh, that's
the first reason...
The second is that the
expectations for the
second company SNN
acquired, BlueSky, were
way too high... When SNN
bought BlueSky last year
it had 20 employees and it
was generating just $11
million in sales... So,
SNN had to spend some
moolah to build up the
sales force and ramp up
manufacturing... That
aided to the performance
of its wound care
segment... The Street
didn't like this, but I
don't know how they didn't
see it coming, frankly.
Sometimes they just get it
wrong... Now we've got a
stock that is just
incredibly beaten down...
But I believe it has spent
the money it needs to
expand this wound business
and remember it's only
competitor is KCI, we've
had them on this show, we
like this... SNN expects
to see the benefits from
its spending the second
half of the year, which
just so happens to be,
right now!... I think the
bad news is all in the
past... And even with that
so called bad quarter, SNN
still managed to deliver
14% earnings per share
growth... So now we have
what I think is an
incredibly cheap play on
the aging of America with
its orthopedics business
with what it looks like
now an up and running
advanced wound care
division with the
potential to deliver
serious growth that should
only have to deliver so-so
results for the Street to
be impressed, lowered
expectations,
disappointing quarter...
Oh, I should add, SNN has
a terrific 3-year $1.5
billion buyback... Don't
forget, these healthcare
stocks have been out of
favor for so long that
it's only like they
believe, and you didn't...
They've repurchased $640
million of stock, while
you ignored it... Not too
shabby for a $9.4 billion
company, very
shareholder-friendly.
. . . .
.
The Bottom Line!:
Healthcare is back, it's
bigger than ever, and I
think
Smith & Nephew PLC (SNN)
is one of the most
undervalued,
underestimated and, I
think, underpriced stocks
in the group... for those
who are trying to build a
diversified portfolio that
doesn't just include
fertilizer and oil.
. . . .
.
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Second
Segment
Opening Segment 2
Title:
'Don't Bank On It'
. . . .
.
Featured Stock(s):
Comments from Jim as a
call to action for the
government to help
prevent a financial
collapse.
After this segment, you
can see Jim's Lightning
Round picks
here...
. . . .
.
JJC:
We're constantly seeing
stocks go down because
someone spread this,
someone said that, some
rumor on the tape, some
guy got on tv and said
something bad, some
company announces this or
that, then another company
put out a press release...
Uh, but I don't want to
get too Simon and
Garfunkel on you... What
we don't hear discussed
that much at all are the
stocks that go down on the
sounds of silence...
Hello, no news flow, my
friend. Yeah, that's
two... It's too bad, it's
too bad... Because right
now there are a lot of
stocks going down on the
sounds of silence...
The banks, the brokers,
the homebuilders... The
three groups, frankly,
that make up the Achilles'
heel of this market...
They've been falling, not
because of anything anyone
said, despite stories you
might have heard in paper
that so and so CEO says
this, that there's rumors
being spread... Uh, uh...
No... I think they're
going down because none of
the right people are
saying anything, nor are
they backing anything up
with buy backs or anything
substantive... I am
bringing this up tonight,
yes, I am bringing up the
financials because at
last, these stocks are in
rally mode and I am not a
pile on guy, I am not a
guy who does that kind of
stuff where they throw the
flags and jumping on and
stomping on guys fingers
and bodies and stuff...
No... See I didn't want to
offer up negatives right
into a panic... That's not
my style... I like to
wait... And I have
waited... It's taken me
forever, but I have waited
until we get some uptake
in the banks and brokers
to take action... Lordy,
we got it today... And I
bet you'll get a follow
through, a follow through
to today's explosive
action to financials
tomorrow...
So you can at last debate
their merits and consider
what I'm about to say in a
positive atmosphere, for
once... It's been so
clouded and toxic, it
reminds me of that little
breaststroke competition I
once had in the Love
Canal... Alright, despite
the positive run ups today
in the banks and brokers,
I believe we could still
be facing, I believe we
are facing some big
financials collapses, and
not just the small ones...
Not just these little
regional banks that you
hear about like the Isely
brothers, whatever that
thing is out there...
Don't worry about it,
that's an old group... I'm
old, alright?... I'm truly
worried about the
fundamentals of Citigroup,
of Bank of America, with
what I think will end up
being considered an
ill-fated acquisition of
Countrywide, I am as you
know, concerned about the
viability of the largest
savings and loan, look
what a statesman I've
become, huh... Well down
here I've become a
statesman...
When I was out at USC I
was telling people to quit
work at Washington Mutual
before the posse came...
But I'm now just saying
that I'm concerned, I'm
concerned about Washington
Mutual... I fret over
Wachovia, especially given
its incredible decline,
lack of permanent CEO...
But what do I hear?... I
hear nothing... I hear
total silence from these
companies... Now all I
know is that they have
unclear losses and unclear
balance sheets in an
environment where home
prices are still
deteriorating rapidly...
We've got silence from
Fannie Mae and Freddie
Mac, the true Simon and
Garfunkel of the joint...
We've got silence from
Lehman, other than some
squawking that the shorts
are at fault... Well, I
almost bought that
logic... We've got silence
from Merrill, except for
the occasional sentence,
the occasional whiff that
they might be selling some
bomber or something... And
worst of all, we've got
silence, more frightening
than the silence of the
lambs from any of the
actors in federal
government, who could have
taken action and so far
haven't... I think our
government will need a
plan, a definitive plan
for when these banks start
to fail again, but all I
hear about is silence, and
silence is deafening...
Just a whisper of a
plan... How about a vague
rumor?... Some slight hint
that someone in the
government is doing
something to avert, or at
least deal with what will
happen when a couple of
giant banks collapse...
That's all I think we
really need is some
assurance, that will give
this group and the market
some relief so the stocks
can go higher and they can
issue more equity so they
are in less trouble... But
right now you could hear a
pin drop... Let me be
clear... I am no longer
ranting and raving about
saving the financials like
I did in that Stop Trading
Segment I did that was
such a hit on YouTube...
Now, I have come to accept
that despite my meltdown,
when something could have
been done then, the fed
did get on the stickle
later... But it no longer
has control over this bank
situation by their own
admission... I mean,
they've basically told you
they're done cutting,
which means the die is
cast and now I think the
real bank failures are
around the corner...
Again, I am sensitive to
the fact that the stocks
are going up right now, so
you can take action... I
am not a pile on guy,
kicking them when they're
down, giving them the
business, alright?...
Right now I'm saying that
for things to get better
we need to start hearing
from the feds about their
plan for averting the
financial apocalypse, and
I don't mean some Sunday
night conference call to
save Bear Sterns... I
don't need anything that's
done on the fly, I need
something planned...
Because I'm afraid, I
think the Street is afraid
that they have no plan,
just like they had no plan
when this whole mess
started... Or maybe they
don't believe in a plan...
Maybe they think it's like
the potato famine in
1847... That the Irish
figured it out
themselves... That didn't
work... I don't think the
banks will be able to do
it on their own... There
seems to be no way they'll
be able to raise all the
capitol they need... Who
the heck wants to give
Lehman or Merrill Lynch
another dime, after the
beatings that everyone has
done and has taken... This
is like four times bitten,
twice shy... You can only
be so stupid... The mutual
funds that own these banks
have taken horrendous
losses and concomitant
redemptions... The big
outside investors have
been crushed, and now they
have scrambled eggs on
their faces... Make mine
sunny side up... For
making the stupid decision
to invest in these banks,
Sovereign Fund Investors,
they've been completely
pantsed by greedy sales
people who told you this
is the last injection... I
think we need the
government to round up the
usual buyers right now, if
there are any usual
ones... We need them to
round them up in a cool
moment, to be ready to
merge with the banks that
I believe are going to
fail, before everything
starts to fall apart in
the heated moment that may
be coming...
We need to know that
there's a short list of
willing and ready buyers
from around the globe as
we had in 1990, the last
financial meltdown... We
need to know that they're
more than just JP Morgan
out there that's ready to
take a swing... I believe
even a whisper of a plan
like this would help this
market tremendously... You
want to know how bad it
is?... You want some
numbers behind my dire
pronouncements?... Okay,
I'm ready, make me look
stupid again... Alright,
presto!... Back on August
3rd, I started a stress
index with 12 stocks,
roughly representing the
homebuilders, the brokers,
and the banks... I created
the index to give me an
idea of just how bad
things were in the banking
and housing complex... On
August 3rd it started at
100... The Mad Money
stress index is now at
20... That's an all time
low that it hit today, it
touched 18 today...
Meaning that the stocks in
this group have fallen an
average of 80% already,
and I'm not saying
anything about things
getting better, other than
for this trade that
started today... At least
not until someone or
something breaks the
terrible sound of silence
that I believe is pulling
this group, and with it,
the whole market, down...
I do not have an answer
for this problem, but I'm
hoping someone in the
government does... Now,
I've told you about the
bad, I don't want to leave
you with the impression
that nothing can be
done... Not after a
decline like this...
Alright, did you see Matt
Lower do that this
morning?... No... Okay,
particularly there are
outfits like JP Morgan
ready to do more buying...
We learned that from CEO
Jamie Dimond today... That
was subtext... I felt when
he said that the bear
axis? is almost done that
he's ready to roll... Now,
I actually liked what I
heard for the first time
in a long time from
treasury secretary Hank
Paulson, about how
important Fannie Mae and
Freddie Mac are... It made
me feel that they're not
going to go away
entirely... But what we
need to hear is that the
federal government still
stands behind these
organizations, and will
remain so and give us an
explicit guarantee, not
the implicit one as long
as Americans need homes...
Oh, and most importantly,
we need to hear the
following words from
Shelia Behr, from the FDIC
or I'll take them from
treasury, I'll even take
them from under the
undercycle belt, I'll take
them from Bob Steel... And
the words we need to hear,
and they don't even have
to do it for a
biattribution... They can
just leak it, okay?... The
words we need to hear are
"we have large bank buyers
who want in, and we have
plans for them to be able
to contain the losses of
the crushed banks they
buy". That statement, even
if given off the record,
somehow, filleted through,
it would be big... But my
question is, do they have
the buyers?... In my view,
the problem is nothing is
being done, or at least
nothing is being talked
about... I think of all
this, all this could get
better... Not fixed, but
better, if we heard some
word, or some kind of plan
from the feds to find
buyers to merge with the
banks that I believe will
fail in the not too
distant future...
Oh, and here's one that
really just dazzles me...
How can both presidential
candidates completely
ignore this issue?... Do
they not know it?... This
one, this is the biggest
issue facing the American
economy... Instead they
focus on tax cuts... That
didn't work with the last
guy... Tax cuts... There's
no solution at all...
Maybe both of these guys
were out to chow... come
on guys, don't wait until
we on Wall Street blow
chow... Come up with
plans.
. . . .
.
The Bottom Line!:
I've laid out a grim
picture. That's okay, the
market is going up right
now... But I think that
after this phenomenal 80%
decline from last summer,
all it will take to
improve things is someone
in a position of authority
to break the silence and
say, yes we have a plan,
yes we're doing something
to make sure that the
banks collapse... They
will at last do something
as smoothly and with as
few repercussions as
possible... Without it,
while there's not much
room between here and the
floor, we will be visiting
sometime way too soon.
. . . .
.
■
Stock Snapshots - Includes
all stocks mentioned above
■
Jim
Cramer's
rating on
this stock
STOCK
SYMBOL
Closing
price
that
day
Opening
price
next
day
Full Company
Name/Comments
(see comments above for
each)
na
na
na
Comments from Jim as a call to
action for the government to
help prevent a financial
collapse.
Go to the LIGHTNING ROUND from
tonight's show
here >>
See current quotes on Yahoo!
Finance from
tonight's show stocks
here >>
Symbol keys:
A Charitable Trust stock.
- An asterisk next to a
stock symbol indicates that
Jim mentioned it is a stock
that he manages within
his
charitable trust portfolio.
You can see the complete
portfolio
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Thumbs up - indicates
he would buy the stock or,
at the very least, not sell
the stock. We do our
best to interpret Jim's
opinion on stocks, as we
think it is indicated by his
comments during the show.
Please read his comments to
decide for yourself.
Thumbs down -
indicates he has said not to
buy or to sell the stock,
based on his comments
We do our best to interpret
Jim's opinion on stocks, as
we think it is indicated by
his comments during the
show. Please read his
comments to decide for
yourself.
Back up the truck -
indicated by Jim, when he
says the stock is so good,
that he would do a
'mon-back' on the stock...
In other words, this is the
sound someone would say to a
truck driver, "Come on
back... " as he is "backing
up the truck" to load up on
his cargo. Translation
for buying stocks:
This recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
Stumped. - Of the
2,000+ stocks that Jim
Cramer has in his head, for
which he has an informed
opinion, he sometimes comes
across a caller with a stock
he does not know well enough
to opine on... He then
indicates he is stumped and
will have to come back to
it, after he does some
homework of his own on
the stock. This
usually occurs during the
Lightning Round, when Jim
does not know in advance who
is calling, or what their
stock question is about.
Definitions of key phrases
used by Jim, known as
"Cramerisms":
Definition: 'Pull the
trigger' is Jim's phrase for making
the decision at that point to trade -
either to 'buy' or
to 'sell' (although he
usually uses the phrase for
buying), as if to say you
should feel comfortable
enough to make the final
decision without looking
back...
Definition: 'Ring
the Register' is Jim's phrase for
selling a stock, and making
it a final sale, that you
should not look back on.
Put it behind you.
Definition:'Let It Come In' indicates how you
may wait for it to pull back, or have the
stock price come down briefly, as your
chance (after letting it come in) to buy
the rest of your position (i.e., total
number of shares you own in that stock).
Definition:'backing it up'
or 'doing a 'mon-back' is Jim's
phrase for the metaphor of backing up a
truck to load up on a stock by buying
it. 'Mon-back is short for the
imaginary worker saying, 'Come on
back...' as the truck is backing up to
receive its load... Notice that we use
the little truck icon to indicate where
Jim has mentioned this.
Translation for buying
stocks: This
recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
See more
"Cramerisms" & other
financial phrases
here >>
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