Coming Week: Walking the Line
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Jim Cramer launched Friday’s “Mad Money” TV show by offering viewers two speculative stocks to research over the weekend — a promising medical diagnostics play and an under-$10 technology name.
Cramer’s first pick, Biosite (BSTE) , is the type of company market players should want to be in if the Democrats “storm the winter palace” in November, he said, “because then all the Big Pharma money will go into acquiring small diagnostics plays.”
“We need to find new diagnostics stocks” as the older ones get played out, Cramer continued, and right now Biosite is looking “hot.” The company makes rapid diagnostic tests — products that help the doctors do their jobs more quickly and efficiently, he said.
These tests save people a lot of money by figuring out early what needs to be done, Cramer said. But Biosite is truly a “pipeline story,” continually reinvesting its money to create new products, he said.
The reason Cramer said he’s talking about Biosite now is because “it’s sitting on top of a new product cycle,” which should create major upside for the stock. In addition, although only four analysts are covering Biosite right now, he believes it should get more and better coverage as it rolls out its new products.
Plus, the stock has a major short position, which could very likely create a short squeeze and cause the stock to bounce, Cramer said. The shorts, he said, are attacking Biosite and will be penalized for it.
Moreover, in addition to having the product cycle, backing of its own management and smart money, factors that make Cramer believe Biosite is a buy, it also has had “meaningful buybacks.” Sun Will Rise Again
Cramer’s second speculative pick, Sun Microsystems (SUNW) , is a company he has “hated for a very long time.”
However, because new management is “shaking things up” at Sun Micro, Cramer believes the stock is an “under-$10 turnaround.”
At the same time, he warned viewers against acting too fast and paying too much for the stock. Be careful and look for a good entry point, Cramer said, adding that he sees two points of upside for this stock only if people play by his rules and wait until at least Monday afternoon to buy it.
Although Sun Micro has been a “loser,” the turnaround here is real at last, he said. First, the company is cutting costs, which means higher margins, and its product sales are growing, Cramer said.
Plus, it “has a lot of upgrade potential,” with a server business that’s “en fuego” and a “strong” software business, he said, advising people to buy it patiently and carefully with limit orders. Cramer’s Game Plan
According to his game plan for next week, Cramer believes people should consider buying GlobalSantaFe (GSF) ahead of when it reports on Monday, because he believes it will have a “blowout quarter.”
However, he expects that Marvell Technology (MRVL) , which he owns for his Action Alerts PLUS charitable trust, will report a bad quarter after market close on Monday. Cramer advised viewers to buy Marvell after it gets hit on Monday, because Analog Devices (ADI) said earlier this week that there could be a bottom in the chip inventory cycle, which means the negativity for Marvell should subside.
On Tuesday, Blockbuster (BBI) reports, and Cramer recommends market players sell a little before it reports, wait for everyone to take their profits in the stock and then buy some back.
Similarly, he told people to sell a little Dynegy (DYN) before it reports Tuesday and buy it again after everyone has left it and taken profits.
Cramer suggested people take a look at and consider buying Foster Wheeler (FWLT) and McDermott (MDR) , both of which he believes will report “solid earnings.”
Further, he told people to buy Charter Communications (CHTR) before it reports and to only buy some Sprint (S) after it reports if it has an “incredibly miserable” quarter.
Other companies that report in the latter half of next week that Cramer considers good buys are Gap (GPS) , Viacom (VIA.B ) and VeriFone (PAY) .
Mad Mail
In the show’s “Mad Mail” segment, in response to a viewer who wrote in, Cramer said that he believes it’s better to buy the stronger company, like Sirius Satellite Radio (SIRI) , rather than the weaker company, like XM Satellite Radio (XMSR) , in an anticompetitive merger, because whether or not the deal goes through, the former should go up. Lightning Round
Cramer was bullish on Suncor Energy (SU) , EnCana (ECA) , Verizon (VZ) , AT&T (T) , Hewlett-Packard (HPQ) , Vasco Data (VDSI) , Devon Energy (DVN) , Arch Coal (ACI) , Peabody (BTU) , General Maritime (GMR) , Prudential (PRU) and Quest Diagnostics (DGX) .
Cramer was bearish on Oilsands Quest (BQI) , Cellcom Israel (CEL) , Sprint (S) , Petrohawk Energy (HAWK) , Frontline (FRO) and Tronox (TRX) .
For more of Cramer’s insights during the Lightning Round, click here.
Want more Cramer? Check out Jim’s rules and commandments for investing from his popular book by http://www.thestreet.com/tsc/cramerbook.
1 What would best describe your stance heading into the coming week of trading?
Bullish
Bearish
Neutral
2 Which of these sectors do you think is set to move up in the coming week?
3 Which of these sectors do you think is set to move down in the coming week?