Even Down Here, Health Stocks Are Shorts

These health cost containers still have more to fall, I believe. The person who knows these stocks best, the "ax," so to speak, is Sheryl Skolnick from CRT Capital -- she is awesome. She has been saying since the $60s to avoid United Health (UNH - commentary - Cramer's Take) as the single most vulnerable company in the industry, saying their commercial cost ratio is still out of line and the Street is still as much as 50 cents too high.

To me that means this stock can still be clubbed. If that's the case, you still can't bottom-fish in these stocks, because the shoes keep falling.

I used to own UNH. I was a believer, but it is increasingly clear to me that these companies are hated, have no control of their destiny and are totally wrong about their business models' ability to raise profitability.

If UNH can earn Skolnick's $3 figure -- well below consensus but perhaps not makeable -- it is pretty much a given that it has to have a multiple less than 10. If it is 7 or 8, you see a stock in the low $20s.

That makes it a short here. Even down here.

And I think you have to sell the group again because of UNH, which has a history -- what is now a multiyear history -- of not being correct about its estimates.

Random musings: Gloom surrounds, but the oscillator is at minus-4 and change and expiration is looming. I don't see that much downside from these levels, except for the financials, which are unfathomable. The developer loans are killing them. Just like the S&Ls of 1990. ... Two big calls out of Goldman: the oil service call, which while late is still pertinent, as these stocks are not done going up; and the XM (XMSR - commentary - Cramer's Take) and Sirius (SIRI - commentary - Cramer's Take) call, which shows the damage the authorities have done by keeping the merger from happening. The companies have now burned through all of their money and have to do big refinancings and money-raising. ... Bob Marcin has some major-league stuff, including a good emphasis on the Goldman oil service call.

At the time of publication, Cramer was long Goldman.

ALL JIM CRAMER BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

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. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.