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RealMoney Radio Recap: Pfizer ... Pfft!

TheStreet.com Staff

The most "intriguing" rally is in health care and drug stocks, Jim Cramer said on his "RealMoney" radio show Thursday.

The bottom has been put into these stocks postelection, and now they are screaming, "buy, buy, buy!"

He considers WellPoint (WLP Quote) best of breed and also likes MedcoHealth (MHS Quote).

For his charitable trust, Action Alerts PLUS, Cramer said he has been buying Quest Diagnostics (DGX Quote).

He also believes that Schering-Plough (SGP Quote) and Johnson & Johnson (JNJ Quote), which he also owns for his trust, are "too cheap," as is Amgen (AMGN Quote).

However, Pfizer (PFE Quote) is "too expensive," Cramer said.

Pfizer is ramping today because it came out and said it is having a "giant upside surprise." But this is not true, Cramer said.

In fact, the company has fired a lot of people and is in a moment in time where it is trying to "create an upside surprise by lowering its bar," he said.

"Pfizer is a challenged company," Cramer said, adding that there are a lot of drug stocks worth owning more, such as Merck (MRK Quote), Novartis (NVS Quote) GlaxoSmithKline (GSK Quote) and Schering-Plough.

Citi Lite

When a chief executive is in trouble, a disgruntled member of the company's board will likely leak it to the media, said Cramer.

But this is not happening at Citigroup (C Quote) with CEO Chuck Prince, he said.

"Citi is as fat and as happy as I have ever seen it, with the executives perfectly oblivious to the fact that this financial has underperformed every other major financial institution out there," he said.

Although there's a lot of talk that the company needs to be broken up, it's probably because the bank has done nothing, Cramer went on to say.

"I believe that breakup calls make sense, but not until you have someone at the helm who can make a difference," he said, adding he would prefer to have a CEO who understands how to make the business work before the company is broken up.

Because Prince saved the company from being shut down by Elliot Spitzer, Citi shareholders seem "brain dead and happy."

It looks like he will be there for life, Cramer said, urging listeners to sell Citi and buy something else.

Home Alone

The sellers in the homebuilding industry have been "desperate" to sell their houses and are thus cutting their prices, Cramer said.

Buyers who have been waiting for these price cuts should now be ready to buy, he added.

Homebuilders cannot finance their inventories, so they continue to cut prices until they find buyers, which is what is happening now, Cramer said.

After all, the housing business is not an industry that can be kept on the books because houses are really expensive.

In fact, "there is not an industry in the world that can finance nonproducing inventory except oil, which is why I like that business so much," Cramer said. "Its inventory goes up in price as it sits because of a developing multiyear storage."

He believes that the analysts got "lulled" into thinking that homebuilding was a secular grower, and then they discovered it was cyclical, Cramer went on to say. "They downgraded the cyclicals at the bottom of the cycle because the price-to-earnings ratios soared."

Analysts love to wonder out loud where the economy may be going, Cramer said. But if market players open their eyes, he believes they will be able to see for themselves where it is headed.

The pullback of the auto and homebuilding sectors -- "two very important industries that matter to the economy" -- augurs a "big decline" in the economy, Cramer said.

General Motors (GM Quote) and Ford (F Quote) are trying their best to lay off people, and the large homebuilders keep saying they are done with building any more homes, he said.

In fact, the only place Cramer sees money being spent is in the energy industry. Everyone is focused on its rally as mutual funds spill money into oil stocks, he said, adding that the Exxon Mobil (XOM Quote) has become the "anointed" stock in this sector.

Cramer's Callers

Las Vegas Sands (LVS Quote) and MasterCard (MA Quote) may be "beaten down" short term, but they are "winners" long term, Cramer told a caller.

Cramer continued to say he feels "very strongly" that both stocks are going up. If either came down five or six points, he said he would pull the trigger because "even the best ones need to take a breather."

As the airlines have had a "remarkable run," he believes that people should not give back the gains they've made in this sector. Cramer said although he likes Continental (CAL Quote), he is not going to recommend it right here as it has already had a "tremendous run."

Responding to another caller, Saks (SKS Quote) "is in the midst of a major turnaround" and has joined the ranks of Nordstrom (JWN Quote) as a member of the "elite," Cramer said.

Moving on, JPMorgan (JPM Quote) is "fine," but not what Cramer considers a "must own," he told his next caller.

Instead, Cramer said he prefers Bank of America (BAC Quote) as he believes it cares more about its shareholders.

When a caller asked about RF Micro Devices (RFMD Quote), Cramer said he is a Cisco (CSCO Quote) guy when it comes to telecom.

Responding to a caller who said he was in the house of pain with Coldwater Creek (CWTR Quote), Cramer said to buy more because the fact that it's down "is a huge mistake."

He told another caller that he likes AK Steel (AKS Quote), but likes Reliance Steel (RS Quote) better.

Nevertheless, Cramer believes that AK Steel "could get a bid any day and its fundamentals are cheap."