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Cramer's 'Mad Money' Recap: Fed Stranglehold

TheStreet.com Staff

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On his "Mad Money" TV show Monday, Jim Cramer unveiled his "ultimate defensive 'Three Bs' portfolio," a necessity in a slower economy.

Cramer told viewers he has three companies that belong to the medical-industrial complex that people should consider buying. These companies, Cramer said, don't export and are American companies that he still feels comfortable recommending.

They are all "solid as richly valued stocks," but there's a decline here in each of their stock prices, which market players should take advantage of, he said.

The first 'B' name is CR Bard (BCR Quote), Cramer said. Although the stock is up 25% since he first suggested buying it in September 2005, Cramer believes Bard should continue on its pathway up.

Bard, Cramer said, is a "primo" medical device maker. Last year, 80% of its sales came from markets where it ranks No. 1 or No. 2 in market share. In 2005, Cramer advised buying Bard as a takeover target, and on Monday Cramer recommended it the same way, saying the company is small enough to swallow.

However, now the Democrats are "threatening to remove antitrust from the commerce department and put it back in the justice department," which will make anticompetitive mergers "a lot harder" to complete once, Cramer said.

Therefore, any company wanting to pick up Bard "has the gun to its head," he explained. This makes the takeover angle much more attractive.

Moreover, no matter what happens to the economic climate, Bard will not be affected, because it makes medical devices that people cannot live without, Cramer assured viewers.

Plus, Bard is sitting on half a billion dollars in cash, which it can use to increase its dividend or purchase companies of its own, he said.

Is It Safe?

The second stock Cramer suggested viewers purchase as part of his "Three B's Portfolio" was Becton Dickinson (BDX Quote).

This, he said, is a "safe" medical device and diagnostics company that makes needles "of all kinds." And with two "smart" acquisitions it recently made, Becton now has an "ultrafast" test to detect drug-resistant staph infections, Cramer said.

Although this play is up 31% since last July, when Cramer told people to think about buying it, Becton has more room to run, he said. Last week, the company reported a great quarter with raised guidance.

Plus, Cramer believes all these medical device companies are "safe from the wrath of the Democrats" and deserve buy ratings. He said he sees this stock going "much, much higher."

While the Fed continues to "strangle the economy," owning stocks such as Becton Dickinson and CR Bard is a good idea, at least until Fed Chairman Ben Bernanke "grows a heart," Cramer said.

Best of B Breed

The third 'B' pick Cramer said he likes is Baxter International (BAX Quote), which unlike Boston Scientific (BSX Quote) is best of breed. However, he said he wouldn't buy Baxter until it pulls back a bit.

Though Baxter has outperformed Boston Scientific as well as Becton Dickinson and CR Bard, that is not what makes it best of breed, Cramer explained. Instead, a lot of what distinguishes Baxter is the diversity of its products, he said.

Its broad range of products and services makes it less speculative and more reliable than BSX. Also, Cramer said he didn't like Boston Scientific's recent quarter "one bit." He understands that people might be attracted to Boston Scientific because it's cheaper, but they should understand that it's cheaper for a good reason, Cramer said.

Moreover, if Becton Dickinson and CR Bard are the Brahms and Bach of medical devices, then Baxter is the Beethoven, Cramer said. "These three should work into the downturn that I am foreseeing right now."

Mad Mail

In his "Mad Mail" segment, Cramer told a viewer that he bought NYSE Euronext (NYX Quote) for his Action Alerts PLUS charitable trust when it was at $84 because he wasn't able to get into it earlier.

"I feel strongly that this is the future" and that NYX is levered more to Europe than the U.S., he said. "I am sticking with it, and I think it is going to be a great, great stock for the next few years."

Cramer praised one mailer for taking profits in Cummins (CMI Quote) and told another that he believes that Rockwell Collins (COL Quote) is not participating with the other defense stocks and going up because it did not have a great quarter.

Cramer said he prefers General Dynamics (GD Quote) or Northrop Grumman (NOC Quote) to Rockwell Collins.

During his "Sudden Death" round, Cramer was bullish on Cephid (CPHD Quote). He was bearish on Quest Diagnostics (DGX Quote), which he owns for his charitable trust, Action Alerts PLUS.

Lightning Round

Cramer was bullish on Apple (AAPL Quote), Ford (F Quote), Abbott Laboratories (ABT Quote) and Level 3 Communications (LVLT Quote).

Cramer was bearish on Flextronics International (FLEX Quote), Solectron (SLR Quote), Jones Soda (JSDA Quote), Cemex (CX Quote) and MEMC Electronic Materials (WFR Quote).

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 clicking here.