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Cramer's 'Mad Money' Recap: Spec Medicine

TheStreet.com Staff

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Kinetic Concepts (KCI Quote) is a speculative medical stock folks should consider getting into, Jim Cramer told viewers of his "Mad Money" TV show Friday.

Cramer, who each Friday devotes part of his show to speculative stock ideas, suggested two such plays for viewers to research over the weekend.

First up was Kinetic Concepts, which designs and manufactures wound-care and therapeutic-service products. Cramer said he considers the stock speculative because "it's not a pastiche." It doesn't have a variety of product but instead is only levered to the wound-care business, he said.

For medical companies, Cramer generally likes ones that have a mosaic of businesses, but in the case of Kinetic Concepts he believes it's OK to speculate. Wall Street, he said, "falls in love" with these types of companies before "falling in hate" with them. Cramer believes all market players have to do here is get into Kinetic Concepts during that honeymoon phase.

The stock took a "nasty beating today," but Cramer said he's not that worried. All of the smaller stocks in the medical-device sector are "notorious" for having bulls and bears fighting it out and pushing the stocks either up or down, he explained. This time, Cramer's money is on the bulls.

The big fear, he said, is that Kinetic Concepts, which has reached about 90% of the saturation point in the wound-care business, won't be able to defend its market share from Smith & Nephew (SNN Quote), which entered the market via an acquisition today of BlueSky Medical Group.

However, Cramer believes Kinetic Concepts "has too many competitive advantages" to not be able to able to defend its market share. In addition, he believes Kinetic Concepts' decline today was "overdone." The stock closed down 3% at $47.25 Friday.

The bandages make up just 10% of the company's total revenue, Cramer said. This stock should bounce back. "If you have an open spot in your portfolio, consider filling it with KCI."

Another great speculative medical name is Micrus Endovascular (MEND Quote), Cramer told viewers.

On Thursday Micrus' stock got knocked down a "hefty" $2, and those who owned it are in the house of pain, he said. But now Micrus is lower, offering a great entry point for people to get into the stock, Cramer said. The stock peaked at $25 and then moved back because it didn't get approval to use microcoils as a way to treat cerebral aneurysms in China.

The market is only looking at the stock short term, Cramer said. This approval hasn't been canceled, just postponed.

Micrus is a small company, but it maintains the second position in its market. Boston Scientific (BSX Quote) and Johnson & Johnson (JNJ Quote) are competitors, but Cramer said he wouldn't worry about them.

Everybody's fretting about the China nonapproval, but it could still happen, he said. To be speculative, you need to take risks. Cramer advised buying Micrus, waiting for the China approval and then selling into the strength the approval creates.

Micrus could even be taken over, he added, as Big Pharma companies are always looking to get their hands on a good small company like this. "So you could win two ways," Cramer said. "It either makes you money or it will get bought out."

However, Cramer stressed that a stock like this should be bought incrementally and with limit orders.

Next Week's Game Plan

During the show's "Game Plan" segment, in which Cramer offers trading ideas for the coming week, he suggested viewers take a look at Thermo Fisher Scientific (TMO Quote). The scientific-instruments maker is hosting an analyst meeting on Tuesday, and Cramer recommended investors get in ahead of it.

Cramer also advised buying J.C. Penney (JCP Quote) and Kohl's (KSS Quote) before the retailers report on Thursday.

The worst has already been priced into the retailers, Cramer said. In fact, he said he is so bullish on the retail sector that he is suggesting putting half your position into Home Depot (HD Quote) before the home-improvement chain reports on Tuesday.

Even though there is a chance the earnings might not be great at Home Depot, Cramer said it is transitioning to "retail-savvy management."

Further, TJX Companies' (TJX Quote) quarter should be "terrific" when it reports Tuesday, and Jack in the Box (JBX Quote) should offer a "gigantic beat" that same day, he said, advising people to consider buying the retailer and restaurant ahead of their quarterly reports.

Deere (DE Quote) reports next week on Wednesday. But here, Cramer advised people to wait and buy the machinery stock after it reports. The stock's already run, he said. Let some people sell it and then buy it after earnings.

Six Flags Set to Fly

Cramer welcomed Six Flags (SIX Quote) CEO Mark Shapiro to the show and asked if the amusement company's recent quarter is signaling something bigger for the future.

Shapiro said Six Flags is in a good position for an "extremely good summer season." The group sales and season passes the company has already sold show that it's "well-positioned to knock it out of the park this year," Shapiro said.

Six Flags has spent more money on marketing and training its staff, and it has recruited more employees, the chief executive continued. Although the company can't control what the weather will be like, Shapiro said what it can do is "increase value proposition for our guests."

After all, "word of mouth is the best advertising we can get," he said.

Cramer said that "Shapiro is good to go" and that he's sticking by him and his stock.

To view Cramer's interview with Mark Shapiro, please click here.

Lightning Round

Cramer was bullish on Spartan Motors (SPAR Quote), Force Protection (FRPT Quote), Enterprise Products Partners (EPD Quote), GameStop (GME Quote), Rio Tinto (RTP Quote), Freeport-McMoRan Copper & Gold (FCX Quote), BHP Billiton (BHP Quote), IBM (IBM Quote), Cheesecake Factory (CAKE Quote), Chipotle Mexican Grill (CMG Quote), Darden Restaurants (DRI Quote), Jack in the Box (JBX Quote), Cepheid (CPHD Quote), Abbott Laboratories (ABT Quote), Schering-Plough (SGP Quote) and ITT Educational Services (ESI Quote).

Cramer was bearish on Blockbuster (BBI Quote), NuStar GP Holdings (NSH Quote), Activision (ATVI Quote), Sysco (SYY Quote), Trump Entertainment (TRMP Quote) and Biovail (BVF Quote).

For more of Cramer's insights during the most recent Lightning Round, click here.

Want more Cramer? Check out Jim's rules and commandments for investing from his popular book by clicking here.

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? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting