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Cramer's 'Mad Money' Recap: The Latin Beat

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Spinal Tap

Medical device makers' stocks should be rocking in this market, Jim Cramer said Wednesday on his "Mad Money" TV show. But, because a number have received Department of Justice subpoenas, Kyphon (KYPH) is the only one that has pricing power, said Cramer.

The DOJ is investigating medical device companies for possible violation of federal anti-kickback rules. Those having received subpoenas include Zimmer Holdings (ZMH), Stryker (SYK), Biomet (BMET), Guidant (GDT), Medtronic (MDT) and St. Jude Medical (STJ), said Cramer. That means those companies won't dare raise prices while the investigation is ongoing, he said.

Although it's stock has done well, St. Jude's, said Cramer, is only up for ancillary reasons. Cramer would ring the register. Another stock in the group, Boston Scientific (BSX), is facing a class-action suit; Cramer wouldn't touch it.

That leaves only Kyphon, a maker of medical devices for spinal ailments, said Cramer. Kyphon hasn't received a subpoena, and that means it has legitimate pricing power, he said.

South America Goes North

President Bush is set to visit Brazil and Argentina in the next four days, and Cramer envisions increased positive media coverage of the Brazilian and Argentinian economies. That should create a rally in Latin American stocks traded there, he said.

Cramer's shopping list of trades for Argentina includes:

  • Petrobras Energia Participaciones (PZE), an oil company;

  • Telecom Argentina (TEO), a telecommunications company that Cramer believes will benefit from media coverage of wireless and Internet growth; and

  • Grupo Financiero Galicia (GGAL), a bank that should benefit from positive coverage of Argentina's economy.

    Cramer's shopping list for Brazil includes:

  • Gol Linhas Aereas Inteligentes (GOL), a profitable, growing airline that can pass higher fuel costs on to customers and that also isn't saddled with U.S.-style labor unions, said Cramer;

  • Companhia Vale Do Rio Doce (RIO), an iron ore and copper mining company;

  • Companhia Siderurgica Nacional (SID), a steel company, as steel demand is strong in developing Latin American countries, said Cramer;

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