Cramer's 'Mad Money' Recap: June 30
06/30/08 - 07:52 PM EDT
TheStreet.com Staff
Cramer predicted that healthcare and medical reform companies will outperform every sector in the market with the possible exception of oil and gas in the coming quarter.
"Medicare is a huge, non-economically sensitive giveaway to a lot of companies," he said.A Boost for Dialysis Providers
Cramer said Fresenius (FMS Quote - Cramer on FMS - Stock Picks) is poised to benefit from this year's Medicare spending bill. He said dialysis is one area Congress is expected to increase funding, and Fresenius will be the primary benefactor.
A Beleaguered Industry
"If you own a house, and that house has a mortgage, you don't really own it, the bank does," Cramer told viewers. He used the analogy to drive home the point that while the stocks of both General Motors (GM Quote - Cramer on GM - Stock Picks) and Ford (F Quote - Cramer on F - Stock Picks) look cheap in the single digits, it's the bond holders, not the stock holders, who really control the company. Cramer said that both GM and Ford have simply borrowed more than they can repay, leaving the bondholders in control of their destiny. He said that despite their huge assets, GM has a negative book value and Ford's book value is barely zero. Cramer compared the fate of both companies to that of Bethlehem Steel in the 1980's. Then, Bethlehem Steel was one of the largest companies in the world. But over time, its pension, healthcare and bond obligations crushed the company until one day, it simply canceled its common stock. "The bondholders are in control," said Cramer, "not the shareholders." Cramer said he wouldn't own either company and extended the warning to shares of many of the ailing bank stocks as well. He called all of them far more speculative than he would ever recommend on "Mad Money." "No matter how low they are," he cautioned, "they can still go to zero."A Juicy Dividend
Cramer welcomed Glen Post, chairman and CEO of CenturyTel (CTL Quote - Cramer on CTL - Stock Picks) to the show to discuss his company's recent decision to increase its dividend ten-fold to return more money to its shareholders. Post said that after years of buying back shares, CenturyTel still had significant free cash flow and felt the increase would help bridge the gap between its share price and the true value of the company. He said that CenturyTel has a high-quality fiber network in place and is bringing broadband Internet services to over 85% of their customers today. He expects to see broadband services continue to be strong and expects CenturyTel to continue to prosper. Cramer commended Post for returning value to shareholders and told viewers to just start buying.Sudden Death
Cramer was bullish on Nike (NKE Quote - Cramer on NKE - Stock Picks) and Research In Motion (RIMM Quote - Cramer on RIMM - Stock Picks). He was bearish on Corning (GLW Quote - Cramer on GLW - Stock Picks).
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