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.

Stockpickr

Cramer said Medicare dialysis reimbursements are based on a so-called "composite rate," an aggregate number that is without an annual update formula to adjust for inflation. The composite rate has only increased two times in the past twelve years, for a total of just 3.6%.

However this year's spending bill allows for a 1% increase in 2009 and 2010, and establishes a formula to regularly adjust for inflation.

Cramer said that the dialysis market is a duopoly between Fresenius and DaVita (DVA Quote - Cramer on DVA - Stock Picks), which collectively control 60% of the U.S. market.

Cramer said both Fresenius and DaVita are terrific companies, but he likes the larger Fresenius for its growth and international footprint. With 173,000 patients worldwide, Fresenius maintains a 30% share of the market and is a vertically integrated dialysis company. Cramer called the company the "best of breed," with 25% of the company's sales coming from dialysis products.

Cramaer said he also likes Fresenius for its expansion into high-growth markets. While its U.S. revenues grew 11% domestically, its international revenues grew 24% in 2007.

With the Chinese dialysis market alone expected to grow 30% to 40% in 2008, Fresenius is poised for growth. The company trades at just 17 times its consensus earnings, but maintains an 11% long-term growth rate.

Cramer called Fresenius a $65 stock masquerading as a $54 stock and expects the company to earn $3.26 a share compared to the $3.10-a-share estimates for 2009.

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).

Lightning Round

Mastercard (MA Quote - Cramer on MA - Stock Picks), Accenture (ACN Quote - Cramer on ACN - Stock Picks), Rex Energy (REXX Quote - Cramer on REXX - Stock Picks), Chesapeake Energy (CHK Quote - Cramer on CHK - Stock Picks), Applied Materials (AMAT Quote - Cramer on AMAT - Stock Picks), First Solar (FSLR Quote - Cramer on FSLR - Stock Picks) and Consolidated Edison (ED Quote - Cramer on ED - Stock Picks).

Cramer was bearish on American Oriental (AOB Quote - Cramer on AOB - Stock Picks), Visa (V Quote - Cramer on V - Stock Picks), Tata Motors (TTM Quote - Cramer on TTM - Stock Picks), ingli Green Energy (YGE Quote - Cramer on YGE - Stock Picks), BJ's Restaurants (BJRI Quote - Cramer on BJRI - Stock Picks) and Canadian Solar (CSIQ Quote - Cramer on CSIQ - Stock Picks).

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

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

1 2
Next Page »
At the time of publication, Cramer was not long on any stock.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, TheStreet.com or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor TheStreet.com, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.

Your Recent Quotes: Quote Up0 | Quote Down0
Dow S&P 500 NASDAQ
Oil*
Gold
10 Yr
0.00%
%
%
%
Data delayed 20 min
Free Newsletters from TheStreet

Cramer's Daily Booyah!
Highlights of Jim Cramer's videos
on TheStreet.com TV & his
"Mad Money" TV show.
Before the Bell
All the information you
need to position yourself
for the day ahead.
Submit
We respect your privacy.

Premium Stock Ideas
Access Action Alerts Plus to find out Cramer’s latest picks now!