Cramer said while the old Abbott traded at 12 times earnings with a 9% growth rate, the new Abbott is trading as 17 times earnings with growth expected in the low teens. This multiple expansion, along with solid management and conservative guidance makes Abbott Labs a buy, said Cramer.
So what about Abbvie? Cramer said he was not as impressed. Abbvie does have good management and a decent portfolio of drugs, he noted, but the company's main product, Humira, goes off-patent in 2017 -- something that investors will begin to take into consideration soon.
He said this will be huge for the company as investors don't yet know if Abbvie has enough in its pipeline to make up for the coming Humira losses. At its present valuation, Cramer noted Abbvie trades for 11 times earnings, about on par with Pfizer (PFE), which has a solid track record and a known pipeline of new drugs. Cramer advised selling shares of Abbvie.
Off the Charts
In the "Off The Charts" segment, Cramer went head to head with colleague Carly Garner over the future price of natural gas.Cramer said that, typically, natural gas sees a decline in late-January right before rallying between February through April. But with such a glut of natural gas in our country, is the seasonal cycle now broken? The number of natural gas rigs fell by 46% in 2012, but is that enough to stabilize prices? According to Garner's research, the answer is most likely "no," as the price of natural gas has been trading in a wedge pattern since its lows in April 2009. Natural gas currently has a ceiling of $3.70 and a floor of $3.20 with both the RSI, relative strength indicator, and the WPR, or Williams percent range, pointing towards more selling to come. Garner expects that if natural gas falls below $3.20, the commodity could see $2.60 or even $2.15 if emotions begin to trump the fundamentals. Cramer said he agreed with the technicals that, at least in the short term, the price of natural gas could be in trouble. He said that given demand and supply levels, the February rally will likely remain intact, but investors shouldn't consider buying in quite yet ahead of that expected rally.
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