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Jim Cramer's 'Mad Money' Recap: What Ails the Market? Drug Stocks

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.

NEW YORK (TheStreet) -- Eventually stocks get so cheap compared to their growth rates that you have to act, Jim Cramer told his Mad Money viewers Tuesday. But in the case of the drug and biotech stocks, they're still getting cheaper.

Cramer said the concern over outrageous drug pricing is only growing larger and the drug stocks are competing with the oil patch for the prize of the worst sector in the entire market.

No company seems to be immune to the selling, Cramer said, as investors ponder whether the pricing challenge could be for real and long-lasting.

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The weakness in the biotechs has even spilled over into other high-growth names including Chipotle Mexican Grill (CMG - Get Report) , down 2%, and Skyworks Solutions (SWKS - Get Report) , down 1.4%.

Cramer said that ultimately these pullbacks are a normal part of the boom and bust cycle of which high-growth names are a part. Eventually, shares will become so cheap that investors will have to step up and buy. Unfortunately, we're not yet at that level, so investors need to continue sitting on the sidelines when it comes to anything related to health care.

Cramer's Favorites

Is it time to circle back to the cyber security stocks, those once-loved high-fliers that have been decimated over the past few weeks? Cramer said he's not yet ready to call a bottom in the group, but said these names are relative bargains compared to where they used to trade.

Among Cramer's favorites was Palo Alto Networks (PANW - Get Report) , down 13% from its July highs. Investors will never get this stock at a market multiple, Cramer noted, so this may be the best level you'll find.

FireEye (FEYE - Get Report) has fallen 44% from its highs, thanks in part to the fact that it is not yet profitable. But the stock still made Cramer's watch list, as did CyberArc (CYBR) , down 30% from its peak.

Cramer also gave the nod to Cisco Systems (CSCO) , a stock he owns for his charitable trust, Action Alerts PLUS. Cisco currently trades at just 11 times earnings and has a 3% dividend yield.

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CMG $713.25 0.00%
CYBR $52.20 0.00%
FEYE $31.18 0.00%
PANW $174.12 0.00%
SWKS $80.71 0.00%


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