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In this game you need to be ruthless, so take a look at debt collection, Jim Cramer said Thursday on his "Mad Money" TV show.
There have been plenty of stories about how a rash of new bankruptcy filings hit right before the new bankruptcy laws went into effect, Cramer said, and that's good news for
Portfolio Recovery Associates
While the company doesn't actually repossess your car, it's the new face of the repo man in a metaphorical sense, he said. And it likes to buy debt from credit card companies for pennies on the dollar and then collect.
The company also focuses on homeowners because they are likely to stop paying credit card debt before they stop paying their mortgages, he said.
Portfolio Recovery had 29% earnings growth last year, and it has a proprietary computer system that allows it to determine what debt is worth going after and what debt portfolios it should forget about, according to Cramer.
He told a caller that people falling into debt is a long-term story, so the stock will probably stay a strong play.
He told another caller that while debt collectors will profit from all the new bankruptcies, credit cards won't make money off of the trend. For example, he said,
Capital One Financial
had an okay quarter but not a blowout. However, he was reluctant to recommend selling the company because it's cheap.
Varian on the Vanguard
"I don't want to sound morbid and I don't want to sound offensive, but here could be a lot of money in curing cancer," Cramer said.
That's why he's bullish on
Varian Medical Systems
Everyone is focusing on drug treatments, but Cramer likes this radiation play.
Usually, the cure is as harmful as the disease, he said, but Varian has a machine that could change that, the Image-Guided Radiation Therapy (IGRT) system.
He said the company was the best of breed in instruments for treating cancer with its SmartBeam Intensity Modulated Radiation Therapy, or IMRT system, even before it started working on the newer IGRT system.
The company may have as much as 70% of the market in the U.S. and perhaps 60% globally, he said, calling it a dominant player on the rise.
As far as growth is concerned, the new system will cost $2 million a machine, vs. $1 million for the old IMRT system.
And IGRT is accessible through Medicare reimbursement effective the first of this year.
Even though Varian CEO Richard M. Levy is retiring in February, the company's long product cycle should trump any bumps that could be caused by a change in management, said Cramer.
An AMR Armistice
In his weekly go-round with senior
columnist Herb Greenberg, the two agreed that viewers should stay away from
Greenberg said based on AMR's numbers, it's probably going to lose money and furthermore the company has a lot of debt.
While Cramer likes to "pimp stocks all over the world," Greenberg had some words of caution for investors looking to buy on overseas exchanges.
Most importantly, he said, you should only buy companies that you can easily research, which can be difficult with some overseas companies.
Hear Ye, Hear Ye
Finally, Cramer wrapped up the show with a hearing aid play that is not based in the U.S.
trades on the Milan Stock Exchange, which is where he suggested picking it up since its American depository receipts (ADRs) trade on the pink sheets in the U.S.
It is also a billion-dollar company that has grown mainly through acquisitions, he said.
While this can often indicate that a company's management doesn't think its business has much organic growth left, Cramer said the story is different with Amplifon because it has been acquiring companies that fit in with its core business.
It bought National Hearing Centers in 2003, a hearing aid retailer whose centers are mostly located in Wal-Mart stores, Cramer said, meaning that Amplifon has a relationship with the biggest retailer on earth.
It also bought Miracle-Ear, a premier name in hearing aids, he added.
He warned viewers that the company has a low trading volume, so they need to be careful not to buy too much and bid up the stock.
Cramer was bullish on:
Advance Micro Devices
Cramer was bearish on:
International Game Technology
Lions Gate Entertainment
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