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The time is right for you to own the drug dealers, Jim Cramer told "Mad Money" viewers Thursday, meaning that it's time to buy drugstore stocks.
In the tug of war going on right now between who gets the lion's share of the drug money, Cramer believes that the drugstores have the upper hand.
That's because many drugs are coming off patent this year and their generic versions will be launched, and because of the new Medicare Part D drug benefit, said Cramer.
Though everyone hates generics, pharmacies love them because they make more money from selling generic prescriptions, Cramer said.
Among the many reasons for this, he cited the fact that insurance companies give pharmacies a reimbursement when they fill generic prescriptions.
And Cramer said that branded drugs are more expensive for pharmacies to acquire. That's a lot of money when you think about how many prescriptions a drugstore chain fills, he said.
As for the Medicare Part D drug benefit plan, Cramer acknowledged that it's poorly organized and confusing, and that there are not many people enrolled.
But, he said, just because this has been "a small-scale disaster for senior citizens," that doesn't mean it's been bad for the pharmacies.
There will be new tax breaks for medical expenses that will directly benefit drugstores.
So Cramer said to take a look at
, even though it's not best of breed like
That's because Cramer believes that the stock is cheap, trading near the average market multiple, even though he likes its growth picture.
And CVS is getting to pick the best stuff from
But he told a caller not to sell Walgreen to swap into CVS, because Walgreen is best of breed and "a winner." He added that CVS is more uniquely levered because of what it's getting from Albertson's.
Don't Stick With Teflon
Teflon will be a coating of the past now that the EPA has found that one of the chemicals used to make it has been linked to cancer, Cramer said, and that means there's money to be made.
Rather than sit back and snipe about the compound Perfluorooctanoic Acid (PFOA), or the company that makes it, which is
, Cramer turned to
to find the chemical's replacement and the company that makes it.
According to the article he read in the magazine, a company called
is making a chemical for nonstick coating that has shown itself to be less problematic than PFOA.
The stock leapt last week because it reported a very good quarter, Cramer said, and he thinks the problems with Teflon will create even more upside.
But he also said that it's small stock, so he warned viewers not to bid it up.
( LYO), Cramer told a viewer that he saw nothing in its latest earnings report that bothered him and that the stock may be cheap because natural gas prices are going up a bit.
Don't lose heart, he said.
Bankruptcies are part of the continuing erosion of the American middle class, said Cramer. And while this is in theory a bad thing, he said it still provides an opportunity to make some money.
Cramer said that
First Cash Financial Services
, a pawnshop, is a unique play on this situation.
The company also provides payday loans, a business that Cramer said is not even legal in 25 states. "The interest rates are so high it would embarrass even the Soprano mob," he added.
The stock will do well, Cramer said, because the middle class is taking a beating, and more people have such bad credit that they can't get a traditional bank loan.
We have people who desperately need money and don't have a lot of ways to get it, Cramer added.
Enter First Cash Financial Services. Consensus forecasts see 20% earnings growth for the company, Cramer said, and First Cash is going to create much of this growth by expanding in Mexico.
Finally, Cramer welcomed Steven Rowley, chief executive of
In November, Cramer told viewers to take a look at the stock, and it's up 50 points since that feature ran.
Rowley said that shareholders reacted very positively to Eagle's earnings report and that the company has plenty more upside.
To view Cramer's interview with Rowley, click here.
Cramer was bullish on:
Birch Mountain Resources
Cal Dive International
Cramer was bearish on:
Pier 1 Imports
For more of Cramer's insights during the Lightning Round,
Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by
At the time of publication, Cramer was long UnitedHealth Group and Sears Holdings.
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."
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