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Nothing is ever a sure thing on Wall Street, but investing in a non-profit health care company that turns into a for-profit company comes pretty darn close, Jim Cramer told viewers of his "Mad Money" TV show Monday.
Cramer noted one group of stocks that fits this bill: non-profit Blue Cross-Blue Shield affiliates that turn into publicly held, for-profit companies.
Cramer said he's run the numbers on the performance of these stocks, and the numbers show they work. During the first four years in the market, Cramer said he found that these stocks were up 28% a year on average.
Last Friday, a company called
went public, he said, and this one, just like the others, should make people a lot of money.
Investors are lucky because so far this one looks like a dud, Cramer said. It opened only 31 cents higher than its $14.50 price and is now trading at $15.87, still below its expected opening range of $16 to $18.
Non-profit companies, he explained, all start out with non-profitable or barely profitable contracts. But when these health care companies go public, they raise prices on the contracts that don't make money to make investing worth the shareholders' while.
Although a good story, Cramer warned against overpaying for the stock in after-hours trading. "If you don't use limit orders, you're going to get hurt," he said, adding that people should do their homework and buy it next week.
Hologic's Expansive Plans
With long-term visibility, great growth and a great balance sheet, Cramer told viewers
, which he owns for his charitable trust,
Action Alerts PLUS, is his type of company.
He welcomed Jack Cumming, Hologic's chief executive officer, to the show and asked him to give a sense of the company's recent merger with Cytyc.
Cumming said they closed on the acquisition on Oct. 22, and that they're a little bit ahead of schedule. Cytyc, he said, shares the same passion for women's health, so the companies are very much alike.
Concerning Hologic's recent $1.3 billion convertible bond offering, Cumming said the company plans to take the money from the offering and pay down its debt. "We loathe debt," he said, and it has been Hologic's policy not to have that much of it.
Compared to competitors, Cumming said he believes Hologic has a "pretty good" head start when it comes to products. The company, he said, came to market two years behind other companies and is now nine months ahead in the competition for digital mammography.
Cumming was enthusiastic about his company's growth prospects. "We believe that when you have nine No 1. products, you're expected to grow at a fantastic rate," Cumming said.
Critiquing Regis' Stocks
People need to look at the market with a long-term perspective, and not worry about the short-term affects of the
, Cramer said. To see just how the how the holidays are shaping up, he welcomed his next guest, Regis Philbin, to the show.
Christmas, Philbin reassured viewers, is going to be fine. People are lining up outside stores to purchase products, he said. Americans are shopping and getting into the holiday spirit.
Philbin said he has certain stocks he's held on for a while. He asked Cramer what he should do with
Time Warner, Cramer said, had a spike recently, and that's when market players should have sold that stock. Cable is losing traction, he said, advising Philbin to sell some of it.
Philbin's next stock,
Advanced Micro Devices
, should also be sold, Cramer said. The company's problem is that it can't deliver the next chip.
Cramer said he can't advise anyone to hold AMD as long as it has Hector Ruiz at the helm.
When Philbin inquired about
, Cramer said the stock's ticker, JDSU, stands for "just don't sue us." Sell it, he said.
Cramer called Philbin's next stock,
, a "tepid buy."
"It has a shot at coming back," Cramer said.
, he told Philbin, is "the house of pain."
Cramer suggested Philbin buy
, all of which he owns for Action Alerts PLUS.
is good, too, Cramer added. Cramer also recommended
, another charitable trust name, and said
makes sense as well.
Beating Expectations Consistently
Cramer told viewers he has two underpromising, overdelivering "UPOD artists" that should be bought:
"Upod works because the bedrock predictor is the trumping of earnings estimates," he said.
The first upod artist, Teledyne, has tapped into two of Cramer's long-term bull markets: aerospace and oil. Over the past two years, it's beaten estimates by an average of 15% every quarter, and it has taken control of its future through smart acquisitions, he said.
The stock is cheap, but if investors wait, they might be able to get in at a better price, so he said he'd be cautious with this one.
Ansys is the "market leader" in making simulation software and services, he said. Most of its business is done overseas, and 68% of its business is recurring, Cramer said. Moreover, it has met or exceeded expectations 40 consecutive times.
While the stock is not cheap, it has a 19% growth rate and deserves a higher multiple, according to Cramer.
The single best way to know who will beat earnings in the future is finding companies that have done so consistently in the past, he said. Teledyne and Ansys are two such companies, but even without their track records, Cramer believes they'd still be worth owning.
Cramer was bullish on
Annaly Capital Management
Cramer was bearish on
Smith & Wesson
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At the time of publication, Cramer was long Hologic, Freeport-McMoRan, McDonald's, CVS Caremark and Transocean.
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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