Click here for an archive of Cramer's "Mad Money" recaps.
"We need stocks that aren't economically sensitive," Jim Cramer told viewers of his "Mad Money" TV show Monday.
That's why he predicted the next big move in stocks will come from the Medicare spending bill now working its way through Congress.
Cramer noted that the U.S. government will spend upwards of $454 billion on Medicare this year, up from just $371 billion in 2006. This means a windfall for many companies poised to take advantage of the huge government handouts that are about to take place, he said.
According to Cramer, investors who took advantage of last year's Medicare bill, which only allocated six months worth of Medicare spending, were rewarded handsomely.
He noted that long-term care hospitals benefited from last year's bill, with stocks such as
, where was up 16% in the weeks that followed.
In-patient rehabilitation facilities also benefited. For example,
, rallied 16% after the bill was announced.
On the downside, Cramer noted companies such as the oxygen-and-dialysis providers nose-dived after funding for their operations were left out of the bill at the last minute.
He called the Medicare bill "low-hanging medical fruit" and told investors to "profit right along side of the profiteers."
Cramer: My Tech Picks
var config = new Array(); config<BRACKET>"videoId"</BRACKET> = 1634719328; config<BRACKET>"playerTag"</BRACKET> = "TSCM Embedded Video Player"; config<BRACKET>"autoStart"</BRACKET> = false; config<BRACKET>"preloadBackColor"</BRACKET> = "#FFFFFF"; config<BRACKET>"useOverlayMenu"</BRACKET> = "false"; config<BRACKET>"width"</BRACKET> = 265; config<BRACKET>"height"</BRACKET> = 255; config<BRACKET>"playerId"</BRACKET> = 1243645856; createExperience(config, 8);
Cramer predicted that healthcare and medical reform companies will outperform every sector in the market with the possible exception of oil and gas in the coming quarter.
"Medicare is a huge, non-economically sensitive giveaway to a lot of companies," he said.
A Boost for Dialysis Providers
is poised to benefit from this year's Medicare spending bill. He said dialysis is one area Congress is expected to increase funding, and Fresenius will be the primary benefactor.
Cramer said Medicare dialysis reimbursements are based on a so-called "composite rate," an aggregate number that is without an annual update formula to adjust for inflation. The composite rate has only increased two times in the past twelve years, for a total of just 3.6%.
However this year's spending bill allows for a 1% increase in 2009 and 2010, and establishes a formula to regularly adjust for inflation.
Cramer said that the dialysis market is a duopoly between Fresenius and
, which collectively control 60% of the U.S. market.
Cramer said both Fresenius and DaVita are terrific companies, but he likes the larger Fresenius for its growth and international footprint. With 173,000 patients worldwide, Fresenius maintains a 30% share of the market and is a vertically integrated dialysis company. Cramer called the company the "best of breed," with 25% of the company's sales coming from dialysis products.
Cramaer said he also likes Fresenius for its expansion into high-growth markets. While its U.S. revenues grew 11% domestically, its international revenues grew 24% in 2007.
With the Chinese dialysis market alone expected to grow 30% to 40% in 2008, Fresenius is poised for growth. The company trades at just 17 times its consensus earnings, but maintains an 11% long-term growth rate.
Cramer called Fresenius a $65 stock masquerading as a $54 stock and expects the company to earn $3.26 a share compared to the $3.10-a-share estimates for 2009.
A Beleaguered Industry
"If you own a house, and that house has a mortgage, you don't really own it, the bank does," Cramer told viewers.
He used the analogy to drive home the point that while the stocks of both
look cheap in the single digits, it's the bond holders, not the stock holders, who really control the company.
Cramer said that both GM and Ford have simply borrowed more than they can repay, leaving the bondholders in control of their destiny. He said that despite their huge assets, GM has a negative book value and Ford's book value is barely zero.
Cramer compared the fate of both companies to that of Bethlehem Steel in the 1980's. Then, Bethlehem Steel was one of the largest companies in the world. But over time, its pension, healthcare and bond obligations crushed the company until one day, it simply canceled its common stock. "The bondholders are in control," said Cramer, "not the shareholders."
Cramer said he wouldn't own either company and extended the warning to shares of many of the ailing bank stocks as well. He called all of them far more speculative than he would ever recommend on "Mad Money." "No matter how low they are," he cautioned, "they can still go to zero."
A Juicy Dividend
Cramer welcomed Glen Post, chairman and CEO of
to the show to discuss his company's recent decision to increase its dividend ten-fold to return more money to its shareholders.
Post said that after years of buying back shares, CenturyTel still had significant free cash flow and felt the increase would help bridge the gap between its share price and the true value of the company.
He said that CenturyTel has a high-quality fiber network in place and is bringing broadband Internet services to over 85% of their customers today. He expects to see broadband services continue to be strong and expects CenturyTel to continue to prosper.
Cramer commended Post for returning value to shareholders and told viewers to just start buying.
Cramer was bullish on
Research In Motion
He was bearish on
Cramer was bearish on
ingli Green Energy
Want more Cramer? Check out Jim's rules and commandments for investing by
For more of Cramer's insights during the Lightning Round, click here
At the time of publication, Cramer was not long on any stock.
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."
None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, TheStreet.com or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor TheStreet.com, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.
Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.