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Jim Cramer, in his "Mad Money" show Monday, said that more than 7 million "teaser" mortgages are likely to be defaulted.
Investors should keep an eye out for the mortgage meltdown's ripple effects and protect their portfolios from the House of Pain.
"Stay defensive," he insisted, as he predicted more problems to come for banks, brokers and funds.
Cramer said to avoid the companies related to lending and homebuilding, such as
Beazer Homes USA
Cramer said to look to the companies focused on staples, soft goods and drugs. He recommended
Procter & Gamble
betting that the mortgage mess will subside, Cramer said. However, Cramer believes that the Fed should cut rates.
Swearing by Schering
One stock Cramer recommended was
, which develops and markets medical therapies and treatments worldwide.
Its brands include Coppertone, Dr. Scholl's, Solarcaine and Tinactin. Schering-Plough's net sales for the second quarter of 2007 totaled $3.2 billion, up 13% from last year. Seven out of 10 of its largest-selling products posted double-digit sales for the second quarter, Cramer said.
The stock is getting knocked down now, but Cramer still believes it's a buy and is naturally far removed from the "mortgage madness." Cramer noted that Schering-Plough CEO Fred Hassan was one of his transformational CEOs back in May.
The company's operating margin is well below the sector's averages, and it recently issued a secondary offering. However, investors should wait for the stock to come in some pricewise before buying, Cramer stressed.
While this is not "an ideal economic climate," Cramer stressed that people still can make money. Even if "we have no control over what the Fed will do," investors must be ready for anything.
Hold the Vodafone
Cramer said investors should consider looking overseas. He recommended
, the second-largest wireless carrier in the world. With 32 million subscribers, Vodafone leads the U.K. and Germany.
Cramer believes Vodafone will bring in more revenue per user. He also pointed out that Vodafone owns a "serious chunk" of
and is part of a still-emerging market; there are still areas of the world without cell phones. And the company has a strong dividend.
Chairman and CEO Jack Cumming to the show and asked him about his company's pending merger with women's health company
When Hologic, which Cramer owns for his charitable trust,
Action Alerts PLUS, finishes its acquisition of Cytyc later this year, it will have $400 million to $500 million in EBITDA and nine No. 1 brands in women's health products, Cumming said.
Moreover, the chief executive said he is not worried about financing the deal, as there is no financial risk.
To view Cramer's interview with Jack Cumming, please click here.
During his "Sudden Death" round, Cramer was bullish on
, which he owns for his charitable trust.
Cramer was bullish on
Gentiva Health Services
Cramer was bearish on
For more of Cramer's insights during the Lightning Round, click here
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At the time of publication, Cramer was long ConocoPhillips, Corning, EMC, Goldman Sachs, Hologic and Sears Holdings.
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