RealMoney Radio: Conexant Can't Advance

Cramer says that even with the Motorola deal, stay away from this stock.
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"Given the power shift in Congress, there have been some downright screwy opinions floating out there that involve the Democrats and drug companies," Jim Cramer said on his

"RealMoney" radio show Friday.

Contrary to people's belief, pharma is not overinflated, Cramer said.

Taking

GlaxoSmithKline

(GSK) - Get Report

as an example, he said it has a good 3.5% yield, yet is down almost 10% from where it was in 2001.

"It doesn't make sense that it's down that much," Cramer said. These stocks are "way, way down, even though they are not losing money."

Also, although people are concerned about price controls, these companies are not going to be able to get price controls under President Bush, he said.

"This whole selloff in drugs, a week from now is going to look foolhardy," Cramer said, advising people to wait for price levels in drug stocks to go down and buy more incrementally.

Although some market players believe that low-priced stocks are cheap, and could make them rich, they need to realize that no matter the case, low-priced stocks could go to $0, and lose people all their money, he said.

Conexant

(CNXT) - Get Report

is a $2 stock that people have been buying because they can't resist, Cramer said. It's tempting to think this $2 could make them money because of its recent deal with

Motorola

(MOT)

.

However, Conexant has a "bad balance sheet," he said. "It can't advance much more than it has, because it has to find a way to pay back all the debt is has accumulated."

If people like the business Motorola is giving to Conexant, Cramer suggested buying

Cisco

(CSCO) - Get Report

instead.

It is a "high quality" company that reported a "great" quarter -- and it's in the same business, he said. "Forget the risk of Conexant."

To see the most recent edition of The RealMoney Radio Recap in its entirety, please click here. This recap is published every day around 3 p.m. ET.

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