James Cramer was talkin' about a revolution in health care stocks on his
"RealMoney" radio show Monday.
Cramer said the biggest stock market story of the next six months is going to be health care. He said cost containment and drug disbursement companies will be the big winners when Medicare changes kick in next year. But since the stock market discounts prices, you need to move in -- carefully, of course -- or else the gains will be gone when health care stocks are pushed into overdrive, Cramer said.
Cramer's plan is to own the best and safest stocks regardless of the coming change in law. Cramer's top five picks to take advantage of the coming revolution in health care include:
UnitedHealth Group (UNH) - Get Report, which he called the best cost-containment company in the country. "At $51, this is a great buy," Cramer said.
Caremark (CMX) , which is a pharmacy benefit manager with fantastic Medicare exposure, Cramer said.
Omnicare (OCR) , a company in "the sweet spot" in the institutional pharmacy business, Cramer said.
Walgreens (WAG) and CVS (CVS) - Get Report, a pair of "regular old pharmacies" poised to do well, Cramer said.
Aside from those five stocks, which Cramer considers must-owns, he also said he likes
One stock Cramer warned against was
, a pure-play managed care services company that "will get you killed," he said.
Cramer warns there might be some profit-taking this week after the market started hitting highs last week. He said the financials are done going up until the
stops tightening, so "you might consider swapping out of financials and getting into health care-cost containment."
In response to a caller, Cramer said
Sociedad Quimica y Minera de Chile
is not done going up, but if you want to get in you should probably wait for a pullback. "New devices require longer batteries and this company has a lock on lithium," Cramer said.
Asked how investors should measure industry performance based on a single company's results, Cramer said last week's
call showed how to play it. Nokia said price competition was tough, but a look at
earlier in the week showed that it was excelling. "There's two sides to every story, the sector metrics and the company metrics," he said.
In the food sector, Cramer said if you want to bet on the growth of organic foods, then just buy
-- don't go shopping the aisles for one of its suppliers.
He also likes
, which is a possible takeout target if
still wants a yogurt maker after it backed away from
Cramer was cooler on
, which he called a "big sprawling company." He said Hewlett is locked in a range until new CEO Mark Hurd figures it out. "People thought Hewlett was going to buy
, but that's not going to happen," he said.
Elsewhere, Cramer told a caller he likes
. He says that if his sectorwide bet on tech in the second half is right, then "Cisco will eventually go up too, but slowly."
Finally, Cramer said
reported one of the best quarters he's ever seen.
"It's not an expensive stock even after this run. It's seeing big orders worldwide," said Cramer. "However, you may want to take a little off the table. Don't be a pig -- they get slaughtered."
At the time of publication, Cramer was long GameStop, General Mills, Halliburton, Motorola and UnitedHealth.
James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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