'RealMoney' Radio Recap: Shirk Merck

Cramer said investors should be patient with Sirius and maybe Comcast, but it's time to flee this Vioxx mess.

Author:: TSC Staff
Publish date:: Aug 2, 2005 3:41 PM EDT

Believe it or not, stocks need their rest too, James Cramer said on his

"RealMoney" radio show Tuesday.

With all the happy headlines coming out of

Sirius Satellite Radio

Tuesday and the market posting a modest gain, investors may have been wondering why the satellite radio stock dropped 2%. It's not because the game is rigged, Cramer told listeners. He said investors who anticipated good news in past months are now taking a break to digest gains.

"Lots of people don't understand that stocks move constantly in anticipation of the future," said Cramer. "When the good news comes out, we still get people who take profits because they think the big gains have been made. There are tons of reasons to take profits."

In a move reminiscent of the late 1990s, Sirius is up 70% from a few months ago. Cramer told listeners that asking more from the stock makes you "hoggish," which he said isn't good.

"This is not an irrational game. It's a game where you can win, if you follow the rules," said Cramer.

Danger Zone

Cramer placed

Merck

(MRK) - Get Report

in the danger zone Tuesday, citing recent trial setbacks on Vioxx. "When a class action suit is certified and filed for a large class, you have lost control of the company," said Cramer. "It does not matter if you increase your dividend or buy back stock or have great results."

In the case of tobacco manufacturer

Altria

(MO) - Get Report

, a Cramer

ActionAlertsPLUS holding, the company has put the class action lawsuit behind it. Not so with Merck, said Cramer.

"The stock will seriously underperform because of the terrible headlines forthcoming as the trial and suit rage on," Cramer said. "It's a great American drug company, and it's a shame, but you should fire Merck."

Cramer's Callers

Cramer was pleased with

Comcast

(CMCSA) - Get Report

through the 1990s, but he is disappointed with it now. On the conference call, he heard a lot of anger in CEO Brian Roberts' voice regarding the stock price. So Cramer is going to be patient for a while. If it continues to stand still, then he may fire it in a few months.

Cramer told an email writer that if they want to play higher PC sales, don't buy

EMC

(EMC)

. Instead, pick up

Intel

(INTC) - Get Report

Cramer still loves tech and a rising tide lifts all boats. That should include

Cisco

(CSCO) - Get Report

and

Microsoft

(MSFT) - Get Report

. Is Cisco a bargain? No. But he thinks it's a buy.

"It's not a trade this time, it's an investment," exhorted Cramer. "Please do not flit in and out."

GameStop

(GME) - Get Report

is Cramer's pick with a big Xbox season on the horizon. "It's the source for video games in this country," he said.

Cramer said he is not going to swap out of

Motorola

(MOT)

to get into

Vodafone

(VOD) - Get Report

. He also said he remains bullish on

eBay

(EBAY) - Get Report

, with its "cult-like following" and great management led by CEO Meg Whitman.

Another caller wanted to know what to do with

Chicago Mercantile Exchange

(CME) - Get Report

. Cramer said the big gains have been made, so it's time to find a new game to play.

Cramer is still negative on the steel industry, even though Morgan Stanley upgraded the sector today. Cramer said he believes there will be overcapacity in the steel industry with China's entry, and you don't want to be caught in an industry when you can't get out.

At the time of publication, Cramer was long Altria, Comcast, GameStop, Intel and Motorola.

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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