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The Fountain of AcquisitionMerger stories come and go and rarely make you money, but Jim Cramer on Wednesday's "Mad Money" TV show told viewers to start buying Allergan ( AGN) because it acquired Inamed ( IMDC). The stock is down because of the acquisition, a purchase that will ultimately make it a one-stop shop for artificial youth. "And there's a bull market in artificial youth," Cramer said, adding that the aging boomers are one of the vainest generations in history. With the acquisition, Allergen will add more vanity procedures to its Botox treatment, the most popular nonsurgical procedure of 2004. As for the competition, Cramer said that it's more exciting than Syneron Medical ( ELOS) and IntraLase ( ILSE) because the deal allows it exposure to all cosmetic treatments. Inamed brings to the table breast implants, skin graft alternatives to deal with scars and dermal-filler products to smooth wrinkles.
Calpine Can't Hurt YouCramer also warned viewers that a Calpine bankruptcy doesn't mean trouble for its competitors, particularly Dynegy ( DYN). It's not another cheap, debt-ridden utility company like Calpine, Cramer said. Dynegy just got upgraded by Moody's, has a third of the debt that Calpine had and has seen three straight profitable quarters, he said. "It should soon be universally considered if not good, viable -- and worth more than it's priced at," said Cramer. A last key difference is that, unlike Calpine, Dynegy isn't dependent on natural gas. The company is using coal from the Powder River Basin, the largest source of coal in the U.S. And with natural gas prices so high, coal starts to look a whole lot cheaper.
Cramer's stock pick of the day is Talisman Energy ( TLM) because he believes that mutual fund managers will pour money into the stock in January. At the beginning of every year, Cramer told viewers, mutual fund managers sit down and anoint stocks that in turn do well because mutual fund money pours into them. " Schlumberger ( SLB) was anointed last year, and look how well it did compared to its peers," said Cramer. "You want these stocks before they're anointed, before all the mutual fund buying comes in over the transom in January," Cramer said. Get in before the stock starts to rise, he added. The only sector Cramer believes that mutual funds will want is oil, and of that sector he picks Talisman, the former Canadian unit of BP ( BP), because of their growth prospects. "Fund managers will buy this stock because it should be able to see production growth of 10% per year through 2008,"said Cramer. Compare that with most major oil companies that have been looking at production decreases.
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