Now that they're down, buy Merck ( MRK) and Schering-Plough ( SGP), Jim Cramer said on CNBC's "Stop Trading!" segment Friday.
"Just so you know, I just issued an alert. ... You should buy it here," he said of the cosponsors of Vytorin, which made headlines today after the Food and Drug Administration said it would issue early communication on the drug. He's reminded of Bausch and Lomb, Bristol-Myers Squibb ( BMY) and other pharmaceutical companies that experienced exaggerated stock-price dives on bad news. Those situations, Cramer said, represented buying opportunities. "The headline risk in drugs is also far worse," Cramer said. "This is what happens with drug stocks. Everyone panics at the same time. They get knocked all the way down." "This is just unbelievable to me," Cramer added, saying that to cut shares of Schering-Plough so much, investors would have to believe the FDA was going to pull Vytorin. Cramer continued, "I would buy Merck too. ... This is a classic headline overreaction." Cramer concluded by saying he prefers Thornburg Mortgage ( TMA) and Toll Brothers ( TOL) to Fannie Mae ( FNM) and Freddie Mac ( FRE). "I just think that they're not investible. ... I didn't like them ... yesterday."