Disappointments? Think Opportunities; Miracle Drug May Be Ailing Gilead: Jim Cramer's Best Blogs

NEW YORK (TheStreet) -- Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:

  • how not to give up on these big names, even though the market has, and
  • why a potent hepatitis C treatment is not a boon for shareholders.

Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.

Disappointments? Think Opportunities

Posted at 3:43 p.m. EST on Thursday, April 24, 2014

What's the matter with Facebook  (FB)? Wasn't it the world's greatest quarter? Didn't it totally deliver on every metric? Doesn't it have accelerating revenue growth, increasing user engagement and the ultimate in worldwide reach?

[Read: Microsoft's 'Blowout Quarter' Proved Nothing]

Yes, it has all of that and much more. But here's what Facebook did best on the call: underpromise about the future. These guys basically spent a huge part of the call telling you that things are going to slow, that they aren't going to monetize things that we thought were about to be monetized and that in the end they are now just a company with really fast growth in earnings. This market doesn't just want really good earnings growth any more. It wants a dividend. It wants a buyback. It wants financial discipline. It doesn't want a company spending like a drunken sailor even as I get the sense that the sailor's really at the top of his game.

So the stock after opening strong didn't rally; it sold off.

Here's the rub. Unlike a lot of the stocks that have sold off because they are just a multiple of sales, not earnings, Facebook is actually an inexpensive stock. I don't know what's going to happen Friday with the stock. I do know that companies with tons of opportunities and great growth do reward their shareholders. I think this is an opportunity, not a disappointment.

I feel the same way about American Airlines Group (AAL). This $27 billion company, which has $10 billion in cash, reported magnificent sales and earnings Thursday morning. I can't believe how much money it made. It seemed like an aberration. And you know what? It was. It was aberrantly low because of all of the cancelled flights. Who knows what it can earn now that the skies are friendly. But it had the misfortune to report on the same day at United Continental (UAL) and that was the one airline, the only airline, that truly has delivered a nightmare number. It obliterated the glory of American. If the company had reported Wednesday, it probably would be through $40 instead of being "stuck" at $38.

[Read: Making Sense of the Crash in Amazon Stock]

Finally, there are two others that I am not giving up on even though the market sure has: Xilinx (XLNX) and Celgene (CELG). These two stocks, both owned by my charitable trust, were obliterated Thursday and I am not happy. It's always nasty when you own a big loser. They make you feel like a loser. That's me -- a real loser because the trust owns these. Hey, I talk about the winners, bring on the losers.

Xilinx's crime? It reported a very strong number but gave horrendous guidance. This isn't the first time it has done that. Several times the company's stock has moved intra-quarter only to be reined in by management. This time CEO Moshe Gavrielov didn't just rein the stock in, he lashed it, slashed it and sent it to the glue factory. We bought some on the weakness. But it was a killer.

And Celgene? I was scratching my head how its best-selling drug, Revlimid, could fail to deliver on its sales line, causing the company to commit the ultimate sin of reporting an in-line quarter. All that said, Celgene reaffirmed guidance and the stock's selling at the same price-to-earnings multiple as some of the low-single-digit big-pharma plays. Except it doesn't have a dividend. I think 10 days from now it will settle down and perhaps even begin to go higher. But, ultimately, it's just too cheap to be this hated. Heck, it's beginning to feel like Apple (AAPL) before the report -- not after.

[Read: Celgene to Rise Like a Phoenix: Opinion]

Miracle Drug May Be Ailing Gilead

Posted at 3:48 p.m. EST on Wednesday, April 23, 2014

Is it possible for a drug to be too good? That's what could be "ailing" Gilead (GILD). After the company reported $4.9 billion in sales Tuesday night (a 104% increase, year-over-year), you would expect its shares would be trading much higher Wednesday. Gilead has a miracle drug called Sovaldi that saves the lives of people who have hepatitis C. It's a remarkably potent drug that cures people after a 12-week regimen.

There are three problems with this miracle achievement though. First, it costs $84,000 and the insurers are balking even though the consequences of not treating hepatitis C are far worse not just for the patient, of course, but for the insurers themselves.

[Read: Sozzi: The New Ford Police Interceptor Car Is an Intimidating Animal]

Second, Wall Street likes maintenance drugs that you take for the rest of your life, like the anti-cholesterol drugs or the multiple sclerosis drugs (including Biogen Idec's (BIIB), although that stock is down Wednesday), which are annuity streams. Once you are cured of hepatitis C you are cured -- and you have to believe that, even though only half of the doctors who can prescribe it, according to Gilead, have already. So, there is a real (albeit high quality) finite problem.

Third, there is competition coming from both AbbVie (ABBV) and Merck (MRK). Normally, I would say that Gilead's got first-move advantage and you don't need to worry, the other guys are making real progress and if their products are as good as Sovaldi, believe me, that $84,000 price tag won't stay up there.

[Read: 10 Greenest Cars Of 2014]

All that said, I really like Gilead. It has more than Sovaldi going for it. It's got a terrific balance sheet and can buy back stock with abandon. But these outlined woes, the idea that there is big inventory in the system and this market's newfound hatred of biotech will keep a lid on this stock for some time.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long AAPL, FB, XLNX, and CELG.

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