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NEW YORK ( TheStreet) -- The havoc in the biotech sector may be too great to ignore, Jim Cramer cautioned his Mad Money viewers Monday as he advised investors to take profits in the group or wait on the sidelines until the carnage subsides.
Cramer explained that today's news that Gilead Sciences (GILD) may lose its virtual monopoly on treating Hepatitis C, news that sent shares down 14%, is cause enough for concern for all biotech investors. Competition is great for consumers, Cramer said, but it's a killer for companies and their stocks.
Just look at the phone companies, Cramer continued. Both Verizon (VZ) and AT&T (T) are down on the year, with T-Mobile (TMUS) down 21% and Sprint (S) shares plunging 61%, all because of increased competition.
The opposite of competition is consolidation, which is why the airlines have been soaring and why the drugstore stocks have also seen relief in 2014. Competition, or the lack thereof, is also why Facebook (FB) , which Cramer owns for his charitable trust, Action Alerts PLUS and a company with a monopoly on our virtual selves, is also having a very happy holiday this year.
For for the biotech sector, Cramer warned there will likely be more profit taking to come as investors sort out the new landscape, which could include more competition for hot franchises.
This Sector Makes Cramer Smile
What's the hottest performing group in market right now? Is it social media? Biotech? Nope. It's the dental supply stocks.
Cramer said there's a lot to like about the dental stocks. First, they aren't linked to where the price of oil is or how the Russian ruble is trading. They do, however, benefit from an aging population here at home and the fact that many people put off getting expensive dental procedures done during the recession. Add all that to the world's growing middle class and Cramer said it's easy to see why this is a red-hot group.
Of the group, Cramer said he likes Henry Schein (HSIC) the best. The stock is up nearly $8 since he spoke to the CEO last month, and shares are up 17% over the past three months. Stein is the number one player in the dental space but also has an animal health and vaccine business to boot, yet trades at just 23 times earnings.
Also on Cramer's buy list is Patterson Companies (PDCO) , the number two player with shares up 21% over the past year, and Sirona Dental (SIRO) , a high-tech provider of dental equipment with shares up 15% over the past three months.
In addition, Cramer mentioned Align Technology (ALGN) , makers of Invisalign braces, as a company with lots of upside but also more than its share on short sellers, and Dentsply (XRAY) , a stock he didn't care for given its exposure to Europe.
A Sector in the Chips
The semiconductor business used to be boom or bust, Cramer told viewers, but thanks to a few smart acquisitions this sector may finally be investable again. Cramer highlighted three recent deals that should be on investors' radars.
First is Avago Technologies (AVGO) and its purchase of LSI for $6.6 billion. Cramer called the deal "brilliant" with over $200 million in synergies resulting in 6% to 8% future annual growth for the combined entity. Shares of Avago are up 114% since the LSI deal was announced just a year ago.
Next is Triquint Semiconductor (TQNT) and its acquisition of RF Micro Devices (RFMD) . Cramer said the combined company, which will be called Qorvo beginning next month, will be a wireless chip powerhouse with minimal overlap between the two companies but broad potential for growth.
Finally, Cramer highlighted Cypress Semiconductor (CY) and its merger with Spansion (CODE) , announced earlier this month. Cramer said this merger of touchscreen controllers and automotive and industrial chips will yield billions in synergies, yet shares of Cypress are only up 39% since the deal was announced. Cramer said there's a lot more upside to come from Cypress.
A New Dawn
It's a new dawn for the oil market, Cramer proclaimed to his viewers. For far too long the price of oil has been kept artificially high by OPEC, but now, finally, we're seeing the true price of oil.
Cramer said if you take the U.S. market away from OPEC, something that our oil shale renaissance has done, and couple that with weakened demand for oil in China, you get the real price of oil.
The multitude of additional oil discoveries in the U.S. and abroad matter, Cramer said. They matter for everything from shipping to industrial companies, energy to retail, autos, dining and more. Even aerospace has been rallying as oil has revealed its true price.
Given all these new discoveries, Cramer said he doesn't see $100 a barrel oil again in the near future. "The new price of oil is the market price," Cramer said, and every U.S. business is now getting the low prices they deserve.
In the Lightning Round, Cramer was bullish on HCA Holdings (HCA) , Integrys Energy Group (TEG) , Royal Dutch Shell (RDS.A) , Applied Materials (AMAT) , KLA-Tencor (KLAC) , LAM Research (LRCX) and JDS Uniphase (JDSU) .
Off the Tape
In his "Off The Tape" segment, Cramer sat down with Chuck Goldman, CEO of the privately held HotRoster, a fantasy sports app maker that's targeting not only hardcore sports nuts but the casual gamer.
Goldman said HotRoster is for anyone with a smartphone who is interested in sports and fun. Since launching the platform, which now includes basketball, Goldman said HotRoster has seen triple-digit growth every week.
Goldman also noted HotRoster is a skills-based game and not simply a game of chance, which is part of what makes it so much fun to play, a notion Cramer seconded.
To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.
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-- Written by Scott Rutt in Washington, D.C.
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