Final Segment 1

Final Segment 1 Title: 'Hips Don't Lie' .  .  .  .  . Featured Stock(s): Symmetry Medical, Inc. (SMA) See SMA's official website here. See the Yahoo! Finance profile for SMA here.

After this segment, you can see Jim's Sudden:Death picks here...

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JJC:  Welcome to speculation Thursday, that's right... We usually save these juicy, suculant and even, to full disclosure, totally risky speculative stocks that everyone's dying to have, for Fridays... but this is my show, and I reserve the right to be totally arbitrary and capricious at all times...

Today I've got a speculative stock that I believe is also a great defensive... It's a company that frankly, has been on my radar screen for a while, but I typically don't like to talk about the speculative stocks until one a week...

This one is called Symmetry Medical, Inc. (SMA)...

But don't let the great rally we've had the last two days lower you into a sense of complacency... After the close GOOG reported a not-great number, Microsoft reported a not-great number, Merill Lynch reported a not-great number, IBM was unexciting...

So you know what, we're still on the same boat here... I believe this is recession time, and the best stocks to own right now are generally the ones that aren't being eaten alive by a slowing economy, or squeezed by high input costs... That's how we switched to healthcare... The moment the federal reserve decided to stop cutting, we switched to healthcare... In my view, that pretty much leaves this group as the safest group to be in... The group that SMA is a member of... This is a little $564 million, okay I put that right up front because usually the stocks I talk about are $5-10 billion, all the way up to $150 billion, or $200 billion... This is less than half a billion... It's a medical device maker... $16 stock... Supplies the companies that make orthopedic implants... I think it's the way to play it with healthcare, and at the same time, take a little risk by speculating...

Typically the ones I've been recommending, you know, I've been recommending big-cap stocks, like the CR Bard Inc. (BCR), the Schering-Plough (SGP*)... this is different, okay?...

SMA is a supplier to the comopanies like Biomet, like Zimmer Holdings Inc. (ZMH), Stryker Corp. (SYK) reported after the close, seems in line... Like Johnson & Johnson (JNJ), with a big blowout quarter, Smith & Nephew PLC (SNN), which I recommended as part of the Cramerican Marine Field Guide to Recessions...

Just last week... It's up 5.8% since then, better than a sharp stick and knife... In fact, the whole trade into healthcare, and I wish that I had just said sell oil and gas, go into healthcare, but I still believe the value of oil and gas, okay?... I hope you did get some healthcare in though...

Now, what does SMA do?...

SMA makes forge, cast and machine products for orthopedic implants and devices... It makes the pieces necessity, the pieces that goes into the implants that these companies sell... Head, shoulders, knees and toes?... No, hips, knees, shoulders, ankles, elbows... Not quite the head and shouldrs... But symmetry comes pretty close... Nobody stops getting hip replacements because the economy stinks... This is not like wrinkle-free skin, okay, you don't elect to do this stuff, which makes this aspect of the business relatively safe... SMA also makes the instruments that doctors use to place and remove orthopedic implants, same deal... It makes cases that are used to organize, secure and trasnport medical devices for orthopedic, for dental, for endoscopic and other procedures... This is something we don't really think about but a lot of this stuff is very delicate and needs to be handled with care... You don't want a broke knee implant... SMA's cases makes sure that doesn't happen... In fact, their cases are currently sold in nearly every segment of the medical device market... I know you never heard of SMA, but I'm trying to bring it to you, please do homework... Bigger orthopedic companies come to SMA because the company helps them shorten their product developments cycles, meaning SMA helps get new products to market faster, helps them make more money... It also helps them reduce design and manufactoring costs... So this is a cost cutting play for the big medical device makers... Speaking of costs, SMA is one company that isn't being picked apart by raw costs... It's main item is titanium, and there titanium prices are stable, they're not rallying... The company is expecting some increases in stainless steel costs, but beyond that I think that they've done a good job of controlling or passing along their input costs... SMA already has a long term agreement on plastics, so higher prices shouldn't hurt them either... And as cort cobolt chrome, which is experiencing significant price increases, 30-40%... SMA has already had talks with its major customers and should be able to pass that material cost along, okay?... SMA also works with newer and smaller device companies that have more limited resources... You could think of this one as an arms dealer to the medical device company, a business we like very much in this market because we don't have to worry about as much of these companies making their earnings... So why am I calling SMA speculative, besides the fact that it's small?... All right, it had a run in with the SEC earlier this year... A combination of an earnings restatements and a late 10K filing... Stock dropped 27%... As it turned out, one of SMA's opporating units in the UK had apparently overstated its revenues last October and caused the whole company to take a $2.2 million hit, that's all though, in legal and accounting fees during the first quarter... Not chunk changes to a company this small... SMA says the people invovled in the overstatement were removed... The company has fully cooperated with the SEC... So to me, it looks like they've had a problem, it's been finished, going forward, it's just a tarnished stock, not a tarnished company taking it lower than I think you would normally get a chance to buy it at... I think the company is in a good position... The Street is looking for 8.5% revenue growth... I think it's going to be almost double that, 12-15%...

The bar is very low, you know we like that... And if SMA keeps up the good work, cleaning up its mess in the UK, I think the stocks spurts to $21... You are not permitted to buy this after hours... This is not like Quanta, okay?... The other day I said Quanta Services Inc. (PWR*)... the Texas utilities commission was going to agree... Sure enough, Quanta's up huge today... There is no deadline to this okay?... Don't buy it tomorrow... Do the work... You must wait at least one week to buy a small stock, okay?... Let all the other jokers take it... Limit orders, buy in small quantities... Otherwise you're going to move the stock and get ripped off... I like SMA at $16... If you drive the price to $17, I don't think it's good.

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The Bottom Line!:   As we learned from our friend Shakira, hips don't lie... Speculative play, SMA.