|
|
 |
 |
 |
 |
 |
 |
|
|
|
|
|
|
|
|
● |
|
|
 |
| |
| |
 |
| |
|
| |
Wednesday, 07/02/08
Posted 07/06/08, 08:21
am ET |
(Scroll down to see Jim's
comments below) |
|
| |
| |
|
Today's date:
Wednesday, 07/02/08 |
|
| |
Dow Jones: |
11,215 |
- 166 |
| |
NASDAQ: |
|
2,251 |
- 53 |
| |
S&P 500: |
|
1,261 |
- 23 |
| |
|
| |
|
| |
|
Opening Segment 1
Title: |
'Child's Play' |
|
. . . .
. |
|
Featured Stock(s): |
Pediatrix Medical
Group, Inc. (PDX)
See PDX's official
website
here.
See the Yahoo!
Finance profile for
PDX
here.
See Opening Segment 2,
below...
|
|
|
After this segment, you
can see Jim's Lightning
Round picks
here... |
JJC: Another
completely and utterly,
totally nightmarish day...
Another day that shook
people's confidences...
made them feel like the
market can't rally to save
its life, but it really
can... We know it...
Because they even took
apart the best stocks in
the market, the oil and
gas stocks or anything
animal vegetable or, of
course, mineral...
The market reacted to an
extremely negative Merrill
Lynch call on
General Motors
(GM)...
sell sell sell... which
said basically what we
said the other night...
that the bond bullies are
in charge there, not the
equity holders... I
reiterate, you cannot own
that stock...
Investors shuddered today
over a call you have
shuddered about two
days... This selloff is
vicious, it's ugly and
it's all about worries of
a global slowdown that
should hit steel, coal,
oil, gas... And I've got
to be very honest... this
selloff is not done.
When we get these moments,
what do we do?...
We hunker down, we look
for special situations
without economic
sensitivity, or minimal
economic sensitivity... We
raise some cash by letting
go of some of our huge
winners in oil and gas, in
copper in coal... Yes, I
know, intraday they
reversed, you're going to
say to yourself, wait a
second, I missed the top,
I'm waiting... No, sell
some tomorrow... Why?...
Because we're going to
ready ourselves for lower
prices so we can start all
over again.
We get more conservative
here... we
ring the register... We be sure that
we have side lines
capital... We counsel
against greed... hogs get
slaughtered... If you're
up huge in some stocks,
you do not have the gains
yet, you don't have the
gains until you take
something off of the
table... Do not fear the
tax man... The market is
coming in... Now this does
include some of the more
volatile energy names that
we have made lots of money
in... I sense that we can
buy them lower later.
If you can take that pain,
fine... I like the
Novocain.
In short, if we're going
to buy anything, we need
to be sure it doesn't have
any economic exposure
right now and if it has
any economic exposure, you
can pretty much be sure
it's going to be
crushed... We're not in
the falling knives
business... Never confuse
yourself with a butcher
block...
So tonight, we've got to
pull-in-our-horns names,
and we look at some
conservative stocks that
make great sense to cycle
into after you've taken
some of the gains. If you
haven't taken any of the
gains, it won't matter...
and you'll look at me and
you'll say, why didn't you
tell me to sell some of
these stocks that I'm up
so much on... Why didn't
he tell me?... And the
answer is, I did...
I don't care if you miss
the exact top that we had
in some of these stocks,
particularly the top that
was between 9:30am and
10:30am... I want you to
bring in some of the
winnings and pick at the
non-economically sensitive
names for a change, or
accept the fact that
you're going to lose some
money for a week, okay?...
Because when we have these
reversals, they're not
over in a day.
This is exactly why all
week I've been focusing on
the proposed Medicare
bill... Because it looks
like it could be chock
full of money for
companies in a
non-economic sense...
Fresenius Medical (FMS),
Allscripts Healthcare
Solutions Inc. (MDRX)...
In a roundabout way,
ResMed Inc. (RMD)...
And these healthcare
stocks have started to
behave well, because they
don't need the rest of the
world to do well... They
don't care about that ECB,
the European interest rate
hike, they don't care
about whether the
consumers not spending...
They don't need any of
that to excel.
But there's another reason
I like to look at stocks
that feed at the federal
trough. And that's because
I don't think the big
money guys, who are
panicking right now out of
fertilizer, out of
railroads, and out of
minerals and out of
steels... I don't think
they're paying any
attention to what is going
on in Washington. Any
company that's likely to
get more money because of
legislation and congress
is a company whose stock I
think you can get an edge
on, because I really
believe that, on Wall
Street, they only read the
business sections, okay,
maybe the sports pages...
but then they throw out
the rest of the paper...
The Street usually doesn't
factor in the importance
of Washington until it
finally hits the company's
earnings... And as far as
I'm concerned, that's way
too late in this game...
Which is why I'm telling
you who's benefitting from
the feds now, so you can
get in ahead of the big
money guys who
consistently underestimate
these stocks... something,
by the way, that I talk
about in the classic,
Jim Cramer's Real Money: Sane Investing In An
Insane World... how's
that for shameless
promotion on a bad day?...
Anyway, my next pick that
could benefit from the
proposed Medicare bill is
a company that frankly,
doesn't make any money at
all from Medicare... But
nevertheless, Medicare
reimbursement rates...
what Medicare pays for
services... is hugely
important to this next
company...
And the company is
Pediatrix Medical Group,
Inc. (PDX),
and it manages the largest
group of neonatal, newborn
specialists in the
country...
The company acquires
independent practices,
takes over all their
management, contracting
back office functions...
They're the number one
service provider to
neonatologists in the
country... That's a $2-3
billion market, that, by
the way, does not get hit
because coal prices went
down... does not get hit
because we are seeing a
situation where Europe is
slowing...
This company manages 22%
of the 1078 neonatal
intensive care units,
they're called NICU's...
The stock is about 3
points above its 52-week
low, we like that
right?... It's the ones
that are really coming
down right now are the
ones that are 3 points
away from their 52-week
high... I think this one
is so low because the
Street doesn't understand
its business or what the
Medicare bill could mean
to this company.
So how exactly does
Medicare, which is for the
elderly and disabled,
matter to a company that's
treating newborn
babies?...
And the answer is Medicare
is the catalyst here for
an otherwise great
story...
The amount of pay
increases that Congress
gives to doctors for
Medicare historically sets
the benchmark pricing for
PDX's physician
contracts... It
doesn't matter that PDX
gets no money from the
feds... Because the amount
it can charge for its
Medicaid and commercial
medicine services will be
partially influenced by
the proposed Medicare
bill, and it could lead to
a 1.1% pay increase for
doctors in 2009... There's
been little to no pay
increases for years
here...
Typically Medicaid...
which is the one we're
worried about here... pays
roughly 55-56% of what
Medicare does... And
commercial payers pay 2 to
3 times what Medicare
does, which is why I think
the possible increase in
pay in the Medicare bill
matters to PDX.
Now Wall Street doesn't
understand this at all,
okay?... And I am telling
you that you now have the
edge... That's the
kicker... How about,
that's the short term
catalyst... that even in
this horrible market
works...
Let me give you the real
story, though, about why
we would recommend this
stock away from Medicare,
and not just the fact that
the economy is just so, so
bad right now...
It's a long-term secular
growth trend... seemingly
immune to the miserable
economy... The growing
number of babies that need
to go to neonatal
intensive care units,
because they're sick, or
born prematurely or way
too little... Any number
of different problems...
PDX thinks that close to
12% of all births in 2006
required admittance to a
neonatal intensive care
unit... And that number is
only projected to go
higher, thanks to
increasing interventions
in pregnancies like
induced labor and
c-sections, older mothers
giving birth, increased
use of fertility drugs...
the increased number of
diabetic expecting
numbers... wave of
diabetes, remember?...
Now, the Street has
hammered this stock, I
mean they just really
crushed it... It's gone
from $70 in May to $48 and
change right now...
We like that! It's
already had its selloff.
PDX missed its quarterly
earnings by 2 cents...
lowered its 2nd quarter
guidance by 5-10%. That's
been a big part of the
stock's fall. But I think
another reason is the
Street thinks there will
be fewer births, thanks to
the recession... All
right... actually, the
birth rates could
fluctuate over time... But
what the Street is missing
is that the number of
babies needing to go to
neonatal intensive care
units has been growing,
and it seems to continue
to increase every year,
regardless of the
economy... and that's what
moves PDX.
The company also is
expanding into services
for anesthesiologists... a
$15-20 billion market.
This is something that's
held back its earnings,
but I think should be
better for the numbers in
the second half of the
year... not in the
stock...
I think the earnings miss
has taken the fluff out of
the stock... but the
long-term and short-term
have actually brightened
since the disappointing
quarter...
How much is it worth?...
Worst-case scenario, I
think it grows earnings at
13% for 2008. The Street's
expecting 8%. I think,
given that, the stock
deserves a 17x
price-to-earnings
multiple. That should send
PDX up to $62. That's 28%
higher than today's
closing price.
Remember, we don't need
the rest of the world...
Remember, we don't need
the Fed... Remember, we
don't need the ECB...
Remember, we don't need
oil to go up or down...
. . . .
.
The Bottom Line!:
I just don't think the
Street understands
Medicare. It's time to
focus on something like
this. Take some of your
winners off the table.
Again, you may not have
caught the top today...
you were busy working... I
don't care. I want you to
ring the register. I am trying to be
really clear on that... On
the stocks that are still
up really huge... not from
yesterday... but from
where you bought them.
Ring the register... and I
think you look at a
Pediatrix Medical Group,
Inc. (PDX).
I think it's a buy off the
Medicare bill, and the
increasing number of
babies who need intensive
care, after they're born.
I'm, again, trying to get
it through... that, even
if you missed the top, and
you're up huge on oil and
gas, minerals, whatever...
I would ring the register
here, and look at a stock
like PDX... until the
smoke clears.
. . . .
.
| |
|
| |
|
■ |
Stock Snapshots - Includes
all stocks mentioned above |
■ |
|
| |
|
|
Jim
Cramer's
rating on
this stock |
STOCK
SYMBOL |
Closing
price
that
day |
Opening
price
next
day |
Full Company
Name/Comments
(see comments above for
each) |
|

|
PDX |
49.22 |
49.60 |
Pediatrix Medical
Group, Inc. (PDX)
|
|

|
GM |
10.12 |
10.62 |
General Motors
(GM)
|
|

|
FMS |
56.92 |
56.14 |
Fresenius Medical (FMS)
|
|

|
MDRX |
13.27 |
13.48 |
Allscripts Healthcare
Solutions Inc. (MDRX)
|
|
|
|
|
|
|
|
| | | | |