Cramer: "Opportunity Is Now for Drug Stocks"
Enviado: 27/11/2006 15:04"Opportunity Is Now for Drug Stocks"
By Jim Cramer
RealMoney.com Columnist
11/27/2006 7:42 AM EST
"Is a bottom in drug stocks approaching? A key Washington Post article this Sunday, titled "Success of the Drug Plan Challenges Democrats," would seem to indicate as such.
Democrats in key posts, particularly in the Senate, are not buying the "feds must jerk around the drug companies benefiting from Medicare" argument. They aren't because the program is wildly popular, and they are afraid that if they tinker with it, something could go awry.
Never forget the power of the drug industry to gear up campaigns that show the public that if anything is changed in Medicare, the elderly - i.e., everyone who votes -- will get hurt. The elderly do not care about saving the federal government money. They just care about getting cheaper drugs, which is what the 22.5 million people who signed up for this program are getting. Plus, the article points out, the cost of the program wasn't nearly as high as people expected. The savings the Democrats want simply may not be worth the effort.
These drug stocks are pariahs right now. It will be much too dangerous for the hedge fund and portfolio managers to own them until this article becomes common currency. These funds will wait to see whether the article becomes true. That's why the opportunity is right now for these stocks.
If you take it, you will be buying into a horrible moment. The resolution will not come quickly. But the risk/reward, given the increasingly unlikely change in the program, says buy them right here and wait for the knowledge of the Post article to be discounted by the marketplace. "
(in www.realmoney.com)
By Jim Cramer
RealMoney.com Columnist
11/27/2006 7:42 AM EST
"Is a bottom in drug stocks approaching? A key Washington Post article this Sunday, titled "Success of the Drug Plan Challenges Democrats," would seem to indicate as such.
Democrats in key posts, particularly in the Senate, are not buying the "feds must jerk around the drug companies benefiting from Medicare" argument. They aren't because the program is wildly popular, and they are afraid that if they tinker with it, something could go awry.
Never forget the power of the drug industry to gear up campaigns that show the public that if anything is changed in Medicare, the elderly - i.e., everyone who votes -- will get hurt. The elderly do not care about saving the federal government money. They just care about getting cheaper drugs, which is what the 22.5 million people who signed up for this program are getting. Plus, the article points out, the cost of the program wasn't nearly as high as people expected. The savings the Democrats want simply may not be worth the effort.
These drug stocks are pariahs right now. It will be much too dangerous for the hedge fund and portfolio managers to own them until this article becomes common currency. These funds will wait to see whether the article becomes true. That's why the opportunity is right now for these stocks.
If you take it, you will be buying into a horrible moment. The resolution will not come quickly. But the risk/reward, given the increasingly unlikely change in the program, says buy them right here and wait for the knowledge of the Post article to be discounted by the marketplace. "
(in www.realmoney.com)