2 stocks for an opportunist's market
Some isolated shares got hammered this week despite good quarterly results. They deserve a look now.
Did we bottom? Heard that a gazillion times. I find it valueless unless you are some sort of SPX futures trader. I believe many stocks have put in a bottom and can be bought because they have been hammered and will do fine in a higher-oil-price environment. I think those names have probably bottomed.
Others, not so fast.
I keep talking about commodities stocks that have bottomed, but let me broaden it. Medco Health(MHS) is a company that reported a terrific quarter and then, almost immediately, completed a 10% swoon right when its monster share buyback came into play -- and the company said it would have no problem beating estimates.
Medco Health has absolutely nothing to do with anything that is driving stocks. Nothing. It is a play on drugs going generic. Beginning six months from now, you will see more patented drugs going generic than at any other time in history.
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In the meantime, Medco has built this amazing business of what I call "outcomes," meaning it knows how to measure from its large base which drugs work and which drugs don't. That's a gigantic help to any provider, any user, that is trying to figure out the true costs of medicines.
Plus -- and this is a huge plus -- it looks like competitor CVS Caremark (CVS) is falling apart. There are only three real players in this pharmacy-benefit-managers business: Express Scripts(ESRX), CVS Caremark and Medco. I consider this area as immunized as I said Fluor(FLR), Deere(DE) and Cummins(CMI) were.
At the same time, I see a lot of the 5%-plus dividend yielders holding up. Verizon (VZ) is good here, down on worries that Apple's(AAPL) iPhone isn't selling well. I say, "Marathon, not sprint." Buy it.
Has it been hammered? Does it make sense in a higher-oil-price world? Did it just report a great quarter? That's the prism that allows me to be opportunistic. Remember, not bullish, not bearish. Opportunistic.
At the time of publication, Cramer was long MHS, FLR, DE, CMI and AAPL.
Follow Cramer's trades for his charitable trust.
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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