Cramer's Medicare Stock Plays
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Date updated:07-03-2008

"Healthcare stocks are on the ascent because they stand to benefit from the upcoming Medicare spending bill that will give investors a unique opportunity to have the wind at their backs." - Jim Cramer

symbol name last price % change open
  • +
  • MDRX
    Allscripts-misys
  • $20.07
  • -1.42%
  • $20.13

Allscripts trades at 18 times next year’s earnings and has a long-term growth rate of 24%. Cramer thinks the company should get a 25 multiple which would mean the stock should trade up to $17.50.

People owning MDRX also tend to own: AOBCOGOCRYPGELGLWGRMNGS

TheStreet.com Rating: No Rating What is this?

  • +
  • RMD
    Resmed Inc
  • $50.25
  • -0.83%
  • $50.56

New Medicare rules will also provide reimbursements for in-home testing of sleep apnea. ResMed makes in-home testing and treatment equipment, so the company is in a great position to benefit as more people will be tested and need its products. Cramer said the stock could soar to $50 to $53 a share, but he cautioned investors to wait for a pullback after the shares ran up 7% today on takeover rumors.

People owning RMD also tend to own: CHKPCOSIEGYFTDHLFMVLNATH

TheStreet.com Rating: A- What is this?

  • +
  • FMS
    Fresenius Med Ads
  • $53.02
  • -0.30%
  • $52.98

Cramer said he prefers FMS because it has solid overseas exposure and its the best-of-breed stock in the sector. He also likes FMS for its growth into emerging markets like China, which is growing at 30% to 40%. The stock trades at 17 times earnings and sports a 11% long-term growth rate. Cramer thinks FMS can hit $65 and will earn $3.26 a share, vs. Wall Street estimates of $3.10 for 2009

People owning FMS also tend to own: AMDBMYCAGJCOMMROUNHAIVSX

TheStreet.com Rating: B- What is this?

  • +
  • DVA
    Davita Inc
  • $58.95
  • +1.17%
  • $58.22

Cramer told investors that dialysis plays Fesenius (FMS) and DaVita (DVA) are in a great position to benefit from this year’s Medicare spending bill. He pointed out that the current version of the bill provides dialysis companies with annual base-rate and inflation-rate payment increases. Cramer explained that FMS and DVA control 65% of the U.S. dialysis market.

People owning DVA also tend to own: AFAMBCOBYDCCRTEGYHALHANS

TheStreet.com Rating: B+ What is this?

  • +
  • PDX
    N/a
  • $28.87
  • 0.00
  • $28.87

Cramer said Pediatrix has already had its sell-off, with shares falling from a high of $70 a share to just $48 a share today. The company now trades at just 17 times its earnings with a long-term growth rate of 13%. Cramer gave the stock a target of $62 a share, or a 28% gain of today's levels.

People owning PDX also tend to own: ASFIATWAXEBBOXCBIDRSEME

TheStreet.com Rating: No Rating What is this?

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