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Cramer: Easy Money Over, Ring the Register

(Click for video linked to a searchable transcript of this Mad Money segment)

The trick to successful investing is knowing when to take profits and walk away. In this case, Cramer says it's time.

That is, "If you own Onyx Pharmaceuticals based on my recommendation from April, you now have a 50% gain. It's time to ring the register. Take some profits," Cramer said.

Shares of Onyx shot higher on Monday after the company's board rejected a $120 share takeover offer from Amgen, saying the offer significantly undervalued the drug company. It represented a 38% premium.

However, Onyx also said it would consider a sale of the company

"Immediately analysts started coming out of the woodwork," Cramer explained. "Lazard said Onyx could be taken out at $130 to $140, Deutsche Bank said $140, Bernstein said $180."

That's a game that Cramer doesn't want to play.

"While it's possible Onyx will catch a higher bid, I also think that the easy money has already been made here. Don't be greedy."

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Instead the Mad Money host said look elsewhere in the sector. He believes there are plenty of opportunities – and the developments involving Onyx may have just called them out.

"You have to understand, the implications of what just happened with Onyx are enormous. Amgen's failed bid tells us that it makes sense for larger drug or biotech companies to pay massive premiums for smaller, faster-growing biotechs with strong pipelines. And the fact that Onyx said no to a 38% premium means that many of these biotech stocks are likely worth much more than the levels where they're currently trading," Cramer explained.

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If you're looking for ideas, Cramer suggested taking a look at Seattle Genetics, Immunogen, BioMarin, Tesaro, Pharmacyclics and/or Ariad Pharma.

"Based on what Amgen was willing to pay for Onyx, I think it would make a lot of sense to speculate in any of these smaller biotechs as long as you're careful to try to buy them into weakness," Cramer said.

And he added, "my favorite players in this space are still the larger ones, namely Celgene and Gilead."

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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Symbol
Price
 
Change
%Change
OX1
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SGEN
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IMGN
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BMRN
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PCYC
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CELG
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GILD
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