As news emerges of Amazon considering a big push into pharmaceuticals, CNBC's Jim Cramer endorsed one of his favorite drugmakers, Celgene, after its stock fell off a cliff on Thursday.
"We like to buy low and sell high. It's literally the oldest rule in the game," the "Mad Money" host said as investors' flight from the stock subsided on Friday. "So I consider it my job to point out when we're getting a nice buying opportunity in the stock of a high-quality company if they ever occur."
Cramer said the market should view the pullback as "a gift" because every time Celgene shares have sold off, they've managed to rebound.
The main driver for Celgene's drop was Morgan Stanley's downgrade of the stock to an "underperform" rating. Analysts' chief concerns were competition from generic versions of Celgene's flagship drugs and the biopharmaceutical player's 2018 pipeline.
But Cramer said Morgan Stanley blew its worries out of proportion. Celgene's patents likely won't be challenged by its rivals anytime soon — its three main patents expire in the 2020s, by which point the company will have made a considerable amount of money on the drugs.
And according to Celgene, its pipeline stands to generate up to $14 billion in peak sales. Moreover, successful clinical trials could send the stock surging once again, Cramer said.
"When a high-quality stock like Celgene gets slammed but the underlying thesis is still intact, I think you need to do some buying," Cramer concluded. "Celgene's building a stable of multi-billion-dollar drugs, it's got fabulous management, and [blood cancer treatment] Revlimid's patent protection will likely hold up, so don't let this Morgan Stanley analyst scare you out of a good story, especially when that analyst sat out the whole run with a hold on the stock, which is not what I'd call value-added."
Cramer's Game Plan: Know What You Own
Stocks may have pulled back after weak nonfarm payroll numbers, but Cramer still noticed a somewhat dangerous rush into high-growth technology and cloud stocks.
"Does this make any sense? You know what, I don't even know anymore. Here's all I ask. The highest valued stocks are now making the big moves — 'highest valued' meaning the highest price-to-earnings, highest price-to-sales [multiples] — so I'm begging you to do something for me: if you're going to own these stocks ... please know what you're buying," Cramer said.
Cramer pointed to an indicator that could mean trouble for the seemingly unstoppable market. The proprietary oscillator, a measure that tracks how overbought the index is, just crossed 5, a high level that often indicates that a correction is imminent.
The most important thing for investors now is to know what they own and do their homework on the stocks in their portfolios regardless of how diversified they are, Cramer said.
"I am urging you to be careful," he said. "At this point, the odds do favor a pullback. It could give you a better chance to buy. Notice I'm not saying, 'Sell.' I'm just saying I want you to be ready."
With that in mind, Cramer turned to the stocks and events he'll keep a close eye on next week.
Know Your IPO: Switch
Cramer rarely fails to notice new players arriving on the data center scene, which is why Switch's initial public offering on Friday caught his attention.
"After digging into this story, I think the pros do outweigh the cons, although I'm obviously not alone in believing that, as the stock surged from $17, where it came public today, up to $20.84. That's a 22 percent gain right out of the gate," he said. "Which begs the question: is Switch worth owning even after today's monster move?"
With a book of high-profile clients including Amazon and eBay already under its belt, Switch claims to offer an advanced kind of data center replete with patented cooling systems and powerful machines equipped to handle businesses' sensitive, complex and regulated data.
"The fact is this is a pretty lucrative business. I told you I love the data center," Cramer said. "However, while Switch is intriguing, it also has some issues that we've got to address here."
Marriott Vacations Worldwide CEO on Millennials
When you think of typical timeshare owners, social-media-shackled millennials may not seem like the prime example.
But Steve Weisz, the president and CEO of public timeshare provider Marriott Vacations Worldwide, told CNBC's Jim Cramer that the data suggest otherwise.
"[According to] some interesting statistics not only that we see, but also through the Timeshare Trade Association and the American Resort Development Association, the number of Gen X, Gen Y and millennials continues to grow as a percentage of the new-owner buyers that are coming into the marketplace," Weisz told the "Mad Money" host in an exclusive interview on Friday.
"While I think the traditional belief is that this is somewhat of a 'boomer' product, I believe that the statistics are proving that not to be true at all," the CEO added.
Putting a Lid on Costco Shares?
Finally, Cramer expanded on his morning commentary on Costco. Shares of the wholesale retailer closed down 6 percent on Friday after its post-earnings conference call, in which analysts pushed a narrative of Amazon overshadowing Costco's future success.
"Here's the CliffNotes version of this call: millennials don't like to go to Costco. They'd rather go to Amazon. Membership growth isn't as robust among younger people, so the aging of its core demographic — 52 is the average — will, in the end, mean that Costco's stock is no longer a bargain no matter what," Cramer recalled.
Even though Costco's earnings report beat Wall Street's profit and same-store sales estimates, Cramer warned investors not to buy this particular dip because of its Amazon ties.
"In this market, once Amazon locks its phasers on you, nothing's ever going to be the same," he said. "So down $10's not enough to immunize Costco's stock from further declines. The reality is Amazon's efforts are putting a lid on Costco's stock and they've taken away the floor."
Lightning Round: GE's Corporate Shake-Up
In Cramer's lightning round, he rattled off his take on some callers' favorite stocks:
General Electric Company: "I am shocked. Jeff Bornstein, the CFO, is out there. A new CFO coming in, Jamie Miller. Things are happening so quickly there. My charitable trust owns GE. It's been a disaster. I like to call when they're good, so why not say when they're bad? Maybe this is a shake-up that's necessary."
Easterly Government Properties Inc.: "It's got a good yield. I think it's a safe yield. I think that the answer is yes [it's a buy], unless you think interest rates are going to skyrocket, and I don't."
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