First in the Sell Block tonight is Johnson & Johnson. Yeah, we know what you're thinking: How is this possible? The brothers Johnson is a blue-chip stock. It's best of breed!
Well, nobody stays best of breed forever. And no matter how you feel about a company's reputation, only the fundamentals matter at end of day. For this reason, JNJ should be sold.
The company’s pipeline is anemic. The only way a drug company can stay on top is by developing new drugs to replace the ones that go off patent, Cramer says, and JNJ just hasn’t done a very good job of this. Meanwhile, Risperdal - the most prescribed anti-psychotic in America and JNJ’s number-one drug - will go generic at the end of the year. Say goodbye to those profits. And Invega, the anti-psychotic designed to replace Risperdal as the big earner in JNJ’s drug cocktail, has been a total disappointment. A weak pipeline plus the patent loss for the biggest drug the company has and the hot new replacement drug was a flop? Time to sell JNJ if you haven’t already.
The second inmate in the Sell Block is Friedman Billings Ramsey, along with the IPO of its capital markets unit. FBR’s problem, and the reason Cramer doesn't want you to own this stock, is that it’s in many ways the opposite of Annaly: It has some terrible subprime exposure. But that's not the only reason Cramer wants you to sell.