GO
Loading...

Bionic Stocks?

Thursday, 11 Oct 2007 | 10:34 AM ET

Scientists might not be able to build a Bionic Woman just yet, but there’s a healthy market for the spare hips, knees and joints that are in demand thanks to a growing baby-boomer population. Of all the medical-device makers in this space, Cramer said likes Stryker the best.

The stock has been under pressure because of payola charges by the Department of Justice. Basically, Stryker and four other companies were charged with paying doctors to use their products. But since a settlement was announced a week ago, the share price is up about five points.

Triple Buy-Onic
Mad Money host Jim Cramer shows you how you can see stocks everywhere.

Cramer said he feels better about Stryker than the other companies involved because SYK was excluded from paying any of the $311 million in settlement fees. And once the one remaining investigation into price-fixing is done, “I think Stryker will really start to run,” Cramer said.

One of the best things going for this company is that it just broke into competitor Smith & Nephew’s monopoly in hip resurfacing, which is an alternative to full hip replacement. Now these two are the only firms in what should equal to 10%-15% of a $2 billion hip-replacement market.

And the stock is cheap. Yes, Cramer said he knows Stryker is at its 52-week high, but the 19.3% long-term growth rate “not only justifies the current price ... it justifies paying a whole lot more.” Trading at just 1.3 times its growth rate, Cramer said it could trade as high as 1.8. That’s 36% upside in Stryker.

So now that Stryker’s legal woes are almost over, Cramer said this stock is finally worth owning.

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

  Price   Change %Change
SN.
---
SYK
---

Featured

Contact Mad Money

  • Showtimes

    Monday - Friday 6p ET
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.