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The Return of Big Pharma

News that Bear Stearns was scrambling for cash, reaching out to the Federal Reserve and JPMorgan Chase for emergency financing, killed the market Friday. The Dow dropped 195 points. But Cramer wasn’t going to let get in the way of his third anniversary show. Besides, he said, why bother with “some tale of woe that no one can possibly make a dime off.”

Instead he focused on drug stocks, a too-cheap sector that could make its return this fall. Maybe that sounds counterintuitive with the Democrats’ good chances of taking the White House. As Cramer pointed out, drug stocks were the market’s pariahs just before Bill Clinton took office. But pharma came back eventually. And the Mad Money host is expecting the same thing to happen again.

So what’s worth buying? Cramer said he likes Schering-Plough for its overseas exposure and a few strong drugs, two of which SGP shares with Merck , Cramer’s other sector pick. He brushed off the Street’s concern about a patent challenge to Merck’s Nexium, prescribed for heartburn, saying the case has a one in 10 chance of going against the firm. And Merck’s new HPV vaccine for women could be worth $3 billion a year in sales.

Big pharma’s cheap for all the wrong reasons, Cramer said. When it comes back, you want Merck and Schering-Plough.

Don’t miss the guest appearance by Saturday Night Live's Darrell Hammond. Plus, audience questions about Teva Pharmaceuticals and stocks with safe dividends, and Cramer’s call on Gilead , Genentech , Celgene , Dow Chemical , ConEd and Carnival .

Questions for Cramer? madmoney@cnbc.com

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