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Current DateTime: 01:22:29 30 Nov 2009
LinksList Documentid: 33423992
Expiration DateTime: 11/30/2009 1:24:32 PM

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Mad Mail: Can We Trust 52-Week Highs?
Published: Friday, 9 Oct 2009 | 7:32 PM ET
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By: Tom Brennan
Web Editor, Mad Money

A Thursday Lightning Round caller stumped Cramer with Emergent BioSolutions [EBS  Loading...      ()   ]. So he did the research and returned with a call.

The verdict? EBS is a “solid speculative play.” The company makes the only FDA-approved anthrax vaccine, BioThrax, which it sells to the government. The agreement extends to 2013, but Washington is expected to award EBS with a new contract worth up to $500 million. That’s almost as much as the company’s $530 million market cap, Cramer said, and it’s “a catalyst worth speculating on.”

On top of this, EBS is working on a successor drug to BioThrax, which should work as a nice patent extender if the FDA approves it. Also, the company has a strong pipeline of vaccines – for typhoid, hepatitis B and chlamydia. This only adds to Cramer’s case for buying the stock. But it is a spec, so use limit orders, buy in increments and do your own research on Emergent BioSolutions before buying.

Dear Jim: A huge applause for the interview with Nucor's [NUE  Loading...      ()   ] Dan DiMicco last night! It was spot on and deeply needed. Job creation is probably at the top of most of our lists. I have made a commitment to myself during this past year, to call or email my elected officials, first thing in the morning on my day off, each week, to let my voice be heard. Thank you for constantly using your voice for good Jim. Just fantastic shows, jam-packed with lots of great information and interviews this entire season! As always your outfits are gorgeous and so GQ! --Lisa in Maryland

Cramer says: “Dan wanted to come on and tell the story. He’s the man we should thank. He’s taking the time out from running a major steel company, the best in America, to make everyone realize that creation of jobs is the most important thing. My hat’s off [to him].”

          ___

Hey Jim: I'm starting to read a little more in the news about more companies starting to hit their 52-week highs. I know this statistic has been an important indicator of bullish and bearish sentiment in the market. From October 2008 through April 2009, stocks fell approximately 50%. As we wrap around this time period, the historical 52-week high of many stocks will continue to fall. Even if stock prices do nothing over the next six months, most stocks will appear to improve on this metric, and most stocks will actually start setting new highs. This anomaly is similar with earnings comparisons of prior year starting in the fourth quarter. With these historical measures being so skewed, are these statistics even relevant? --Jonathan in Georgia

Cramer says: “No. That’s why I’ve been working on a multiweek project to analyze the stocks that are at their three-year or all-time high, which is much more effective and much more efficient.”

Call Cramer: 1-800-743-CNBC

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