Cramer on Vivus Stock Victory
Shares of Vivusskyrocketed on Thursday after the U.S. Food and Drug Administration backed Qnexa, the drugmaker's diet pill. If passed, the drug would be the first obesity pill to get approved in 13 years.
This was a long-shot, Cramer said, but Vivus proved to be a very profitable for those who speculated on it. So we can we learn from Vivus’ huge gain? Cramer said it all comes down to looking for undervalued stocks that have potential to pop.
“Some would say the Vivus situation was binary, meaning that while you could make a lot of the drug was approved, you could also lose a lot if it wasn't, but I question that logic,” Cramer said, adding that it may have been binary if Vivus had run up going into the meeting, but that didn’t happen. “You could feel the pressure on the FDA to offer something to the desperate souls out there who have nothing else that can be taken to lose weight.”
“So, what do we have? How about a classic example of informed speculation, where you could make a ten-dollar bet that pays off more than eight dollars, and at one point today gave you a double.”
Cramer’s point is that investors should have room in their portfolio to speculate on a stock or two. So long as you have a diversified portfolio, the “Mad Money” host thinks it’s smart to speculate on what could be the next Vivus.
—CNBC.com contributed to this report
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