Cramer blows the whistle on China

Jim Cramer was alarmed when he saw that Perrigo rallied more than $3 on Monday for no apparent reason. There was no news or press releases that took the stock higher. What the heck?

Perrigo is the leading maker of store brand, knock-off, over-the-counter drugs, and it also runs a mid-sized generic prescription drug business. The company missed its numbers recently, citing a weaker cold and flu season.

"But I have an idea about what might have been on the minds of people who were buying the stock: Chinese vitamin supplements, that's what," the "Mad Money" host said.

Perrigo CEO Joe Papa further elaborated on the company conference call, stating that the company is receiving pricing pressure from vitamins made in China.

Tablets manufactured by Perrigo
Andrew Harrer | Bloomberg | Getty Images
Tablets manufactured by Perrigo

Even more disturbing to Cramer was when Papa clearly implied that some of the products coming into the states from China are not properly labeled.

In the wake of the Lumber Liquidators fiasco concerning potentially carcinogenic levels of formaldehyde in flooring made in China, Cramer is concerned.

"Lumber Liquidators sourced American and sourced Chinese, but after the drubbing this company and its stock having suffered in the last week, I bet these guys wish they'd never heard of China," Cramer said.

The history of Chinese products is scary to Cramer. Given the scandal involving Chinese drywall that caused respiratory problems, the 2007 Mattel recall of lead-based paint on toys, the poisonous pet food issue and now Lumber Liquidators—Cramer is steering clear.

Will someone blow the whistle on these vitamin supplements, too?

If they do, that means South Carolina-based Perrigo will go much higher. All of its products are made in the good old U.S. of A.

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"After the downfall of Lumber Liquidators, all I can say is 'good luck' to anyone who's trying to obscure the origin of vitamins made in China," Cramer said.

Maybe the story will break in Lumber Liquidators style, or maybe everyone will just switch to Perrigo fast enough that no one notices.

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