Buy Becton Dickinson?

A lot of companies, until very recently, were watching their margins shrink thanks to surging commodity costs. But now that those costs have come down, a number of firms are on track to regain their lost profits. Cramer’s been looking for stocks that not only benefit from this trend but also work in a recession. Because if the talk is true, that’s just where we’re headed.

Becton Dickinson makes medical equipment from syringes and needles to infection systems and lab analyzers, just the type of equipment hospitals need regardless of record declines on the Dow. And BDX uses oil-based resin to make many of its products, an expense that jumped $20 million from 2007 to 2008. Back before the commodity decline, the company expected resin costs to jump another $20 million through 2009 based on $125 oil. But now that the price per barrel is down to $74, BDX could net more profit than expected, and that might send the stock higher.

This is a longer-term play, though. The lower costs won’t reach BDX’s bottom line for three to five months because at last report the company had three to four months worth of resin inventory. So think of BDX for 2009. Cramer did say, though, that the change in costs might mean an increase in 2009 guidance when BDX reports its fiscal fourth quarter on Nov. 5.

And Cramer expects good numbers from that report – the company’s beaten earnings every quarter for over a year. BDX is a seller of staple medical supplies, and it’s a market leader in most of the products it sells. So overall this is a consistent performer no matter which direction the market’s headed, and the lower costs make it even more attractive.

While price-to-earnings multiples haven’t worked for a lot of stocks in this market – who can trust projected earnings right now? – PEs do work for names not so sensitive to the economy. So BDX 14.4 multiple on next year’s conservative earnings estimate of $4.93 a share (remember: analysts are concerned about costs) can be trusted.

Given that BDX is the type of stock investors flock to in a downturn, Cramer said it’s not unlikely that multiple could climb to 18 during a recession. If that happens, then next year BDX will be worth $89, a 23% jump from present levels.

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