Cramer's Three Biotech Picks, And His Biotech Strategy

Stock Tickers: DNA, AMGN, NFLD, CELG, GILD, GENZ, ONXX, DNDN

Jim Cramer has a video on TheStreet.com "Wall St. Confidential" showing how the biotech sector can be looked at with blow-ups.  For every small biotech that grown up into a huge company there are 100 Northfield Labs (NFLD).  Cramer thinks you have to play momentum and even stocks like Genentech (DNA) and Amgen (AMGN) have to be gotten out when they are no longer going up.

Cramer still likes Celgene (CELG), Gilead (GILD) and Genzyme (GENZ) in the sectore.  If you bet on one product wonders then have you to be prepared to lose everything.  Onyx Pharma (ONXX) is a potential one-hit wonder that Cramer likes, but says to play it you should buy deep in the money calls because any bad news could chop the stock in half.  He also noted that he believes the FDA is not predictable on upcoming drugs.

From an outsider’s view, it really looks like Cramer has been changing his stance more and more on biotechs.  It is obvious there have been blow-ups like Northfield and there have been fortunes made and lost in Dendreon (DNDN).  Cramer watchers will recall that he rode Amgen (AMGN) down day after day thinking it had bottomed, and stayed positive on Genentech (DNA) as the "winner"  while the stock itself has spent the better part of eighteen months rapidly going nowhere.

Jon C. Ogg
May 29, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.