Cramer's 'Mad Money' Recap: Handicapping a Long Shot (Update 2)
Cramer told viewers that he's always preached diversification, staying in a mix of stocks to minimize their downside risk. But Cramer said that he also always preaches speculation, picking one stock with huge upside potential to help keep investors engaged in the markets and excited about investing. One of those speculative picks paid off big today, he said, which is why he encourages investors to "stay in the game."
That speculative winner was that of Vivus (VVUS) , a fledgling drug maker that today received approval for the first weight-loss drug to be approved in over 13 years. The news, a surprise to many, sent shares of Vivus up over 78% today. But was Vivus really a long-shot that no one saw coming?
Cramer said that while many on Wall Street viewed Vivus as a loser with plenty of risk, those who did the homework on the company saw a different story. He said with the obesity epidemic in the U.S. growing rapidly, the FDA was under pressure to give doctors something to combat the problem. This was not the case 13 years ago when the last weight loss drug, phen-phen, was approved.
Cramer called investing in Vivus a calculated long-shot, not a wild speculation. He said the stock's story should be a lesson to all investors that sometimes betting big pays off big. He said investors need to stay with the tried and true stocks, those like IBM (IBM) and Procter & Gamble (PG) , both of which enjoyed small rallies today, but having a speculative stock like Vivus makes investing all the more enjoyable.
In the "Executive Decision" segment, Cramer spoke with Marc Benioff, CEO of Salesforce.com (CRM) , a stock that came under fire when it last reported in November, but also one that was able to redeem itself today with a three-cent-a-share earnings beat on a 38% rise in revenues year over year.
Benioff explained that companies today need to become social enterprises, communicating better with both customers and their own employees. He said that Salesforce.com is a transformational company, helping customers use social, mobile and cloud technologies to that end.
As usual, Benioff reiterated that traditional software solutions from the likes of Oracle (ORCL) and Microsoft (MSFT) require big outlays of cash to install, upgrade and maintain. Cloud computing, on the other hand, requires less cost and allows companies to grow faster with less risk.